Real Estate – It sets you free
In what might seem anachronistic to youngsters, earlier generations saw their employer as “masters” to be served without question. In this piece, I attempt to chronicle the life and times of a dear friend of mine, Prof Keshav Rao.
Prof Rao retires from an MNC Pharmaceutical company this week after putting in 38 years of meritorious service . He is every company’s dream employee , putting in long hours uncomplainingly, bubbling over with ideas and enthusiasm. He carries his team and duties on his broad shoulders , so much so that he is an apt example of Murphy’s law , namely that “ If you are too good to be replaced , you probably will not be , and therefore as a corollary, you will not be promoted much. In the early part of his 38 years’ career itself, it would have been apparent to the top brass of his organization, that Prof Rao would superannuate from the company itself and therefore could be taken for granted. I have had the good fortune of knowing Prof for a good ten years now, and was privy to his finances as well , being a sounding board for his financial planning.
We got talking at the time of his retirement and he was stunned when he worked out the sum of his earnings over the thirty eight years of slogging. Well, the sum was a pittance and just was not enough to take care of his post retirement needs.
The meagreness of the amount caused him to question the rationale of this entire career. All is not gloom and doom , however. The redeeming part of the story is well, the real estate story of Prof Rao. By a combination of good decisions, luck and an ever supporting spouse, Prof Rao has the following assets :
1. Two apartments in a Mumbai Suburb Valued at 2 crores
2. One unit in Navi Mumbai , valued at Rs 55 Lakhs
The three dwelling units will have the following uses :
1. For Self Occupation.
2. For Renting Out; fetching him a rent which will meet his monthly expenses. He will also be able to get an increase in the rent with time , which will keep pace with inflation.
3. The third unit at Navi Mumbai can act as his financial tool to generate income by way of capital gains.
Prof Rao is therefore in a happy state of affairs , post retirement, thereby giving him the financial freedom to do what he loves , namely travelling and teaching . The following streams of income will accrue to him
1. Income from deploying his retirement corpus .
2. Capital Gains income from his 3 rd unit , can be atleast Rs 7 Lakhs per annum , conservatively.
3. Rental Income of Rs 30.000 per month.
The real estate income alone will exceed his last drawn salary. Passive income wins hands down over his active income ( 38 years , gosh ).
There are lessons to be learnt for youngsters who are taking their first career steps. As with every story .there are aspects to be emulated and aspects to be rejected outright. From Prof Rao, we should learn not to obsess about our “ Job”. Cynical as this may sound, a “job” is a “job”; Nothing more, nothing less. Work –Life balance is critical , as the years lost can never be made up. It is important to pay attention to one’s family and health , even as one puts in long hours. Learning to say no to long hours, is a critical skill that one must acquire early in one’s career. Another skill that all of us must have is to create a nest egg for ourselves. This could possibly enable us to fast forward our retirement plans so that we can have a richer, fuller life. If we spend the prime years of our life, stuck behind a desk and hunched over a laptop, even as we deal with stress and bad bosses, we have only ourselves to blame.
Prof Keshav is a very good example of a wonderful real estate story , that I love to recount to my inner circle as the perfect way to let their real estate portfolio generate income, without making any demands on their time. Taken to it’s logical conclusion, it can act as a springboard to creating the one resource that we all crave; namely “ time”.Truly, Real Estate has set him free.