Although it's always a good idea to invest in a property, specially a Home, the calculations are very biased right from the outset.
1. The security deposit for a house rent of Rs.13,500/- is mostly upto Rs.50,000/-.
2. With Rs.2,500,000/- you cannot buy the kind of Home that attracts a rent of Rs.13,500/- or Rs.20,000/-.
There are many factors that will definitely affect the calculations like inflation, interest rates, rent etc. over the course of 20 years. But in terms of flexibility, you have more options like size, location and cost (rent vs EMI) if you live on rent.
And finally but importantly, if you are salaried like in this example, there are more chances of your being transferred to other places than staying in the same city.
This article certainly needs more elaboration than what is provided to be a useful guide of any sort.
RE:Option 2 is better but calculations are biased.
by shyam subramanyam on Apr 30, 2007 07:58 PM Permalink
perfectly correct. I live in a rented house for the past 5 years in navi mumbai. I hav had 5 agreements of 11 months. I was told it is a Rs. 16L flat when i paid 5k rent. Now im told it is a 30L flat and Im paying 6.5K rent. Me or my landlord is weak in maths, i guess. Rents have not kept pace with the sensex. If i had bought a house in Ghatkopar (a prime area) in 1979 for Rs. 2 Lakhs in 1980, i will now be able to sell it for Rs. 30L. If i had put it in the sensex, it would be worth 270 lakhs....so be my guest!
Thanks rediff for posting an article apart from ash-abhi wedding or cricket.
The author has made some good points to note. But, as per the end things may change completely. Our tax laws or the interest rates from the banks.. many things that will influence your decision. And 20 yrs is a hefty long period.
In our opinion, consider short-term projects and also buying a house when real estate slump would be feasible
A house costing 25 lakhs does not give a rent of 13.5 K ; at best a rent of 5 K ! Or the author is assuming that if a person wants to pay rent , he will stay in Juhu and when he stays in his own house - goes to Khandivily. Actually that is a likely thing because house buyers do make compromises on their lifestyles.
The above saying is not fully incorrect. In fact, the option of purchasing land is not a bad idea in any sence, as there is no depreciation for Land. However, it seems that one should think twice while investing on house. Its value depreciates year after year. Moreover, if you intend to live in your own house, you have to spend substantial amount of time and money for its maintenance, which aspect is not focussed in the article. Even the contruction itself is a much time consuming and mind boggling excercise. Does it worth that much of stress and strain? Do we intend to live in this world for an infinite period? For many, house is a liability than asset, which demands looking after, which demands presence and which demands time energy and money in many forms. Many salaried people have to find tenants for their house and live near their working place in a rented house. The amount they get as rent is much lesser when compared to , even the intereset of amount they had invested for construction. Many fools have built houses and they are waiting for tenants. Pay and dwell . Fools construct house and wise men reside- Is it correct?
RE:'Fools construct house and wise men reside!'
by vasi karan on Apr 30, 2007 07:59 PM Permalink
u r very right.. even i go with your point.. investing on land makes some sense.. but investing on apartments where now a days wont last long more than 20 years. it is totally a risky part..
A house whose market value is 2,500,000/- can not fetch 13,500/- as rent where as the house which is rented out for 13,500/- would be easily enjoying the market value above 80,00,000/- Therefore always the calculation should be done by considering the house in same location.
this is a good idea by rediff,for focusing on the regular on property which is a talk of the common people, But i believe in the option B for buying a property,in a residential area,near or out of city area,so that they can give us good value if we want to sell at the time of 20years. so investing is the good and ideal idea
Why rediff is not explaining that a few people are there,those are earning huge amount of black money and purchasing houses and flats at random as well as they are purchasing cars at random,they are perhaps keeping a big car for a small baby also,-Why this is happening???????? Thats why price of houses/lands going up and up and it is just pathetic. Need to make system "One family one house/flat" and purchasing car shd depend on income shown,-why it is not happening???????That means the people who are earning black money , they are keeping good relationship with politicians/Administration.
When Congress Govt formed price hike of Houses/flats/lands going abv sky.Then how ordinary/ common person can think for a house/flat?
When BJP was there it was possible to some extent to buy a house/flat for reasonable price as well as interest rate on home loans.
So wait for the change of party in the centre and let see how much BJP can manage the disaster done by Congress.
RE:Think little broad pls.
by renjan bhasi on Apr 30, 2007 06:57 PM Permalink
Why you are bringing politics here..??? Its all about planning your investments for the future...Do you think that BJP will give you flats/houses for cheap rate...Man..its the RBI who will dedide about the interest rates...All the partys are equal yaar..wat they will be looking is how to earn more money or more no of flats/houses for themselves...We..the fools...the voters...the citizens will blindly believe them that my party (BJP/Congress/CPM...) will bring good fortune to me... Its foolishness to have believe them... What we have to do is work hard..earn well..plan your future...grab the opportunities coming in your way... Otherwise a better idea is there...become a politician ...be a minister and dictate everything...
RE:Think little broad pls.
by chinmoy chatterjee on Apr 30, 2007 07:04 PM Permalink
U renjan, pls dont try to hide and manage the actual scinario. Can u say Why this article is getting importanc?
Why u r getting irritated if I hv involved politicians here?
U want that no shd focas into the real problem?
Man stay with truth , no one born to kill the truth.But truth can kill perhaps all the negatives.
RE:Think little broad pls.
by Vikas Singhal on Apr 30, 2007 06:56 PM Permalink
Boss I understand. But that is not the subject of the article. Its meant to address a practical issue faced by all of us, who bought homes on loans in low interest regime (02-06)
RE:Think little broad pls.
by renjan bhasi on Apr 30, 2007 07:13 PM Permalink
Hi Chinmoy, I'm not trying to hide any truth...wat I said is some real facts..which everyone's aware of abt the politicians...I'm not trying to say one political party is good or another is bad..generally speaking...all these party's have a common agenda..be in the power...and earn as much as they can...I believes more than 90% of the readers will share the opinion... It would be highly appreciated if you can explain us whats the real problem u meant in ur last reply...
Anyway...the article was informative...Its not telling anybody to but property or rent a house..leaves the decision to be taken by each individual...Really good one...
