Real Estate Investment is one of the most favorite investment option for Indians. One of my friend Soumya is planning to invest in real estate market. He already owns a 3bhk in bangalore. He is looking to invest around 1.5cr more in real estate in bangalore or mumbai with objectives of capital appreciation and rent. His biggest dilemma is which unit size is best for investment i.e. 1BHK, 2BHK or 3BHK. Other way to look at it will be , he can buy 5 units of 1bhk, 3 units of 2bhk , and 2 units of 3bhk in almost same price. Real Estate Investment is very tricky and any wrong decision can spoil the party.

Every unit size has its own advantages and disadvantages. Real Estate Investment should be based on thorough research and planning. I believe 2 bhk is the best investmemnt option available. I will all 1bhk, 2bhk and 3bhk based on various factors like -:

• Capital Market Appreciation - How much is the property appreciating in terms of price and value
• Maintenance - How much is the maintenance charged. Since in most of the socities the maintenance is charged based on the super built up area of the flat.
• Rent Market - How big is the market available for renting the property
• Rent - How much rent you can get after putting the property on rent
• Interest on the loan amount - This means how much interest will go from the loan. Basically, higher the loan value , higher the interest charged on that amount. If the loan amount value is less than 30-35 lakhs, then at present interest charged is 8.2-9% . If it is between 30-75 lakhs , interest charged is between 8.6-9.5% It the loan amount value is more than 75 lakhs , the interest charged will be between 8.8-10%

Now, lets discuss about 1bhk, 2bhk, and 3bhk with these factors

The video is from Ultra Legends Club channel which explains everything, so if you want to watch instead of reading check it out:

1 BHK

1. Rate of appreciation of 1BHK lags behind other unit size therefore investors don’t prefer 1BHK for Real Estate Investment. 1 BHK has least amount of capital appreciation amongst all other unit options available.
2. Since the super built-up area of 1bhk is least , so maintenance of 1bhk will be least. So, even if the flat is vacant for few days, this maintenance amount will not weigh very high on your pocket.
3. Rent Market of 1bhk is not very high , since if you rent it out to 2 bachelors then there will be privacy concerns, since there is only 1 room. You can give it to only a couple with no child, because they can be comfortable with it. if you are giving to only a single bachelor , you might have to compromise with the rent. So, rent market is not that vast.
4. You will not be able to get a lot of rent out the property as well.
5. Interest on the loan amount will be least , since most of the 1bhk in most of the major cities will fall under less than 30-35 lakhs category.

There are not many good builders who build 1bhk apartments. There are very few “A” grade builders who build a 1BHK.

3 BHK

1. Rate of appreciation of 3BHK lags is according to its unit size . It is better than 1 BHK.
2. Since the super built-up area of 3bhk is maximum , so maintenance of 3bhk will be maximum. So, if the flat is vacant for few days, this maintenance amount will weigh very high on your pocket.
3. Rent Market of 3bhk is good. But, if you wanted to get maximum value out of your 3bhk then you have to rent it out to bachelors only. Because a family might not be able to pay that kind of rent. And if you are going with family then you will have to compromise with the rent. 3BHK is still considered luxury and target audience is very limited. For 3BHK, target audience is mostly family with 2 Kids or with old parents.
4. A 3BHK may cost 50% more than 2BHK but rent differential is hardly 20%.
5. Interest on the loan amount will be maximum , since most of the 3bhk in most of the major cities will fall in 75+ lakhs category.

Now a days builders are adding just very small room in a 2bhk , and calling it as 3bhk, and asking for premium charges on that. Just be very careful with that kind of 3bhk.

Now, let’s see, why 2bhk is the best Real Estate Investment option Available

1. Rate of appreciation of 2BHK lags is maximum, according to its unit size . It is lot better than 1 BHK and 3bhk.
2. Since the super built-up area of 2bhk is moderate , so maintenance of 2bhk will be moderate.
3. Rent Market of 2bhk is good. You can rent it out to couple, nuclear family (husband, wife and 2 childrens) , also to bachelors without compromising much with the rent.
4. A 2BHK may cost 50% less than 3BHK but rent differential is hardly 20%.
5. Interest on the loan amount will be moderate , since most of the 2bhk in most of the major cities will fall in 30-75 lakhs category.

Affordability is another major driving force in favor of 2BHK. 2BHK is very easy to rent or sell due to affordability. Even Big & Reputed builders like Shobha, Brigade, Hiranandani, Mantri etc have increased share of 2BHK units in their upcoming projects. Some builders are even launching projects with concept of Premium 2BHK units which are intelligently priced between normal 2BHK and 3BHK.

Let me know what you guys think about this in the comment section below.