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Summary: Rs 84,500 goes out every month. Rs 50,000 comes in from the tenant. The plan was that rent would cover the EMI. Most people discover the gap exists only after they've signed.
Somewhere in India right now, someone's father is explaining why buying a flat is the smartest thing you can do with your money. The uncle who bought three flats in the 1990s and retired early has already been mentioned. The conversation ends the same way every time.
Property is never a bad investment.
My colleague had reached the same conclusion. She brought it up over coffee one evening, not as a question but as a plan she had already settled on. A 3BHK in a locality she liked, around Rs 1.5 crore, good connectivity, young professionals moving in. She had spoken to a broker. She had a rough idea of what the flat would fetch in rent.
Take a home loan. Find a tenant. The rent covers the EMI. At the end of it, she would own a property. A tenant would have paid for it.
"It runs itself," she said.
I asked her to sit down with me first.
Rs 84,500 out. Rs 50,000 in.
A Rs 1.5 crore property typically means a loan of around Rs 1.05 crore, with Rs 45 lakh as a down payment. Home loan rates today sit between 7.5 and 8.75 per cent depending on the bank and your profile. At 8.5 per cent over 25 years, that loan costs Rs 84,500 a month.
Now the tenant's side. Residential rental yields, the annual rent as a share of what your property is worth, run at 3 to 4 per cent across most Indian cities. At the optimistic end, 4 per cent on Rs 1.5 crore gets you Rs 50,000 a month in rent.
Rs 84,500 going out. Rs 50,000 coming in.
That Rs 34,500 difference does not come from the tenant. It comes from your own pocket. Every month. For 25 years.
She had assumed those two numbers would be somewhere close. Most people do.
What the broker never mentions
Rs 34,500 is the clean version of the shortfall. Real life adds to it.
Tenants move out. Most agreements in India run 11 months. When one ends, the flat typically sits empty for a month or two while you find the next person. Society maintenance runs Rs 3,000 to 5,000 a month. Property tax is Rs 5,000 to 15,000 a year. Every time you bring in a new tenant, brokerage costs roughly one month's rent. The flat needs upkeep—a broken geyser, a leaking pipe, fresh paint every few years. Budget Rs 20,000 to 30,000 a year for that.
There is also a cost most people forget entirely. Stamp duty and registration, the government's charge on the property transfer, comes to around Rs 8 to 10 lakh on a property this size. Paid before the first tenant has moved in.
Add it all up and the monthly shortfall is not Rs 34,500. It is closer to Rs 45,000 to 50,000. Not the plan she had in mind.
What you are actually betting on
Most people who buy property for rental income are not really investing for the rent. They cannot be. The rental income does not come close to covering the costs. What they are actually doing is betting on the property going up in value. Funding that bet with monthly top-ups from their salary, hoping appreciation justifies everything when they eventually sell.
That bet can pay off. If the flat grows at 10 per cent a year over a decade, it reaches roughly Rs 3.9 crore, a gain of Rs 2.4 crore. Seen that way, the monthly shortfall starts to look like the price of entry. The uncles who bought in the 1990s made exactly this bet and won. Prices rose. Locations developed. Time did the work.
But those uncles had something going for them that today's buyers do not. Property was cheaper relative to rents back then. Yields were higher. The gap between what a tenant paid and what a loan cost was smaller. The arithmetic was more forgiving. Today, at current prices and current rates, it is not.
The version of this plan that does work
Property can be a good investment. But it works differently from how most people imagine it.
It is not a passive income machine. The rent will not cover the EMI, not at current yields, not at current rates. If you go in expecting it to run itself, the numbers will disappoint you. Usually in the first year, when the first vacancy arrives and the first maintenance bill lands.
What can work is treating property as a long-term wealth bet. You go in knowing you will fund the gap from your salary for years. You believe the location will grow. And you hold long enough for the appreciation to justify it. That is a legitimate investment. It just needs honest expectations going in.
Three questions worth asking before you sign anything. Can you carry the monthly shortfall without strain? Do you believe this location will appreciate over the long run? Are you prepared to hold long enough to find out? If the answers are yes, it can work. If the plan depends on a tenant making it easy, it probably will not.
The uncle was not a genius. He was early.
That is no longer an option. Knowing the numbers is.
Most financial decisions look different once you sit down with the actual numbers. For more such analysis, keep reading Value Research Online.
This article was originally published on June 19, 2026.
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