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Ramalingam Kalirajan |11135 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Mar 26, 2026

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more

Question by Renjit on Mar 26, 2026Hindi

I have an ancestral property 20 km from my home town tier 3 city valuing 2 cr there is an old house there the rental income earning is rs 10000 pm Only. I had a plan to dispose it and buying a flat in my home town which would fetch 35000 rental income. But my relatives are asking not to sale the landed property it would give u appreciation better than a flat. I'm in a confusion what to do. Please advice

Ans: You are thinking carefully before taking a big decision about ancestral property. This is a very responsible approach. Many people decide emotionally in such matters. Your thinking about rental income and appreciation together shows maturity.

Your situation needs a balanced decision because this is ancestral land plus income planning plus future wealth planning.

» Understanding your present property position

– Property value around Rs.2 crore
– Located 20 km away from hometown
– Old house exists on the land
– Rental income only Rs.10,000 per month
– Rental yield is very low compared to property value

This means the property is wealth heavy but income weak.

» Your proposed alternative plan

You are considering:

– Selling ancestral property
– Buying a flat in hometown
– Expected rental income Rs.35,000 per month

This improves income flow but changes asset type.

So decision depends on your goal:

Income stability OR long-term land appreciation.

» Important reality about land vs flat comparison

Relatives are partly correct but only in certain situations.

Land generally:

– Appreciates better in long term
– Needs patience
– Depends heavily on location development
– Does not produce steady income

Flat generally:

– Produces better rental income
– Appreciation slower than land
– Requires maintenance
– Has ageing factor

So both are different financial tools.

» One major concern in your current property

Current rental income Rs.10,000 on Rs.2 crore asset means:

– Very low income efficiency
– Asset not supporting monthly cash flow
– Return from property mostly dependent on future appreciation only

This creates concentration risk.

» One important question you must answer before deciding

Ask yourself clearly:

Do you need monthly income improvement now or are you comfortable waiting for long-term appreciation?

If income support is required, your present property is not helping enough.

» Risk of shifting fully from land to another property

Even the new flat:

– Will still be a single real estate asset
– Needs tenant continuity
– Needs maintenance
– May have vacancy risk
– Rental income can change over time

So this change improves income but does not reduce asset concentration risk.

» A stronger financial approach you can consider

Instead of shifting from one property to another property completely, think more balanced structure.

Possible approach:

– Sell ancestral property if emotional attachment is manageable
– Use part of proceeds for stable income planning
– Keep part invested for long-term growth
– Avoid putting full amount again into one single property

This improves diversification and reduces risk.

» Emotional factor in ancestral property decision

Ancestral property decisions are not only financial decisions.

Consider:

– Family expectations
– Future dispute possibility
– Sentimental value
– Long-term holding comfort

Sometimes keeping ancestral property gives psychological security even if rental income is low.

» Practical evaluation checklist before final decision

Check these points carefully:

– Development activity near current land
– Road expansion plans
– Commercial growth possibility
– Future city expansion direction
– Legal clarity and ownership structure

If development potential is strong, holding land may be better.

If development is slow and uncertain, shifting strategy can be considered.

» Finally

Your current property is strong in value but weak in income.

Buying another flat improves income but keeps risk in same asset category.

A balanced decision normally works better:

– Sell only if appreciation visibility is weak
– Avoid shifting entire amount again into one property
– Improve income planning and diversification
– Keep emotional and family factors in mind before selling ancestral asset

If you share:

– Your age
– Whether you depend on rental income for living expenses
– Whether this is your only major property asset

I can guide a clearer direction suitable for your situation.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

https://www.linkedin.com/in/ramalingamcfp/

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