When “Safe as Houses” Turns Risky
Lessons from Real Estate Rentals
Real estate is often seen as one of the safest investments.
The logic sounds simple - buy a property, hold it, and either earn regular rental
income or benefit from long-term appreciation. But sometimes, reality can turn
out quite different.
A recent newspaper headline caught my attention: “Elderly
man reclaims flat from defaulting tenants after 4 years.” The story was
about a senior citizen who had to fight a long legal battle just to get back
possession of his own flat.
That news item instantly brought back memories of a case I had
witnessed nearly three decades ago. One of my clients, an employee with the
Department of Atomic Energy, had a similar ordeal. While he was still in
service, he purchased a modest apartment through a loan from his employer. His
plan was straightforward - continue living in government-provided quarters until
retirement and then move into his own home.
Unfortunately, life had other plans. He rented out the
apartment in the interim to a couple who happened to be legal professionals.
They were also closely related to a local political corporator. Within six
months of moving in, the tenants stopped paying rent. What followed was a long,
painful struggle.
Instead of enjoying the comfort of his own house after
retirement, my client was forced to live in a rental accommodation. He had to
shell out money each month for rent, while his own apartment remained locked up
in a legal tussle. For nearly two years, he went from one office to another,
filing complaints, attending hearings, and pleading with authorities. It was
only after a prolonged and emotionally draining battle that he could finally
reclaim his property.
The incident left a deep impression on me. On paper, owning
property looks like an asset that offers both financial security and emotional
comfort. But once rented out, especially without proper due diligence, the same
property can become a liability. Eviction laws in India are notoriously
tenant-friendly, and unscrupulous occupants know how to exploit the loopholes.
The lesson here is not to dismiss real estate as an investment
altogether - it undoubtedly has its place in a balanced portfolio. But investors,
particularly those who intend to rent out their property, must be careful.
Strong legal agreements, thorough background checks on tenants, and a realistic
assessment of risks are essential safeguards.
After all, an investment meant to give you peace of mind
should not become the very cause of sleepless nights.
The content made available in this article is for general informational purposes only. While every effort has been made to ensure the accuracy and completeness of the content, it should not be considered as a substitute for professional consultation.
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