From ₹1.2 Crore Flat to ₹50 Lakh Profit: India’s Wealthy Are Compounding Smarter
Discover how India's emerging wealthy are leveraging early-stage property investments to achieve 18-22% IRR, outpacing traditional mutual fund returns.
Real EstateWealth CompoundingProperty InvestmentMutual FundsIrrReal Estate NewsJun 21, 2025
In a detailed LinkedIn post, Sujith SS unpacked how India’s emerging wealthy are increasingly leveraging early-stage property investments to beat traditional returns. “While mutual fund investors celebrate 12% CAGR over 10 years… Let's say Riya quietly crosses 18–22% IRR by compounding hard assets,” he wrote, narrating a real client case study.
The story begins in Year 0 with Riya buying two under-construction flats in Gurgaon, each priced at ₹1.2 crore—roughly 20% below ready-to-move properties in the area. Her payment plan was staggered: 10% at booking, 30% at successive construction milestones, and no loan disbursement or EMI initially.
By Year 2, as the tower rises, prices inch to ₹1.4 crore amid increasing NRI and broker interest. In Year 3, as possession nears, her flat’s market value hits ₹1.75 crore. She sells one unit for a ₹50 lakh gain and rents the other, locking in a 6% rental yield and using it to refinance at favorable rates.
The kicker? She reinvests the sale proceeds into a pre-leased commercial unit on NH8, which immediately generates 8% annual returns. “This isn’t random investing. This is a structured wealth play,” Sujith wrote, outlining how such investors repeat the cycle every 7–10 years: buy early, wait for value unlock, exit or convert into rental, and shift gains into higher-yield commercial assets.
But Sujith also emphasized the risks. Delays in delivery, lack of market appreciation, legal disputes, and poor-quality commercial assets can all derail this strategy. And hidden frictions—EMIs on unfinished units, 6–7% stamp duty, capital gains taxes, and rental vacancies—can eat into returns.
Still, with due diligence, Sujith argues, this is how India’s “new-age rich” are playing the long game. They are not just buying properties but strategically investing in them to maximize returns and build wealth over time.
Frequently Asked Questions
What is the IRR mentioned in the article?
IRR stands for Internal Rate of Return, which is a financial metric used to measure the profitability of investments. In the article, Riya achieved an IRR of 18-22% through her real estate investments.
What are the risks associated with early-stage property investments?
The risks include delays in delivery, lack of market appreciation, legal disputes, and poor-quality commercial assets. Additionally, hidden costs such as EMIs on unfinished units, stamp duty, capital gains taxes, and rental vacancies can reduce returns.
How does Riya's investment strategy work?
Riya buys under-construction flats at a discount, waits for the value to increase, sells one unit for a profit, rents the other, and reinvests the proceeds into higher-yield commercial assets. This cycle is repeated every 7-10 years to maximize returns.
What is the benefit of a staggered payment plan in real estate?
A staggered payment plan allows investors to pay in installments, reducing the initial financial burden. This can also help manage cash flow and reduce the risk of defaulting on payments.
Why is due diligence important in real estate investments?
Due diligence is crucial in real estate investments to identify and mitigate risks such as legal issues, delays, and poor-quality assets. It ensures that the investment is sound and has the potential to yield the desired returns.
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