Everyone talks about Mumbai and Bangalore. But common people like us cannot put money there anymore. One small flat in Mumbai costs more than one crore. In tier 2 city, same type flat comes in twenty to forty lakh. That is big difference. Also big cities are too crowded. Water problem. Traffic problem. Price also does not go up like before. But tier 2 cities are different. They are growing newly. New roads are coming. New companies are opening offices there. Government is also putting money to build airports and metro there. So if someone asks me where to put money for housing investment, I say look at the best housing investment options in tier 2 cities. Not because they are cheap only. But because they will give better return in next five to ten years.
What Makes A Tier 2 City Good For Investment?
Before I give you city names, let me tell you what I check before putting money.
- First thing is price. If price is already too high in that city, then no point. You want city where price is still low but demand is increasing.
- Second thing is jobs. If new offices or factories are opening in that city, then people will come. People need house to live. Some will buy. Some will rent. Both are good for you.
- Third thing is road and transport. If metro is coming or new highway is being built, then area near that becomes expensive slowly. That is where you buy.
- Fourth thing is rent. Even if you do not need rent money, check if someone can rent your flat easily. If there is rent demand, then resale is also easy.
I follow these four things. You also follow.
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City number one – Indore
Indore is very clean. Everyone knows that. But what everyone does not know is that Indore is getting many new offices. Companies are leaving Mumbai and Pune because rent is high there. They are coming to Indore. Also Indore has good colleges. Students come from other states. They need rented rooms and .
Where to buy in Indore?
Do not buy in old city. Old city is crowded. Buy near Super Corridor. That road is wide. Many new buildings are coming there. Also Bhawarkua is good. Vijay Nagar is also good but price is little higher there.
What to buy?
Buy 2BHK flat. In Super Corridor area, 2BHK flat costs around thirty five lakh to fifty lakh. Price depends on building age and how close to main road.
Why I like Indore?
Water is not a problem there. Electricity is also better than many other cities. Airport is small but connected to Delhi and Mumbai. Rental demand is high near colleges. You will get twelve to fifteen thousand rent per month easily.
City number two – Lucknow
Lucknow is a city of good food and good people. But today Lucknow is also a city of new metro and new flyovers. The government is building an international airport there. That is a big thing.
Also many people from nearby small towns like Sitapur, Hardoi, and Barabanki are moving to Lucknow for work. They want to buy flat or take on rent.
Where to buy in Lucknow?
Gomti Nagar Extension is my first choice. Roads are wide there. Many new schools and hospitals have opened there. Shaheed Path is also good but price is higher. Amar Shaheed Path is still affordable.
What to buy?
Buy 3BHK flat in Gomti Nagar Extension. Yes 3BHK. Because in Lucknow, people look for bigger flats. Joint families live together. A 3BHK flat there costs around fifty to sixty five lakh.
Why I like Lucknow
Lucknow feels safe. Even women living alone feel safe there. That matters for rental. Also metro has made travel very easy. If your flat is near metro station, you will get good rent and good resale price.
City number three – Coimbatore
Coimbatore is in Tamil Nadu. Weather is very good there. Not too hot. Not too cold. Many factories are there. Many engineering colleges are there. Also many people from Kerala come to Coimbatore for treatment in big hospitals.
So you have three types of people needing house – factory workers, college students, and patients families. That is good for you.
Where to buy in Coimbatore?
Saravanampatti is the best area. Many IT companies have opened offices there. Young people work there. They want flats near office. Vadavalli is also good for peaceful living. Peelamedu is near airport.
What to buy?
Buy 2BHK flat in Saravanampatti. Cost is around forty to fifty five lakh. Rental yield is better than many big cities. You will get fifteen to eighteen thousand rent per month if flat is in good building.
Why I like Coimbatore?
People do not leave Coimbatore once they come there. Weather and peace keeps them there. So resale is not a problem. Also property tax is less compared to other cities. That saves your money every year.
City number four – Nagpur
Nagpur is exactly in middle of India. That is why many logistics companies are building big warehouses there. When warehouses come, office comes. When office comes, people come.
Also the Nagpur Mumbai expressway is almost finished. That will bring more business to Nagpur.
Where to buy in Nagpur?
Mihan area is number one choice. Mihan is a special economic zone. Many companies are there. Engineers and officers working there need flats. Wardha Road is also good. Besa is for people with lower budget.
What to buy?
Buy 2BHK flat in Mihan. Cost is around thirty to forty lakh only. That is very low compared to other cities. But do not expect very high rent. Rent will be eight to ten thousand per month. Main gain will come from price increase and know more about the best housing investment options in tier 2 cities.
Why I like Nagpur?
Nagpur is still very affordable. You can enter with low money. Metro rail is also expanding there. In five years, prices will be much higher. So if you have time, Nagpur is very good.
City number five – Bhubaneswar
Bhubaneswar is the capital of Odisha. It is called temple city but it is also a planned city. Roads are wide. Parks are everywhere. Not crowded like other cities.
Many IT companies have opened offices in Bhubaneswar. The government also gives help to new businesses. That brings more people.
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Where to buy in Bhubaneswar?
Patia area is very close to Infocity IT park. That is where IT workers live. Chandrasekharpur is also good. Infocity Road is expensive but very good for investment.
What to buy?
Buy 3BHK flat in Patia. Cost is around fifty to seventy lakh. Yes that is higher than other tier 2 cities. But rent is also higher. IT workers pay good rent. You can get twenty to twenty five thousand rent per month.
Why I like Bhubaneswar?
Bhubaneswar has no flood problem. No earthquake problem. That makes it safe for long term. Also city is very clean. People from nearby states also want to buy there. So resale market is active.
City number six – Vadodara
Vadodara is in Gujarat. It is a peaceful city. Not too much noise. Not too much crowd. Many chemical and engineering factories are there. The Halol road has many companies.
Also Vadodara has good schools and medical colleges. Students from other states come there.
Where to buy in Vadodara?
Ajwa Road is growing very fast. New schools and malls are opening there. Waghodia Road is also good. New Alkapuri is premium area but price is high.
What to buy?
Buy 2BHK flat on Ajwa Road. Cost is around thirty five to forty five lakh. Rent is not very high. You will get eight to ten thousand per month. But price increase will be steady.
Why I like Vadodara?
Vadodara is one of the safest cities in India. Crime is very low. That matters for families. Also water supply is good. Many people from nearby villages want to buy flat in Vadodara. So demand is always there.
City number seven – Jaipur
Jaipur is Pink City. Many tourists go there. But Jaipur is also becoming a city for new housing. The Jaipur Development Authority has planned many new areas on the outskirts. These areas have wide roads and parks.
Where to buy in Jaipur?
Ajmer Road is very good. Many new buildings have come up there. Jagatpura is also good for investment. Sirsi Road is for people who want lower price.
What to buy?
Buy 3BHK flat on Ajmer Road. Cost is around fifty to eighty lakh. Price changes a lot based on how close you are to main road. If you go little inside, price drops.
Why I like Jaipur?
Jaipur has a very good airport. Many flights to many cities. Also hospitals in Jaipur are very good. That is why many retired people want to live in Jaipur. They buy flats. Some take on rent. So market stays active.
Flat or house or land – what to buy
People ask me this all the time. Should I buy flat. Should I buy independent house. Should I buy land.
Here is my simple answer.
Buy flat if you want safety and rent. Flat is easy to buy. Bank gives loan easily. Builder handles most things. You can also rent flat very easily. In tier 2 cities, 2BHK and 3BHK flats have highest demand.
Buy independent house if you have time to take care. House needs more work. You have to manage water and electricity yourself. But if you buy house in a good layout near a new road, value goes up faster than flat.
Buy land only if you can wait ten years. Land gives no rent. Zero. Nothing. But if you hold it for ten years, return can be very high. But careful with land. Always check papers. Best way is to take bank loan. Bank checks papers before giving loan. That is your free legal check.
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Mistakes that will kill your returns
I have seen people lose money in good cities also. Because they made mistakes. Do not make these mistakes.
First mistake – buying too far from city. Some builder shows you very cheap flat. You get excited. Then you go there and there is nothing. No school. No hospital. No market. That flat will not grow in value. Always check distance from main city or main road.
Second mistake – not checking builder name. In tier 2 cities, many small builders come and go. Some do not finish project. Some finish but quality is bad. Always check if builder has completed past projects. Talk to people living in his old buildings. If builder is new, ask for bank approved project.
Third mistake – ignoring water. This is very common mistake. In many growing cities, water is a problem. You must visit area on a hot summer day. Ask people living there if they get water every day. Also ask if building has borewell or corporation water.
Fourth mistake – thinking price will double in one year. This does not happen in tier 2 cities. These cities grow slowly. You need five to seven years. If you want fast money, do not buy property. Buy something else.
Fifth mistake – not checking rental potential. Even if you do not need rent, check if someone can rent your flat. If there is rent demand, that means real people want to live there. That means resale will also be easy.
How to start your investment step by step?
Step one – decide your budget. Do not look at properties above your budget. Also remember registration and stamp duty will cost extra. Keep ten percent extra for these charges.
Step two – pick one city. Do not pick three cities. Pick one city that is close to you or where you have a relative. You will need to visit many times. So pick nearby city.
Step three – go and see with your own eyes. Do not trust photos on internet. Take a bus or train. Go to that area. Walk around. Talk to shopkeepers. Talk to people living there. This gives you real truth.
Step four – get a local lawyer. I know this costs money. Two to three thousand rupees. But this small money will save you big loss. That lawyer will check land title and building approval.
Step five – take bank loan. Even if you have full money, take small loan. Bank will check all property papers before giving loan. That is a free legal check for you.
Step six – register property in your name. Never do cash deal. Always pay by cheque or bank transfer. Get sale deed registered at sub registrar office. Without registration, you are not owner.
Conclusion
Tier 2 cities are good for housing investment. Not because someone said on TV. But because numbers show it. Low price. Growing jobs. New roads. Good rent. Indore, Lucknow, Coimbatore, Nagpur, Bhubaneswar, Vadodara, Jaipur. All are good. But best city for you depends on your budget and how long you can wait.
If you want safety and monthly rent, buy 2BHK flat near new office area. If you can wait ten years, buy plot on new road. Just remember three things. One – go and see yourself. Two – get lawyer to check papers. Three – do not expect fast money. Give it five to seven years.
