Last Updated on May 26, 2020 by Gopal Gidwani

In 48 hours since the government lockdown, I decided to test the attitudinal state of people who have been consistently investing over the last decade and more to building a stable portfolio.

In essence, my interrogation as confined to asking, “How do you fortify your investments with a view on the future to distribute your risk by investing in a stable environment that insulates the foreseeable future”.

The truths post interrogation

Is any level of precaution adequate for the eventual exit?
The conversations yielded the precarity and ageism inherent in our careers which have been curtailed to last a 20 year period at best unless one takes a lateral plank and took the plunge into a passion that also yielded monetary gain. Therefore, after this time investment and all the earnings, bonuses, savings and investment, how safe did they feel now and how can one still ensure that one is prepared for an exit before one hits 50 or 40?

The validity of diversity in investment
After all the method that was deployed to secure their hard-earned income, they were struggling to come to terms with the fluctuation on the return of their investments, let alone the recent carnage that is in prevail in the stock markets. “When I worked in event management, I was always very proactive with my personal finances,” says Jim. “I invested my money across all kinds of products including equities, bonds, mutual funds and start-ups of which I am a co-founder of a few”. But, in this wipe-out, I am left asking too many questions”.

The eternal question of self-reward or future-insulation
Many of them had walked the middle path of a relative degree of indulgence for themselves and the sacrifice for the future. This middle-path was walked given the uncertainty of their careers on one end and the wishful and hopeful thinking that their current incomes would grow. As Mr. Nath, a veteran IT specialist mentioned, “I got into the habit of saving 35% of my income rather early in my work life but I couldn’t help wondering that I was in a job I felt I was plateauing and where I wouldn’t be able to get any upside to my earnings”

Any investment should be made early including real estate
Quite a few stated that they have increased their expected length of their careers and expect to prolong the time period by which they will leave their respective industries. But the most sensible will think long-term from the outset. Venkatramana, a well renowned channel partner mentioned, “You get a lot of people earlier in their career treadmill who are in their mid or late twenties who are focused on buying a house. Property is one of the most stable parts of one’s portfolio. Even in a downturn like the current one, property continues to withstand the turbulence and is proving to be quite resilient with a steady momentum in sales, even now”

The best positive that came out of these conversations is that most people are ‘Excessively Time Rich’ and that they have enough quality time that is being spent with their kids. This in the context of the 12-hour days in general that are being invested at their respective work environments. This was the silver lining during this health pandemic and financial crisis.

There are a lot of negative things said about the ‘SAFETY’ of investment in real estate. This is true given the number of fly-by-night operators that existed but are being slowly weaned out due to lack of access to construction capital.

Having said that, this is the time, the absolute moment of truth when real estate becomes one of the best avenues to invest capital from a long-term perspective. This is truer in the case of an investment being made in a brand that has credibility, reputation, legacy and a track record for on-time delivery.

The following pointers are a testimony to the attributes required for investment into real estate.

Patience is an insubstitutable virtue
Another factor that most investors forget during turbulent times is the time duration of their investment. When people put money into EPFs or other saving schemes, it only becomes beneficial when the money stays invested over a period of say 15 years. It is the same with real estate as well. To borrow from an often quoted one, “Don’t wait to buy Real Estate. Buy Real Estate and wait”. This effectively sums up the virtues of patience and perseverance while investing in real estate. Buying real estate may not be the quickest way but it is the surest way to building financial security.

Differentiated real estate is an asset not a liability
One of the bigger challenges faced by most middle-class Indians is the quantum of money that is required to make an investment in real estate. This becomes more facilitating when the real estate in question is differentiated. Smart condominiums are the buzzword in investment in real estate at the moment. These are an advantageous proposition simply because of the sizes that these are offered in. Straddling anywhere in between 325 Sq. Ft. to 465 Sq. Ft. and being equipped with a separate bathroom, a separate bedroom, a kitchenette and a living room, these offerings listed as ‘COMPACT URBANE CONDMININUMS’ are a fantastic investment opportunity given the overall ticket pricing that doesn’t exceed Rs. 45 Lakhs.

Rental yield that offsets the investment value
When the real estate offering is in close proximity to the CBD (Central Business District) or Work Hubs, then the probable rental values are also relatively steeper guaranteeing you a better return on you Investment. When the rental yield offsets the EMI payable in case of a loan being taken, then the pay-out gets offset. What one gets is an asset without disproportionate costs incurred. More often than not investment success is in finding that immaculate balance of risk, reward and return.

The security of investment in real estate as an asset class
Unless investment in real estate is of an extremely speculative nature, real estate seldom fails as an investment. Real estate as an asset class has always delivered an increase in value over time. It cannot and should not be considered from a speculative point of view or a short-term horizon. The investment then can be easily considered as one of solid security. The caveat here is that investment in real estate should only be made without any exceptions to the rule in a brand that has a legacy, corresponding credibility, reputation that is completely untainted and a storied past of having delivered within the committed timeline.

Real estate is best bought via one evaluation parameter alone - location
In a hierarchy of evaluation parameters, location is the singular indisputable one which is a guarantee of future returns. All purchase decisions are best made through verifiable data points and studies on what the location currently represents and more importantly, what the future value of it is going to be. Step-by-Step, a piece of identifiable land becomes a location and this location inevitably results in increased development, infrastructure followed by commercial development followed by residential development. And both, commercial developments as well as residential developments deliver handsome return on investment.

They say that one of the best ways to earn or supplement your income is when assets invested in make money when you’re not directly involved. And on a lighter note, this resonates even better when its’ said ‘Landlords grow rich in their sleep’.

Author: Bennett has spent a considerable part of his working and learning in unraveling human insight across a diverse spectrum of business categories through observation, decoding & distilling consumer behavior through their purchase behavioral cycles. As a practicing real estate marketeer, he cross pollinates from different data sets to put out hypotheses and ratify these for marketing and set best-in-class standards for instigating customer attention in a cluttered environment, provoking prospect desire, stimulating customer experiences and engagement through relationship management post sale. Position: Marketing & Brand Head, Duville Estates