NEW DELHI: Is it better to buy a property or to stay rented? This is the most frequently asked question by the investors, especially those who are paying huge rentals in metros. While owning a house renders a sense of social security and has an emotional connect, experts say the in terms of financials you must consider several factors including your disposable income, age, cost of property before joining the house hunt bandwagon.
Assess your Financials First
You should know if you are buying for personal use or investment. If you are buying for personal use than you must calculate how much money you will be left with after paying EMI. Is it enough to cover your other financial commitment like retirement plan, education expenses, health expenditure or financial emergencies? Also if you are salaried class, is your increment in sync with the inflation in property price and rentals. These factors must be taken into consideration before going to buy a property.
EMI Vs Rent
It is important for you to consider the difference between the rental you pay every month and the EMI you will have to pay every month. If the difference is huge than it makes more sense to stay rented than to buy a property. Taking for instance in many areas in Delhi, like Dwarka, while the rentals are to the tune of Rs 15,000 to Rs 18,000, property price is as high as Rs 75 lakh to 80 lakh for a decent two bedroom flat. In this context, renting is better option and the money can be invested in other instruments which give better annual return than the price appreciation in coming 5-10 years.
Buying at right
Valuation Buying a house can be profitable when you are doing it at right valuation. In this regard it is very important to mention an interesting answer to this question by a Rajeev Shah, a stock broker with Angel Broking. “Buying a property is like buying a stock. Just because you own a bluechip company stock will not make your portfolio attractive.
You should buy the stock at right valuation and know when to exit. Then only its profitable else if becomes a messy affair,” he added. For instance if your monthly income is between Rs 70,000 - 80,000, and if you are planning to buy a property if will be better deal only if you are buying a property which is between Rs 40 Lakh-Rs 45 lakh. Also more time you live in your house, more profitable it will become. So earlier you buy, better it is.