Tuesday, May 28, 2013

Here is an investment idea that gives 7-9% passive income as well as capital appreciation of 15% per annum


Inside Electronic city in Bangalore, where there are thousands of IT professionals working, there is a new facility that has just got inaugurated by a company called Uniworld (http://www.uniworldindia.com/).  It is a studio apartment complex with about 720 fully furnished studio apartments that comes  with additional facilities like a cafeteria, laundrette, gym, lounges, gaming zone, 2/3 home theatres, WiFi, 100% power back up etc. This complex is meant for working professionals. The room rent starts at Rs. 5500 (on twin occupancy basis) and it is truly premium in the way it is built, furnished and managed. I have known the person behind this venture (Mr. Kush Shah) for about 18 months and I have recommended this investment opportunity to my most of close friends last year and many have invested in the property.  Yesterday, I had visited the complex, for the first time after inauguration in mid April and I sure am impressed - you can see some of the photos shot by me here.




 

For an investment of appx. 10-11 lacs, you can own one apartment -this apartment will be managed by the company (Uniworld) and will be rented out to working professionals. 75% of the rentals are returned back to investors every quarter and this works out to appx 7-9%. This is pure passive income on an investment secured by immovable asset. The rental income is paid back on a sharing basis –hence, even if your specific apartment is not rented, you will surely get a rental income as long as other apartments are rented out.

The location is so good that there are lots of flats coming up in the same road and the property rates in the area will surely go up by about 15% per annum as there are lots of IT jobs in that area.

Hence as an investor you will get a 7-9% return as passive income and also a capital appreciation of around 15% per annum.

So these are all the reasons why one must invest here.

There is one key risk elements here that needs to be mentioned – the key risk element is mis-management of the complex that could result in the rentals dropping and also lowering the value of the property. Kush Shah, who is the man behind the complex, along with his family, owns about 200 of these studio apartments (out 720 apartments) and has a pretty high stake in the success of the venture. Plus I believe that he has the ability to manage such a venture (that is my opinion though).

Also this is legally  not a residential property and is, I think, classified as a “Hostel” – so you cannot get a home loan for this investment.

Despite these negatives, I believe it is a good investment option and I recommend it whole heartedly to all my readers. Many of my friends from across the globe already own apartments here. As the complex is almost ready, there are just about 10 studio apartments left for investors – so if anyone of my readers want to reach out – you can write to me  – or better still, you can reach out directly to Mr Kush Shah or Mr Deshpande at ir.uniworld@gmail.com.