Should I buy a second flat for rental income to fund my early retirement?

Published 2 October 2026

Rahul from Patna

I have paid off the EMI on my primary home and have Rs 50L in savings.

I want to generate passive income to cover my Rs 75k monthly expenses.

I am thinking of buying another flat to put on rent.

Is real estate a good way to generate passive income in India compared to the US?

Sachin Kabra ex-Director HDFC Private Wealth, Business Head Motilal Oswal AMC LinkedIn

Buying a home in the US for rental yield is a sound strategy but doing so in India is highly inefficient for generating passive income. Historically US inflation hovered around 1-2% while rental yields were 5-6%. This meant passive income generated real inflation-beating returns.

In India inflation sits much higher around 6%. Meanwhile rental yields in India are notoriously low at just 2-3%. Your Rs 50L property might barely generate Rs 10k to Rs 12k a month in rent.

This yield will not even beat inflation let alone cover your Rs 75k monthly expenses. Instead of locking your capital in an illiquid asset with poor yield you should look at financial assets. Equities and debt funds offer much better liquidity and tax efficiency for generating passive income over a 20yr or 30yr retirement.

Real estate EMIs make sense when you are truly ready to buy your primary home. For investment and passive income it simply does not work the same way it does in the West.

Disclaimer: All information shared above are strictly for educational and informational purposes only. It should not be construed as financial or investment advice.

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