Retire in India and live off interest payments?

NeeliAankhen

Do people own flats in Delhi/Bombay? if so, what is the financial setup?

How are all the costs of running a large building met? do you pay a monthly fee? In New York you do - you pay a regular monthly amount that covers building employees (superintendant, repair people, people who clean common areas, and maybe a doorman, depending on buildig); management fees (whoever hires these people, colelcts money, etc); the taxes paid by the building; and payments on any mortgage held by the building (i.e. payments on loans made for the original purchase of the building by the corporation or group of people who originally purchased it).

How is all that paid for in India?

Nick-H

I think we currently live on about 20,000 in terms of monthly expenses. Not sure; I don't like doing sums. That does not include any capital or annual expenditure or any gift item or special gadget.

Most people would consider our lives to be very simple: we only go out a couple of times a week, when we eat out we eat little and cheap (that is our taste) and rarely spend more than 150-200. We do not drink alcohol; we do not buy too many clothes. I eat non-veg, and one luxury item is Rs500 on giant prawns once a week (better than eating out)!

We don't travel much either, not more than once or twice a year. The urge to travel is probably stronger in the early years of living here, just the wish to explore, but some people (especially many IMers, probably) are travellers by nature.

Any foreign trip is from capital.

Speaking of capital... in the last year we had made a nice appreciation on some investments; enough to live on for a couple of years. That appreciation, over the past few weeks has disappeared completely and is now standing at a small loss .

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puchoo

Im not exactly sure what you mean by this. Of course people own house in Delhi and Mumbai ( ill stick to comments on the former since thats where i live) , i dont understand your query on the financial setup.

Home loans is one of the largest type of loan used in the market today. Owning a house is aspirational to some degree and the recent spurge in development has ensured the availability of a lot of accommodation at various price bands.




In a independent house you pay for it as and when its required, like we do. But if you are living/ are part of a society then there might be some expenses which are to be paid by every resident..guard, water, cable, parking etc..

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NeeliAankhen

My question had to do with the ownership of an apartment or flat, as distinguished from an individual house.

The financial arrangements of ownership of one's own apartment or flat vary a great deal, I believe from place to place. In New York where I live there are two kinds of set ups, though their monthly costs may come out to be similar.

Some apartment buildings are "co-ops" or cooperatives. In these buildings you technically do NOT own your apartment (though in common conversation you would call yourself an owner, as you are not a renter of someone else's property) -- you own a certain number of shares in the cooperative. YOu're a stockholder.

In the other setup, a condominium, you do own your apartment.

In both cases, you are assigned a monthly fee covering the things I mentioned, as is everyone else. In a coop it's assigned per share - if you own 300 shares, your fee is usd 900/month, etc. I don't know exactly how it's done in a condo, something similar.

In London, I know you do not own anything at all when you"buy" a flat, you are really buying some kind of lease or something -- we (NYers) don't understand their thing.

In most of the rest of the US, I think they're all condos -- you won the apt, not shares. But again in both cases, you have a fixed monthly fee, which of course will rise from time to time with inflation.

So question has to do with ownership (versus just being a tenant) of an apartment or flat in an Indian city.

puchoo

I don't think its that complicated here...you are either an owner or you are not... I cant comment with 100% conviction regarding societies , since i dont live in one, but my father does own a flat in such a setup. The persons renting it currently pay a certain amount as rent + electricity and thats it...they are the tenants on a annual company lease which needs to renewed every year..

Of course, In India, come tenants choose to never leave....

NeeliAankhen

If your father owns this flat, how is the running of the building organized, how is money collected to run the building, and how much does it cost the owner of the flat per month?

If father rents the flat out to someone else but does not live in it, he keeps tne rent money, but he must also pay somebody something to keep the buiding operating -- heated (if necessary), water, repairs, taxes, garden if there is one, etc.

If he owns it and lives in it, he's not "renting"it as it belongs to him.

And - how much does it cost an apartment owner per month or per year to own his apartment? here we tend to talk about this cost per square foot. (It is not assessed that way, the formula in each building is more complicated, but that's how people compare "maintenance" costs of apartment ownership.)

In New York, uss 1 per month per square foot used to be average, now it's closer to usd 1.30-1.50 per square foot per month.

So if you had a 1000 sq ft apartment, an average monthly maintenance was usd 1000/month. Now it's more like usd 1300/month. Again - average, could be more or less.

puchoo

Like i said there are certain expenses incurred by the society with regard to water, guard, sweepers which are expected to be paid by all residents..whether this comes out of the rent given to my father or is paid over and above the rent by the tenant is something im not sure on though i will safely assume that cable, water, electricity, internet etc will be over and above since these are optional as is power backup.

general maintenance is looked after by the tenant but structural repairs etc by my father, if the tenant was not at fault.

Yes , if he owns it and lives in it ,he's not renting it.

I know a lot of people who own independent houses/bungalows but maintenance is never gauged on the formula you are calculating on...in societies there might be something like 1000 INR (hypothetical figure) a month which goes towards the general upkeep of the place but then this could also include the cost of the guard etc....this may be done on a formula but in all honestly i dont think it is.

sanjaymehra

Rs. 25,000/ to Rs.40,000/ per month including rental for a modest life.

ladyinred

All right. In Bombay, where I live we pay a monthly maintenance that goes towards the common amenities etc. When you own a flat in housing societies, this is calculated just like Neeli Aankhen said: Amount x Number of Square feet.

So yes if you are buying an apartment in a relatively better off complex/area/locality expect to pay the monthly maintenance. Otherwise you can get by paying the small fixed amount per flat i.e. Rs. 100/200 in a worn down building/illegally constructed/away from the city/lower middle class locality.

If you have your own house or a Bungalow, like we did when we moved here, the maintenance will obviously come out of your pocket as and when needed.

grikoo

Just thought I'd weigh in here, as I'm in the process of moving there under similar auspices:

According to our calculations, two budget travellers would need about 800-1300usd per month for a comfortable existence. A single person would need less, and a single stationary person even less than that. It mostly depends on your location and level of comfort (and whether you're a regular drinker, the expense of which is not included above).

So how much money would you need for this, in order to live off an investment?

That all depends on your knowledge of investments, how much money you have, and your level of comfort with risk.

My opinion, as a well informed and experienced investor, is that you would need at least $85,000-$100,000 to make this work.

With that amount of money, you could easily generate from 10,000 - 25,000 per year (so you could actually be making money, rather than just breaking even, while sipping your chai on the veranda), but you'd need to know what you were doing.

I generally keep 90% of my money in mutual funds, as I think it prudent to leave most of the work up to experience fund managers. Most of these currently are taking advantage of the continued growth in emerging and international markets, the current commodity bubble, etc. The other 10% is in intermediate term stocks, which I monitor closely. All the stocks I currently hold are taking part in the current commodity bubble. This year, which has been a very tumultuous year for the world economy, has already made me a 10% total gain, and my current batch of stocks has made 16% in the last 4 weeks (one of them has grown 40% in that period ). I also keep 1 years worth of finances in a high yield savings account, to brace against major economic downturns.

So it's certainly a possible endeavor for those willing to learn about investing.

Anyone having questions on investments is welcome to PM me. I'm certainly not an expert, but willing to offer help if I can.

Ultimately though, anyone looking into doing this with a small amount of startup capital (like 100,000) will need to learn a great deal about doing it. It's not something to undertake flippantly, as you could lose a HUGE amount of money, particularly if you're trading stocks directly. If you feel the task of keeping up to date with the market and understanding the underlying economic dynamics is too great a bother, an initial capital investment of $200,000-$300,000 would be likely required to do the same thing in a 'no hassle', 'no worry' manner.

Nick-H

Having made, on paper, enough to live on for this year --- and then lost it again, I am feeling very warm and friendly towards basic, relatively secure bank deposits.

I could hve made nearly 30% on my investments. I would have made 6% to 9%. Would have is worth a lot more than could have!

grikoo

Hey, if you've got enough money to make lower risk investments like bank deposits, more power to ya. There's no reason to take unnecessary risk if you don't have to (except unbridled greed).

I was just pointing out the highest return/ lowest capital scenario (with reasonable risk).

For the record, it looks to me like the market is getting ready to slide again, so beware.

Nick-H

What, further?

i was thinking that Indian stocks had had what some call "an adjustment", the buble burst, leaving a more realistic level.

But inflation seems to be out of conrol, fuel is about to go up, the PM is woffling...

Haylo

Just spotted this long running thread. Sounds like a great idea in theory, but flying home and staying in London at least every six months to arrange visa renewals might prove too expensive. I guess what's needed is a way of becoming an Indian citizen.

Out of curiosity, does India have an investor programme like Canada's? It's a scheme where you "invest" a large amount for a set number of years in return for being given status as a Canadian citizen.

Nick-H

No, it doesn't.

It doesn't even have any sort of immigration program