1) Rental you get is usually 30-40% of the EMI you would pay for the house. The rest is sunk cost. 2) When you buy a house , nearly 20% cost goes into brokerage, registration and general improvement. You don't recover through capital appreciation for the next 2 years. 3) Purchasing property is a good idea when the market is down and it usually happens in cycles. In the current market only the builder and the banking industry that gains. You buy and you are the sucker.
RE:bad idea
by anand srivastava on Feb 18, 2007 01:52 PM Permalink
Buying property is most often a long term investment so there is no sunk cost(a term used in accounts for capital items). Secondly, any one can solicit - buy when market is down....If every one could time the market !? Next, buying property is forced saving and a rent on property is a bonus.
RE:RE:bad idea
by Anurag Shrivastava on Feb 18, 2007 02:16 PM Permalink
One house is usually a good investment as it provides emotional security. The second house has to be treated with the same rational as say in stocks or bonds. Sunk cost is the interest paid which is cost of the investment.
