so the above analysis is relevant only if a property bought at 25 lakhs fetches a rent of Rs.13500 today...
if that is the case.. then the EMI is 22k for own house.. so a guy who rents saves around Rs.8500 every month... if he put this into a investment then that earns a person a lot... imagine what can be done if you put into a good investmnet options here... plus no maintainance cost of rented house...
the guy who has bought a house is locked into his EMI cycle while a guy who hasn't has flexibility...
he can go for the house with nice balcony if he wishes...
1)I am living in Pune. If you are buying a flat of Rs.2,500,000.00 here, you can get the same flat at a rent of Rs.8,000.00 not 13,500.00. And even if it is compared to a city like Mumbai, where can you get a flat for Rs2,500,000.00 only?
2)maintenance charges are ot considered in self-occupied property, they are really very-very high these days.
Well Cupid striked my mind when i read this article, Well if you buy a house worth 25 lakhs and rent it for say 15k which is the min. rent you can expect in a good location. Then you bargain your lifestyle for a 8k Rented home and pay an EMI of 20k monthly. Which is (rent you get 15k minus 8k rent you pay = 7k) so you need to add up another 13k from your pocket. so you pay less from pocket, get rent for your property and make an Asset for yourself.. (** well tax factors are always there for you to tackle, it depends how good you are at it)in the end at your old age you have a home good for your living and after retiring you cannot afford to pay 15k rent, so the so called Home loan is taken to shelter yourself in olden days... Lot can be written but this is just a brief explanation..
RE:How about Buy and rent it!!!
by Rahul Shetty on Apr 30, 2007 06:01 PM Permalink
Hmmm. Where will you find a house in a good location that is worth only 25 lakhs? A house that costs 25 lakhs is unlikely to fetch you a rent of 15K
RE:How about Buy and rent it!!!
by vineet kk on Apr 30, 2007 05:55 PM Permalink
Pls let me know a place where you can get a home for 25 lakhs and get a rent of 15k on the same.
The comparison is not real indeed as after 20 years, as in case of rent you will end up with expenses of 0.46 cr and will continue to incur for rest of life, but if you buy a house you will end with property worth 2cr at a cost of 0.74 cr and not required to expend anything for rent or emi.
The benifit will start after 20th year when you realy need it.
RE:house or stay on rent
by kamalbir singh on Apr 30, 2007 05:46 PM Permalink
i think he is represenatative of finnace minister bc he demotivated to buy own house
Over 20 years you can expect the value of the house to increase from Rs 25L to at least Rs. 65L ( 5% per annum) . In a growing city like Chennai this may go up to double or more ....
RE:Value of the house
by Narendra Sharma on Apr 30, 2007 05:48 PM Permalink
Author is not considering price appreciation of property also he is showing - Loss of interest on account of initial payment of Rs. 5 lac(over 20 years) [C] Rs 2,654,193 i.e. more than 5 time of investment and not considering banks 20 lacs loan on same terms.
Three years back I did this modelling in which you invest your EMI-Rent amount say in equity MFs, that would give you more clear picture. In above example, EMI is 22022 and rent is 13500 so Kumar should invest 22022-13500 in RD or SIPs of MF, then he would realize that over years rented home is better option.
its really stupid with wat parameters he has come to the conclusion like asset cost to remain fixed in 20 years !!!. i have not seen such a stupid comparison n 13500 rent for 25 lac flat...amatuer
