Article by Neeraj Tyagi
when you plan to buy a ready to move residential or commercial property (Flats, Retail Shop, Office Space), etc. It is very difficult for a new investor/buyer that how to know the exact value of the property. The seller has always wanted a high price, and the buyer wants the lowest. Then, what should be the actual value of the property is a big question.
Let’s explain how to know the actual value of the property, point by point.
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1. Residential Property
In the Indian real estate market, a residential property gives an average return/rental of 3% per annum. Let’s understand this by an example- If a residential flats rental is 20,000 per month than the property value should be approx INR 80,00,000/- Lakh.
So we can calculate residential property value by Formula:- Property Value= Monthly Rent X 12 / %.
2. Commercial Property
In the Indian real estate market, a commercial property gives an average safe return/rental of 6% to 7% per annum. Let’s understand this by an example- If a commercial retail shop rental is 20,000 per month than the property value should be approx INR 3,428,571/- Lakh to INR 40,00,000/- Lakh.
So we can calculate commercial property value by Formula:- Property Value= Monthly Rent X 12 / %.
Fact Check
If a commercial property rental is higher than 6% to 7% per annum, than that maybe not a proper location commercial property, maybe fake or manipulated rentals to get the higher sale price.
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