- Sell the land & use the money as described in steps 2 to 5.
- Pay off the home loan
- Create an emergency fund
- Set aside money in fixed deposit which would provide monthly interest income equivalent to his monthly salary.
- Buy flats and rent them out to create additional streams of income.
- Six months back, he sold off the plot of land for Rs 9 Crores (post tax).
- Almost instantly, he paid off and closed his home loan of Rs 70 Lacs.
- Parallely, he created an emergency fund of 30 Lacs to cover his family’s expenses for next 24 months.
- Five months back, he parked Rs 4 Crores in Fixed deposits, which now provides him with a post tax monthly interest income of more than Rs 1.75 Lacs (Much more than what he drew as his last salary).
- In next two months, he bought 7 flats worth Rs 3 Crores and managed to put 5 of them up for rent. Rental income from these 5 flats is more than Rs 80,000 per month. He is still waiting to put remaining two flats on rent.
- Just two months back, he bought a small warehouse (godown) for Rs 1.1 Crore. As of now, he is pretty close to cracking a deal with a logistics provider for renting out the property. Probable rental income from this property is expected to be around Rs 75,000 every month.
- With home loan paid off, and earning in excess of Rs 3.2 Lacs a month without going to office for somebody else, this person quit his job (read retired) after celebrating his 37th birthday last month.
|A brilliant example of how to use your inheritance|
A reader commented in part 1 of this post that this guy was simply lucky to have inherited such a plot of land.
I am not sure whether its right to give all credit for this guy’s success to luck. Agreed that you need to be lucky to inherit something like that. But I assure you, mentally and emotionally, it’s not an easy decision to sell inherited properties. It’s a tough call to make. It may seem simple up front. But it is quite a difficult decision to sleep with. Anyways, we are not trying to judge anyone or anyone’s luck here.
- Take property loans (approx Rs 2.5 Crores) which would use up this Rs 3.2 Lacs in EMI. The property in turn could again be rented out to generate more cash.
- Put money in stock markets using SIPs in good mutual funds and direct equity investments.
- Start a small money lending business.
By the way, he is not frustrated any more. 🙂
What are your thoughts on this?