Can you earn stable and long-term returns on your investment without big risks? For a long time, financial experts would have said that such an investment does not exist. Conventional wisdom used to be that there is always a trade-off between risk and returns — the riskier the investment, the bigger the returns it will yield, and vice versa. But in recent years, a dark horse has emerged that defies this trade-off and offers a win-win solution to investors — high returns with low risk. This dark horse is none other than commercial property, an investment that was once thought of as too expensive for the common man but is now quite affordable, thanks to fractional ownership.
For any investor, the most important consideration is the return on investment, be it rent on property or interest on a deposit. Commercial property offers a generous rental yield of 6%-10% on the investment. Rental yield is calculated on this formula: Based on this formula, an investment of ₹25 lakhs in a good, Grade A commercial property could yield approximately ₹13,000 and ₹21,000 per month (between ₹1.5 lakhs and ₹2.5 lakhs per annum). Not only is this rental yield high, but it is also consistent, month-on-month because premium CRE is usually leased to MNCs, banks, retail stores, etc. Compare this to investing in a fixed deposit, while this is considered to be among the most secure places to park your money, the interest rate is a paltry 4%-6%. So, the same investment amount could fetch you as little as ₹8, 500 per month. To top that off, interest rates continue to fall at Indian banks this year, so returns will keep shrinking in the near future.
Low Risk Investing: Stable Returns for Long-Term Success
samuel
This is where hBits comes in, with the unique solution of fractional ownership. Imagine a scenario where a premium commercial building is available for sale at ₹100 crores. While the rent and capital appreciations are bound to be healthy, the investment amount is far too great for the common man, also known as a retail investor or small ticket investors... This is why the commercial property was restricted to High Net Worth Individuals (HNWI) in the past. However, on the hBits online platform, several interested investors can find each other and pool their funds for a shared investment. Say ten people invest ₹10 lakhs each, they can comfortably buy the property. Sure, the returns will be shared among all 10, but so will the risk.
Compare this to investing in a fixed deposit, while this is considered to be among the most secure places to park your money, the interest rate is a paltry 4%-6%. So, the same investment amount could fetch you as little as ₹8, 500 per month. To top that off, interest rates continue to fall at Indian banks this year, so returns will keep shrinking in the near future. Even if one were to invest the same amount in residential real estate, returns would be less than half, with the residential rental yield as low as 1.5%-3.5%. This would fetch a mere ₹3,000-₹7,300 per month. In addition, Grade A commercial property has huge potential for capital appreciation, which results in the value of your investment increasing as well.
