Look if we just look at the non financial part of it...renting is always prefered as whatever home you buy..in 20 years time one's need would definately outgrow the home which one bought 20 years before..staying on rent you can always choose to stay in any location/size any time.now you cannot buy a home every time..but by renting you can always have the freedom to choose property based on your current need..and looking it from an investment perspective you can put your money in any investment option based on your risk potential..to cover your future needs..there are many people who have bought homes and to find that after 2 years that the place has become too crowded..it is different perspective but think over it...
RE:Why renting is good
by Vikas Singhal on Apr 30, 2007 06:58 PM Permalink
Also if you are transferred to another location in your job, say 5 years down the line (even if you are in a non-transferable private job), then a distress sale of the house will ensue. This needs to be considered.
If your read above article carefully A) and B) option. B will be definetly better after paying rent of 20 years what your are getting in hand but if you purchase house then after paying more EMI after twenty years house become your and same value of that flat would be much more. So B is the best option.
RE:But after paying EMI house become the owner
by on Apr 30, 2007 06:24 PM Permalink
Hi friend your right. who are so called financial consultants, some times they don't have minimum brain. Hello rediff please do not post this kind of immature calculations. Please find correct calculations here. --------------------------------------------- 1. Total expenditure on rent after accounting for tax benefits (A-B C) Rs 4,619,303 2. Total expenditure after adjusting for tax benefits (A-B C) Rs 7,429,300 So if we have own house over 20 years the burden is: 7429300 - 4619303 =2809997 But finally house worth will be around 1.68 crore ( assumed yearly 10% growth). So we were able to save : 1.68 - .28 = 1.4 crore worth own house ********** House Initial cost 2500000 Ho use cost after 1 year 2750000 Assumed yearly 10% appreciation House cost after 2 years 3025000 Assumed yearly 10% appreciation House cost after 3 years 3327500 Assum ed yearly 10% appreciation House cost after 4 years 3660250 Assum ed yearly 10% appreciation House cost after 5 years 4026275 Assum ed yearly 10% appreciation House cost after 6 years 4428902,5 Assumed yearly 10% appreciation House cost after 7 years 4871792,75 Assumed yearly 10% appreciation House cost after 8 years 5358972,025 Assumed yearly 10% appreciation House cost after 9 years 5894869,228 Assumed yearly 10% appreciation House cost after 10 years 6484356,15 Assumed yearly 10% appreciation House cost after 11 years 7132791,765 Assumed yearly 10% appreciation House cost after 12 years 7846070,942 Assumed yearly 10% appreciation House cost after 13 years 8630678,036 Assumed yearly 10% appreciation House cost after 14 years 9493745,84 Assumed yearly 10% appreciation House cost after 15 years 10443120,42 Assumed yearly 10% appreciation House cost after 16 years 11487432,47 Assumed yearly 10% appreciation House cost after 17 years 12636175,71 Assumed yearly 10% appreciation House cost after 18 years 13899793,28 Assumed yearly 10% appreciation House cost after 19 years 15289772,61 Assumed yearly 10% appreciation House cost after 20 years 16818749,87 Assumed yearly 10% appreciation
RE:But after paying EMI house become the owner
by anchal sultania on Apr 30, 2007 06:53 PM Permalink
Please nore carefully that he also talked about creating asset for oneself.. and your calculation shows the same as qualtitative value of that statement.
It is easy to undermine statements, but difficult to really understand the meaning of everything.
RE:But after paying EMI house become the owner
by Ramesh on Apr 30, 2007 06:38 PM Permalink
asmani kabootar zameen pe aa. har saal 10% growth ka guarantee tera baap de ga kya.
RE:But after paying EMI house become the owner
by bv srinivasarao on Apr 30, 2007 06:54 PM Permalink
are subbrao, u see current trend in bangalore and hyderabad for fast five years we saw gorwth 50 to 100 %. i am sure this will not happen every time. thats why I assumed 10%, if not 10% just assume 7%.
NOTE: If you don't belive atleast 7 to 10% annual growth. so then these calculations are not suitable to you. ---------- House Initial cost 2500000 House cost after 1 year 2675000 Assumed yearly 7% appreciation House cost after 2 years 2862250 Assumed yearly 7% appreciation House cost after 3 years 3062607,5 Assumed yearly 7% appreciation House cost after 4 years 3276990,025 Assumed yearly 7% appreciation House cost after 5 years 3506379,327 Assumed yearly 7% appreciation House cost after 6 years 3751825,88 Assumed yearly 7% appreciation House cost after 7 years 4014453,691 Assumed yearly 7% appreciation House cost after 8 years 4295465,45 Assumed yearly 7% appreciation House cost after 9 years 4596148,031 Assumed yearly 7% appreciation House cost after 10 years 4917878,393 Assumed yearly 7% appreciation House cost after 11 years 5262129,881 Assumed yearly 7% appreciation House cost after 12 years 5630478,972 Assumed yearly 7% appreciation House cost after 13 years 6024612,5 Assumed yearly 7% appreciation House cost after 14 years 6446335,376 Assumed yearly 7% appreciation House cost after 15 years 6897578,852 Assumed yearly 7% appreciation House cost after 16 years 7380409,371 Assumed yearly 7% appreciation House cost after 17 years 7897038,027 Assumed yearly 7% appreciation House cost after 18 years 8449830,689 Assumed yearly 7% appreciation House cost after 19 years 9041318,838 Assumed yearly 7% appreciation House cost after 20 years 9674211,156 Assumed yearly 7% appreciation
Person who authored this article must have read messages on board.Hence,either he must justify content of his article and prove others wrong or else rediff.should take a note and ban these people from forming their destructive opinion.Please be informed that buying a property is creating wealth through a long term investment unlike a rented house which does no good to your hard earned money and I am sure the author of this article must have invested heavily in real estate and has return this article on behesst of those who waant to discourage HOME LOAN
RE:HOME LOAN
by Quasim on Apr 30, 2007 06:22 PM Permalink
hey rajeev, pal, you should really learn to read & understand things before opening your mouth. the part mentioned by you is already there in the article. "While staying on rent would be a pure expenditure, buying a house should be regarded as an investment, as an asset is created for the home buyer. The asset's value is likely to increase over the course of time (a vital factor that we have not considered)."
RE:HOME LOAN
by Anto Giscard on Apr 30, 2007 06:39 PM Permalink
well said Quasim. They give an idea to arrive at a conclusion of our own personal choice.
I'm from chennai. Here, Only an apartment that is worth Rs 50,00,000 & above can fetch you Rs 12,000 as rent in todays scenario i.e. when u buy an apartment today for 50 lakhs, you can only rent it to a max of 12 thousand. So if this is the case in chennai, the cost of purchasing an apartment in mumbai & delhi should be even more & im quite sure the rent should only be a little more.
So, i suppose the data taken for comparison is wrong in this article. Probably a 25 lakhs apartment can only fetch you 8000 in rent in chennai. And should be almost the same in other metropolitan cities. So, i dont know where the author of this article hail from.
RE:data for comparison looks wrong !
by anchal sultania on Apr 30, 2007 06:58 PM Permalink
@Vasanth Kumar Gopalakrishnan
your assertion "Only an apartment that is worth Rs 50,00,000 & above can fetch you Rs 12,000" is wrong. That is true in Chennai. But if you come down to banaglore, you would find that the house worth 30 lakhs (a 2BHK) earns you anywhere between 12000 to 20000. It all depends upon a lot of attached attributes to the house.
RE:data for comparison looks wrong !
by karthik on Apr 30, 2007 09:41 PM Permalink
no in chennai itself, in Velachery Ramaniyam Edens and Coconut grove which cost 35 lacs and 48 lacs resp. ,the prevailing rent is 15k & 20k.
I think example taken here for rent is wrong. "Rent per month Rs 13,500" is in a Hi-fi area where purchase of property is not possible at 25,00,000. So u need to adjust this equation by actually considering only one area for buying and renting the house. You will see that the rent is a good option then.
RE:Buying property
by ganesh ramanathan on Apr 30, 2007 06:11 PM Permalink
Having your own house implies if you are unemployed in your old age you can stay in your own house but not in a rented house , here we assume you have fully repaid your loan , HENCE OWN HOUSE IS ANY DAY BETTER THAN RENTED HOUSE ganesh
RE:Buying property
by Anto Giscard on Apr 30, 2007 06:41 PM Permalink
yeah..even in Chennai Suburbs you can't now buy a house/apartment worth for rent of 13500 for 25 lcas.
Many people who wrote messages here.. read only a few lines in the begenning and came to a conclusion that the author is saying that it is better to stay on rent. I pity those who can't read till the end and make funny comments on the article.
1. Need to consider returns on 6.5 (7.5 -1) (@8%) and deduct these gains from expenses, since he is willing to put down for buying the house, which he will not in rented case. 2. For calculation on owned house, Any perceived gain of the bought property over the next 20 years should be considered (even if u assume avg 2-5% appreciation on 25 lakh property means a lot). As mentioned in the article, either of these cases may prove costly depending on the parameters involved, but the article needs to consider these parameters as well.
If you own a house, after 20 years you can sell the house and get the money you invested on it. If you live in a rented house, you wont get a single paise
RE:Owning the house is the best
by pravin kawadkar on Apr 30, 2007 06:13 PM Permalink
NOrmally None sells his house in which he is staying unless and he buys anaother house. But definitely you create an asset for you and that is the biggest advantage of buying house.
This calculation shall be inclusive off property value increase also. If he is buying house of X value it's real value sellable will be X appreciation over given years. as author has captured in rented house of 5% acceleration
I think if there is principle amount availble fo investment in property. then buying a house or apartment is good solution.
But it is again person to person. and yes condition driven.
RE:Well
by Mayur Shah on Apr 30, 2007 06:05 PM Permalink
to have milk everyday you don't need to buy a cow..i think at present scenario rented house is a better option..the worst part of buying a house is the 30% super built up thing which the builder charges a customer.
