Hi Sir,
I have a property in Mumbai suburb (approx 40L) and its location is perfect near station, bus stop, heart of the city etc. It's very old around 36 years old. I have just inherited it and I am finishing the legal procedure of it. The monthly maintenance is increasing every year and we are still waiting for redevelopment to happen.
I am housewife and require monthly income. We also have loans around 25 L. My husband is int IT field and I am German language expert. We have a son 3 years. Some are saying to give it on rent and some are saying to sell it off for repaying loans. Even if I sell it I would like to reinvest it somewhere for getting monthly income, preferably a property. I want a secure investment for meeting the requirements for my son's education as my husband's field is very volatile due to regular layoffs and stuff.
Kindly guide
Ans: You have inherited a 36-year-old property worth around Rs 40 lakh.
You have Rs 25 lakh loans to repay.
You are a housewife but a German language expert, and your husband is in IT.
You want monthly income and secure future planning, especially for your son.
You have inherited a valuable property in Mumbai suburb.
You are completing the legal formalities rightly, which is very important.
You are thinking ahead for monthly income, child education, and loan repayment.
Very few people show this kind of foresight. You deserve appreciation.
Challenges You Are Facing Now
Property is old, around 36 years, and needs maintenance.
Maintenance charges are rising every year, increasing burden.
Redevelopment is uncertain and unpredictable.
You have Rs 25 lakh loans creating stress.
Husband's IT field is unstable due to layoffs.
You want a secure monthly income and financial stability.
Option 1: Giving Property on Rent
You can earn monthly rental income by renting it out.
Typical rent may be around Rs 8,000 to Rs 12,000 per month.
Rental yield will be hardly 2%-3% on Rs 40 lakh value.
This is very low compared to your needs and loan burden.
Maintenance charges, property tax, repairs will further reduce your income.
Vacancy risk is also there if tenants leave.
Overall, rental income may not fully support your financial goals.
Option 2: Selling the Property
Selling can give you around Rs 40 lakh.
You can immediately clear Rs 25 lakh loans.
After repaying loans, you will still have around Rs 15 lakh.
Loan closure will bring huge mental peace and cash flow freedom.
No more EMI burden means husband's salary can be saved better.
You can use balance Rs 15 lakh wisely to generate monthly income.
Important Insights on Redevelopment
Redevelopment can take 5-10 years easily.
Many projects get delayed due to disputes and permissions.
Till redevelopment happens, maintenance and repair costs rise.
You may have to stay invested without any income for long.
Your immediate needs for income and loan closure will not be solved.
Depending on redevelopment alone is very risky at this stage.
What You Should Ideally Do
Prefer selling the property now while market is still decent.
Clear all Rs 25 lakh loans fully and become completely debt-free.
Debt-free life is the biggest financial freedom you can gift your family.
With balance money, create a secure income plan.
Stay light without property burdens and maintenance worries.
Focus on building an education corpus for your son and retirement corpus.
Where to Invest After Selling
Do not buy another property immediately for investment.
Property rental yields are low, and liquidity is very poor.
Instead, create a mix of debt mutual funds and hybrid mutual funds.
These can give you monthly income using Systematic Withdrawal Plan (SWP).
This method protects your capital and gives you flexible monthly payouts.
Debt mutual funds can provide 6%-7% returns safely with low risk.
Balanced advantage funds can give 8%-10% returns over 3-5 years.
Always choose regular mutual fund plans through a MFD who is also a Certified Financial Planner.
Why Not Property for Reinvestment?
Property is illiquid; selling it again takes months or years.
Property has heavy costs like stamp duty, registration, brokerage, repairs.
Rentals are taxed fully as income, eating away returns.
If tenant defaults or property is vacant, you get zero income.
Maintaining property is a headache, especially in old buildings.
Mutual funds offer better flexibility, better tax-efficiency, and better liquidity.
Disadvantages of Direct Plans (Important for You to Know)
If you invest in direct mutual fund plans yourself, you miss expert guidance.
Wrong fund selection, wrong withdrawal rate can destroy your capital.
Regular plans through a CFP-backed MFD give proper fund selection and review.
Charges in regular plan are justified because it protects your long-term wealth.
Getting professional hand-holding is very important for your peace of mind.
Additional Steps You Must Take
Keep a separate emergency fund of Rs 3 lakh in liquid mutual funds.
Buy a good term insurance cover for husband (at least Rs 1 crore).
Ensure you have a good health insurance for the whole family.
Start a small SIP for your son’s education goal systematically.
Slowly explore freelancing as a German language expert to earn extra income.
Future Planning for Your Son
Education costs are rising 10%-12% every year in India.
For good education after 15 years, you will need a large corpus.
Start small SIPs in good mutual funds focused on child education.
Stay committed for long-term without withdrawals.
Education planning must be top priority after loan closure.
Final Insights
Renting out the old property will not solve your loan and income issues properly.
Selling the property now and clearing the loans is the better, safer step.
Remaining money should be invested wisely for monthly income generation.
Avoid buying new properties now. Focus on mutual fund income plans.
Build emergency reserves, insurance covers, and an education fund for your son.
Stay light, stay debt-free, and keep life flexible financially.
Your thinking is already mature. With correct action, your future will be very secure.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment
Question by Narayanan on Oct 27, 2023Hindi
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