Invest Rs 2.6 cr now or grow it to Rs 11 cr? The retirement math on real estate you must see
Financial expert Ravi Nagrani highlights the risks of early property investment for retirement, citing low rental yields and potential inflexibility. He suggests a diversified investment approach to better prepare for future uncertainties and maintain financial flexibility.
- Jul 22, 2025,
- Updated Jul 22, 2025 3:19 PM IST
Investing in property for retirement may seem a wise decision, but financial expert Ravi Nagrani advises caution, particularly when the retirement horizon is 15–20 years away. A recent discussion with a friend revealed a potential oversight in such planning. Nagrani's friend was contemplating purchasing a flat in Pune for Rs 2.6 crore, with the intent to rent it until retirement. "I’m thinking of buying a flat in Pune for Rs 2.6 crore. I’ll rent it out for now… and live there when I return to India," he shared. While this plan appears sound, it may not account for future financial and personal changes.
The financial analysis of this investment plan reveals a concerning figure. The expected rental yield is a mere 1.6%, based on an annual rental income of Rs 7.8 lakh against Rs 3.6 lakh in maintenance costs. This low yield does not account for taxes or potential vacancies. "Worse, you're tying up Rs 2.6 crore in one illiquid, ageing asset," Nagrani warned, highlighting the drawbacks of locking funds in a single property. "You're betting everything on one city, one location, one asset class, and one tenant," he added. This lack of diversification could pose significant risks. Moreover, unforeseen expenses could further erode the already low returns, making the investment less attractive over time.
| Property Cost | 2.6 crore | One-time upfront investment |
| Expected Rent (Monthly) | 65,000 | Rs 65,000 × 12 = Rs 7.8 lakh/year |
| Annual Rental Income | 7.8 lakh | Pre-expenses |
| Maintenance Charges (Monthly) | 30,000 | Rs 30,000 × 12 = Rs 3.6 lakh/year |
| Annual Maintenance Cost | 3.6 lakh | Society charges only; excludes repairs/tax |
| Net Rental Income | 4.2 lakh | Rs 7.8 lakh – Rs 3.6 lakh |
| Effective Rental Yield | ~1.6% | (4.2 lakh / 2.6 crore) × 100 |
| Capital Appreciation (est.) | 4–6% per year | Depends on market and micro-location |
| Alternative Investment Return | 9–11% per year | Higher liquidity and diversification |
| Projected Value After 17 Years | ₹9–11+ crore | If ₹2.6 crore earns ~8–9% annually |
Many investors fear being priced out of the market if property prices rise sharply in the future, especially NRIs observing from a distance. However, Nagrani believes that hastily locking in funds increases risk rather than mitigating it. He advocates for an investment strategy that includes a mix of equity (both domestic and international), fixed income, gold, and commodities, as well as Real Estate Investment Trusts (REITs). This diversified approach provides a more balanced growth potential and retains liquidity, offering peace of mind.
Furthermore, Nagrani emphasises the importance of maintaining flexibility in financial planning. By investing wisely, the Rs 2.6 crore could potentially grow to over Rs 9 crore with an 8% return or more than Rs 11 crore with a 9% return over the same period. This growth could allow for various future lifestyle options, whether it be purchasing a different type of property or choosing not to invest in property at all. "Property is a commitment," Nagrani notes. "And your retirement should be about freedom, not financial rigidity."
Ultimately, while property can be a valuable asset in any portfolio, Nagrani cautions against early investment, particularly for retirement purposes. He advises keeping funds liquid and allowing them to grow, thus preserving the ability to make flexible lifestyle choices later. This strategic approach could ensure that retirees enjoy more financial freedom, avoiding the pitfalls of early investment commitments. By maintaining this flexibility, individuals can adapt to changing circumstances and preferences, ensuring a more secure and fulfilling retirement. Moreover, this approach allows for adjustments in response to market changes, ensuring that retirees are not locked into outdated decisions.
Investing in property for retirement may seem a wise decision, but financial expert Ravi Nagrani advises caution, particularly when the retirement horizon is 15–20 years away. A recent discussion with a friend revealed a potential oversight in such planning. Nagrani's friend was contemplating purchasing a flat in Pune for Rs 2.6 crore, with the intent to rent it until retirement. "I’m thinking of buying a flat in Pune for Rs 2.6 crore. I’ll rent it out for now… and live there when I return to India," he shared. While this plan appears sound, it may not account for future financial and personal changes.
The financial analysis of this investment plan reveals a concerning figure. The expected rental yield is a mere 1.6%, based on an annual rental income of Rs 7.8 lakh against Rs 3.6 lakh in maintenance costs. This low yield does not account for taxes or potential vacancies. "Worse, you're tying up Rs 2.6 crore in one illiquid, ageing asset," Nagrani warned, highlighting the drawbacks of locking funds in a single property. "You're betting everything on one city, one location, one asset class, and one tenant," he added. This lack of diversification could pose significant risks. Moreover, unforeseen expenses could further erode the already low returns, making the investment less attractive over time.
| Property Cost | 2.6 crore | One-time upfront investment |
| Expected Rent (Monthly) | 65,000 | Rs 65,000 × 12 = Rs 7.8 lakh/year |
| Annual Rental Income | 7.8 lakh | Pre-expenses |
| Maintenance Charges (Monthly) | 30,000 | Rs 30,000 × 12 = Rs 3.6 lakh/year |
| Annual Maintenance Cost | 3.6 lakh | Society charges only; excludes repairs/tax |
| Net Rental Income | 4.2 lakh | Rs 7.8 lakh – Rs 3.6 lakh |
| Effective Rental Yield | ~1.6% | (4.2 lakh / 2.6 crore) × 100 |
| Capital Appreciation (est.) | 4–6% per year | Depends on market and micro-location |
| Alternative Investment Return | 9–11% per year | Higher liquidity and diversification |
| Projected Value After 17 Years | ₹9–11+ crore | If ₹2.6 crore earns ~8–9% annually |
Many investors fear being priced out of the market if property prices rise sharply in the future, especially NRIs observing from a distance. However, Nagrani believes that hastily locking in funds increases risk rather than mitigating it. He advocates for an investment strategy that includes a mix of equity (both domestic and international), fixed income, gold, and commodities, as well as Real Estate Investment Trusts (REITs). This diversified approach provides a more balanced growth potential and retains liquidity, offering peace of mind.
Furthermore, Nagrani emphasises the importance of maintaining flexibility in financial planning. By investing wisely, the Rs 2.6 crore could potentially grow to over Rs 9 crore with an 8% return or more than Rs 11 crore with a 9% return over the same period. This growth could allow for various future lifestyle options, whether it be purchasing a different type of property or choosing not to invest in property at all. "Property is a commitment," Nagrani notes. "And your retirement should be about freedom, not financial rigidity."
Ultimately, while property can be a valuable asset in any portfolio, Nagrani cautions against early investment, particularly for retirement purposes. He advises keeping funds liquid and allowing them to grow, thus preserving the ability to make flexible lifestyle choices later. This strategic approach could ensure that retirees enjoy more financial freedom, avoiding the pitfalls of early investment commitments. By maintaining this flexibility, individuals can adapt to changing circumstances and preferences, ensuring a more secure and fulfilling retirement. Moreover, this approach allows for adjustments in response to market changes, ensuring that retirees are not locked into outdated decisions.