Passive Income From Owning A House In GOA

We took this apartment for around 60 and set it up and we invested in around 4 to 5 lakhs in it. From day one we got a booking and I looked at Hyderabad, I looked at Bangalore. The rental returns are around anywhere from 0.5 to 2 percent and here in Goa you can get anywhere from 5 to 12 to 13 percent depending upon what kind of apartment you have, how do you keep your fixed costs lower. So in this span of two and a half years we expanded from one apartment to three apartments only because we had the confidence that yes there is no place in India which will give us such return. So all the three properties costed me together somewhere around 2.4. You can make a good 1.2 to 1.5 per month on these properties, sometimes even a little bit more but again I mean that is again an average because I mean I'm not making that amount of money in the off-season. Suddenly a boom happened in the past one, one and a half years in Goa where the property rates just skyrocketed and every property minimum 50 to 100 percent inflation happened. So the returns are still there but they have actually halved plus the government has become stricter. They are enforcing some norms on you. The electricity bill is going to be converted from domestic to commercial so that will take your profit even further down. Fortunately last two, two and a half, three years was all work from home so whenever there was an issue we could fly down. It's best at best to give it to a good property manager who knows the tricks of the trade otherwise handling a property by yourself it's going to be pretty, pretty difficult. In 2019 we had bought this for about 2.1 CR and it's currently valued at upwards of 6 CR, 6, 6.2, 6.3. Right before COVID we were on the verge of closing a deal for a land which is very close by from here. That property they were asking 22,000 per square meter land in Vagator. Currently the land rate in Vagator is upwards of 60,000 per square meter. More so than that there's barely land, good land available because of the Portuguese law there's a lot of issue with clear title lands. Given that I had invested at 2.1 obviously the yield that I'm getting is far better than one would at this point. So the rental yield that I am getting is about 36 lakhs per year but even now let's say if you were, one was to buy this property at 6 CR, in hand they are still getting upwards of 6%, 5, 6%. And if you go to think about any of the metropolitans, you think Delhi, you think Mumbai, you think Bangalore, you think Kolkata, you think Pune, it's not as good. This villa we range between 28,000 to 38,000 in off-season and in season we range between 45,000 to 55,000. Prime which is like your New Year's, Christmas, around that time it ranges somewhere between 1,10,000 to 1,20,000 per night. 365% occupancy more or less. So for higher rental yields, for example the kind of plates we use, they are nice, thick, big, the kind of spoons you use. People use like, they want to cheap out and use those 2mm, 3mm spoons. We use 4mm thick nice spoons. We use 400, 500 thread count bed sheets. These things make a difference to that client. Think of it as you creating a home because the more amazing you make it, the better yield you will get, the earlier you will recover your investment. One of the main things you should be sharing with the people who are looking to buy here in Goa, is that people are going to give you all sorts of numbers. This is the kind of rentals we'll get for you and I can almost guarantee you it's ****. Everyone who's come up, who comes to me with a property adhita, what do you think about this, they're saying this and that and this. I tell them, listen, that area right, go to that area. Go on any online portal that is you know, offering vacation rentals and check the price that you're getting. You're buying a three-bedroom apartment, check the price for three-bedroom apartments, what they're selling at. Spend an hour right, that will give you a better idea and better reality than anyone else out there. The ones who are just investing it as a home, you know, and they don't want to rent it out etc. etc. I would suggest, like Goa is probably one of the places that you shouldn't consider doing that and for the very simple reason, the weather over here is pretty drastic. The heat, the heat is extreme, the rains can be very extreme and if there's nobody to take care of your house, it tends to become a bigger expense than first floor, the greenery view that we get while we're in the pool is something else. The whole living room without any pillar, extending to a dining space, you know, the flooring in the ground floor, the black and white pattern created so beautifully out of these nitco tile slabs. Each bathroom having unique color combination, unique patterns. So, all in all, like this is, I mean, as good as it gets, I think. In Telado, these villas at the moment are, I think in the market is pricing them at between 12 to 15 crores. So, once someone buys these villas from us, we implement our hospitality services on these villas and we make sure that our villa owners stand to get a decent rental returns from these villas. Now, you know, rent returns, I would say 6 to 10 should be the expectation of a buyer. In case of these villas, we are providing four people each villa. There is a chef, there is a server, there is a housekeeper and there is a caretaker. We are only charging 30 percent from our buyers. So, we are at the moment renting between 50 to 60,000 rupees. In the season time, we will raise it from 60 to 75,000 and obviously, you know, December, January is one time which we get any kind of prices. So, we will obviously also earn our money from there. We must have experienced something like 50 percent occupancy and December, obviously, we did something like 75, 80 percent. So, even if a person is getting 6 percent return from their property, it is not bad for a real estate which is appreciating. Please understand that the land is very limited in Goa. Prices are going to go up. So, whatever 2 crores you have put in or 5 crores you have put in today will become 4 crores or 10 crores future. On top of that, if you are getting 6, 7, 8 percent return, you should be very happy, you know. So, some people feel that, you know, I mean, the prices may have gone up from say 2019 to 2020, 2021 or 2021, 2022 may have got doubled and that is very quick for a very short period. But what they do not realize is that it should have been there much before that already. It was preceded by a very dull market for a very, very long time. And the biggest, biggest USP for Goa that one is there is limited land. All told, if you see, then we are only some 4, 5 percent total developable land left. In that, there are still land issues, title issues and this and that. Please make sure that your location is, you know, rentable for a tourist, not for someone who wants to come and live in Goa. Because someone who wants to come and live in Goa would pay 40,000 a month, whereas someone who's coming to holiday in Goa will pay 20,000 a day. So, this is the main complex, the main building which houses three rooms, the kitchen, the dining space and the living room. You know, then this is the pool here and then this is a set of two rooms and that is a single room unit. So, all together we've got six rooms here. At least a 200-year-old spread over half an acre property right in the heart of Asa Gaon, which is the most happening, you know, touristy area at the moment in Goa. This house, if you specifically ask me, it would be the land alone is around, in today's market price, it will be around worth 20 crores itself. Plus the heritage house, the tag and, you know, all told, I think 25 to 30 crores should be a reasonable expectation from this house. So, our tariff in normal times vary from 60,000 rupees for the whole villa to 90,000 rupees. In the months of December and in the peak period, it can go up from 120,000 to 150,000 a night. In the bad time, we actually did even 40% occupancy, but in regular times, it goes up to 60-70%. So, it's about 25,000 square feet, you know, in terms of just what the whole thing is. And the built-up area is only 4 bedrooms, 2-3 living spaces, a very nice dining area. But we pretty much spend the time by the pool on this table. We just get out of the bedroom and then the sunrise is right in the morning, is right in front of the pool. In Delhi, I never wake up for sunrise, but here I always do. See, the landed cost of this one was, you know, between 15 and 17. What are people currently ready to pay for this? I think 30 is quite achievable. I haven't entertained a serious conversation, so I haven't really got to that point. See, we don't rent below 70-80,000 a night. In the season, it's typically between 1-2 lakhs, but in December, close to that period, 2-2.5 lakhs. Because we're not aiming for occupancy, so our occupancy is maybe about 30%. In terms of purely yield, the lower the price point, the better the yield. Because a lot of people who come to Goa want to pay 20-30,000 a night for a 4-bedroom house, right? But for the higher-end homes, the yield is really low. Because A, the price point is high because you don't want to, you know, rent it to all kinds of holidaymakers. So, if you bought something in 2018, then the yield today on that buying price is pretty high. But if you buy something now, then the yield is not more than 2-3% for the more upscale homes. So, the yield is almost inversely proportional to the level of the property. For our house here, the staff cost is about 2 lakhs a month. And then maintenance and consumables, utilities, electricity, this, that, cars, maintenance and others, you know, 1.5 to 2 lakhs a month. So, on an annual basis, expect to spend about 40 lakhs a year. Most of that actually is recovered by the rental income, and that's the reason also, partly the reason, the returns are low. Because the cost of operating is high. I could have bought a house, I mean, I was here in 2017 looking for some, and then it was, like, if you buy, how will you manage, what will... Because the ecosystem of other companies managing holiday homes was simply not present, even in 2017. If you were Airbnb, you were on your own. But then now, you buy a home, you pretty much give it to them, and sort of they look after it, they rent it. Goa has something for everyone. My parents are happy to come to Goa, my kids are happy to come to Goa, my friends are happy to, everyone's happy to come to Goa. It's well connected. From everywhere you can fly, multiple flights a day. I try and come twice a month, if I'm not overseas or if I'm not caught up majorly with something. So, when you say return, it is a little bit of a limiting calculation to calculate return only in terms of, you know, money. Obviously, if you're buying a house in Goa, then money isn't the biggest of your worries anymore. Quality of time is. If you are only money rich and time, not time rich, maybe stay away from this. Because then it just becomes one more thing to bother about, and you feel almost terrible that you can never go there. So, you actually have a home, other people come and pay you 40,000 a night and enjoy it and go away. So, you don't need those things, right?