People think big cities are the only place to put money in property. That is wrong. Completely wrong. I have seen it myself. My friend bought a flat in Mumbai in 2018. Two crore rupees. Today same flat is two point two crore. Very small growth. Another friend bought in Indore same year. Fifty five lakh rupees. Today same flat is ninety lakh. You do the math.
Big cities have no space left. Prices are already too high. How much more will they go up? Not much. But Tier 2 cities? They are still sleeping. And when they wake up, prices will jump. So let me tell you which cities are best. No fluff. No tough words. best tier 2 cities for property investment.
What is a Tier 2 city anyway?
Do not get confused by big words.
Tier 2 city means a city that is growing but not yet crowded like Mumbai or Delhi. It has airport. It has colleges. It has offices. But traffic is still less. People can still breathe. In India, cities like Indore, Lucknow, Nagpur, Jaipur, Coimbatore, Bhubaneswar, and Ahmedabad are in this list. Now let me explain each one.
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Indore
I will start with Indore because I like this city. Indore is clean. Very clean. You will not believe it but it won cleanest city award many times. When a city is clean, people want to live there. Simple logic. Also Indore has business. Small industries. Food business. And now IT companies are also coming because rent is cheap and workers are smart.
What is the price there?
A good two bedroom flat in a good area will cost you around forty five to fifty five lakh rupees. Not more. Can you get rent? Yes. Because young people keep coming for jobs. They need house. You give them house. They give you rent. Every month. How much rent? Around fifteen to eighteen thousand for a two bedroom flat. Now tell me. In Mumbai, a flat of one crore gives you twenty five thousand rent. That is very bad return. In Indore, fifty lakh flat gives you eighteen thousand rent. Much better. Also price is going up every year. Not very fast but steady. Eight to ten percent.
So Indore is good for both rent and selling later.
Lucknow
Lucknow is a funny city. Old part is very old. New part is very new.
The government built big expressways from Lucknow to Delhi, to Agra, to Varanasi. Now travel is easy. So people from nearby small towns are moving to Lucknow. They want better schools for kids. Better hospitals for parents. This creates demand for houses.
Where to buy in Lucknow?
Areas like Gomti Nagar Extension, Shaheed Path, Sultanpur Road. These places have new buildings. Good builders. Clear papers. A two bedroom flat here costs fifty to sixty five lakh rupees. Rent is around sixteen to twenty thousand. One more thing. Lucknow has a new international airport coming up. When airports come, prices go up. That is a fact. So if you buy now and hold for five years, you will get good profit.
Nagpur
Nagpur is in the middle of India. Exactly middle. So it is a big centre for transport. Goods come from all sides. Then go to all sides. The government made a big project called MIHAN near the airport. Many Japanese companies have factories there. They make plane parts and other things. Thousands of people work there. These people need houses. And Nagpur property prices are still very low. You can get a new two bedroom flat for just forty to fifty lakh rupees. Yes. Forty to fifty lakh. That is less than the price of a small studio in Mumbai. Rent is around twelve to fifteen thousand. Not very high but okay.
The real gain will come from price increase. Because industry is coming. Jobs are coming. When jobs come, people come. When people come, house prices go up.
This is not complicated. It is simple.
Ahmedabad
- Some people say Ahmedabad is not Tier 2 anymore. Maybe true. But prices are still like Tier 2.
- Ahmedabad is very well planned. Roads are wide. Water is there. Electricity is there. No cutting of supply like other cities.
- Also the Gift City near Ahmedabad is a big banking and finance centre. Many global companies have offices there.
- If you buy a flat in a good area of Ahmedabad, it will cost you sixty to seventy lakh rupees. Rent is around eighteen to twenty two thousand.
- Price growth is good. Eight to ten percent every year.
- But the best thing about Ahmedabad is safety. Papers are clear. Builders are registered. You will not get stuck in legal trouble.
- For a first time buyer who does not want headache, Ahmedabad is number one.
Jaipur
Jaipur is close to Delhi. Very close. Two hours by road on the new expressway. Because of this, many companies put their back offices in Jaipur. Office work is cheaper there. Employees also like it because life is better than Gurgaon. Jaipur also has tourism. But tourism does not give long term rent. Offices give long term rent. Areas like Ajmer Road, Agra Road, Sirsi Road are good for buying. New projects are coming up every month. Price of a two bedroom flat is fifty to sixty lakh rupees. Rent is fifteen to eighteen thousand. One problem in Jaipur is water in summer. Some areas face shortage. So before buying, ask local people about water. Do not skip this. Otherwise Jaipur is a solid choice.
Coimbatore
Coimbatore is in Tamil Nadu. Very different from north Indian cities. Very quiet. Very clean. Very educated people. It is called Manchester of South because of textile business. But now IT companies and engineering companies are also there.The weather is very nice. Not too hot. Not too cold. Many retired people want to live here. That creates a different kind of demand. Price is higher than other Tier 2 cities. A two bedroom flat costs sixty five to eighty lakh rupees. But rent is also higher. Around twenty to twenty five thousand. If you have more money to put and you want stable market with good rent, Coimbatore is good.
Bhubaneswar
Bhubaneswar is the capital of Odisha. This city is growing slowly but surely. Many new colleges have opened here. Private universities. Engineering colleges. Medical colleges. Students come from all over the state. They need places to stay. Also the government has made good roads and a new airport terminal. Price is very low. You can buy a new two bedroom flat for forty to forty five lakh rupees. Rent is ten to twelve thousand. Do not expect fast price rise here. It will take time. Five to seven years at least. But if you are patient, it will pay off. For small investors who have limited money, Bhubaneswar is a good start and know more about the best tier 2 cities for property investment.
What to check before you buy?
Now listen carefully. This part is important. Do not buy anything without checking these things.
- First. Who is the builder? Have they built before? Go and see their old projects. Talk to people living there. If builder is new and has no track record, do not buy. Even if price is low.
- Second. Papers. Land should be clear. No court case. Building plan should be approved by the local authority. Take a local lawyer. Pay him five thousand rupees. Let him check everything. That small money can save you big trouble later.
- Third. Location. Do not buy in a far away area just because it is cheap. Go there at night. See if there are lights. See if people live nearby. See if shops are open. If area is empty, your property will stay empty.
- Fourth. Water and power. Ask local people about water in summer. Many Tier 2 cities have water shortage. Also ask about power cut. If power cut is too much, tenants will not stay.
- Fifth. Future plans. Look on the internet. See if a new metro or new road or new airport is coming near that area. If yes, that is very good. Price will go up.
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How much money do you really need?
Let me give you a real example.
- You buy a flat for fifty lakh rupees in Indore or Nagpur or Lucknow.
- You need to pay ten to fifteen lakh from your own pocket. That is the down payment. The rest comes from bank loan.
- Your monthly loan payment for fifteen years will be around thirty five to forty thousand rupees.
- You rent the flat for fifteen to eighteen thousand rupees.
- So your own monthly cost becomes twenty to twenty five thousand rupees.
- That is not nothing. But it is manageable for most working people.
- After five years, your flat price goes up to seventy five lakh rupees. You sell. You pay back the remaining loan. Whatever is left is your profit.
- This is how normal people build wealth. Not by getting rich fast. But by doing small smart things again and again.
Mistakes people make
I will tell you three mistakes. Do not make them.
First mistake. Buying without visiting. Many people see photos on phone. Talk to agent on phone. Send money on phone. Then later they go and see a broken house in a dead area. Do not do this. Go yourself. Walk around. Spend two days there. Talk to five different people. Then decide.
Second mistake. Buying only because price is low. Low price means nothing if area has no jobs, no schools, no roads. A cheap house in a bad area will stay cheap forever.
Third mistake. Taking too much loan. Some people take loan of eighty percent of property value. Then monthly payment is very high. If flat stays empty for two months, they cannot pay. Then bank takes the flat. Be careful. Keep your loan amount low.
Rent or sell. What is better
Both are good. Just different.
If you want money every month, buy near offices and colleges. Small two bedroom flat. You will get tenant easily. Rent will come every month. That rent will also increase every year.
If you want one big profit after some years, buy in an area where a new metro or new expressway is coming. Then wait. Do not sell fast. Wait five to seven years. Then sell. Price will be much higher. You can also do both. Buy in a growing area. Get rent for five years. Then sell. That gives you monthly income plus final profit.
Conclusion
Do not wait too long.
I am telling you from experience. Prices in these Tier 2 cities are going up every month. Slowly but surely. The people who bought two years ago are already happy. The people who buy two years from now will pay more. You do not need to be very rich. You do not need to understand complex things. You just need to pick one city. Go there. Check things. Buy one small flat in a good area. Then hold it.
That is it. That is the whole secret. No big words. No fancy formulas. Just common sense. If you have questions about any city or any builder, ask a local person. Do not ask google. Do not ask agents who want to sell you anything. Ask normal people who live there. That is the best research you can do.
