CHOICES, choices & choices. From the single brand of butter – the Amul days, India sure has come a long way. You can choose between flavoured yogurt and probiotic yogurt, at least 20 kinds of clothing brands and more than 200 different kinds of mobile phones.

Investments too are offering more choices than before. Now not only can you choose between stock markets, real estate, art etc as avenues but within each you have further choices. Take real estate for instance - after you've finished buying a house to live in (which most kids do by 25 today) you can choose to invest in real estate either through a second homes or through a real estate mutual fund.

There are, however, certain issues that must be considered before investing specifically in a second property today.

• Property prices: There has been a significant run-up in the real-estate prices over the last couple of years. Prices in many areas have doubled/tripled in this time. Fearing that there may be a bubble in the real-estate prices, RBI has made it increasingly difficult for the builders to access bank finance. Also, the interest rates on their borrowings have gone-up. The idea is to cool down the speculation in the real-estate sector.Therefore, there is a general expectation that the prices may correct or at most remain stable in the near future. If that is so, it may be prudent to wait and watch the scenario.

• Home loan interest rates: There has been a more than 50% jump in the interest rates on home loans in the last couple of years – from 7/7.5% pa to about 11.5/12% pa. This higher interest cost adds up substantially to the total cost of acquisition. Again, the government and the RBI have been cracking down on inflation. As the inflation drops to more modest levels, there is an expectation that interest rates too may cool down. So once again, it may be smart to wait and watch.
  
  
• Other costs: Apart from interest, one needs to consider the other associated costs such as property tax, maintenance charges, insurance etc. All these will add to your cash outflows.

Photograph: Vipurva Parikh