A very useful and a thought-provoking link
http://www.rediff.com/money/2007/apr/30perfin1.htm
Members, your opinions on this please.
Buy or Rent
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murlidharc
- Posts: 14
- Joined: Fri Jan 12, 2007 2:00 am
Buy or Rent
hellome;23849A very useful and a thought-provoking link
http://www.rediff.com/money/2007/apr/30perfin1.htm
Members, your opinions on this please.
This quote from the article tells it all...
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).
I can't comprehend why these morons have written the article comparing rent vs buy option without taking the equity of house into consideration.
Buy or Rent
http://articles.moneycentral.msn.com/Banking/HomebuyingGuide/WhyRentToGetRicher.aspx?page=1
extract:
I have something un-American to confess: I rent an apartment despite having enough money to buy a house. I plan to keep renting for as long as I can. I'm not just holding out for better prices. Renting will make me richer.
extract:
I have something un-American to confess: I rent an apartment despite having enough money to buy a house. I plan to keep renting for as long as I can. I'm not just holding out for better prices. Renting will make me richer.
Buy or Rent
For some seriously interested in computing actual cost of ownership :
an article I wrote couple of years back
an article I wrote couple of years back
Computing Real cost of Housing (series) - written in 2005
Buy or Rent
hellome;23849A very useful and a thought-provoking link
http://www.rediff.com/money/2007/apr/30perfin1.htm
Members, your opinions on this please.[/quote]
1. apartment price to rent is unrealistic ( 25L apartment wont rent for 13.5K/month)
2. for comparison over longer period, one must consider FV
3. house maintenance expenes, property taxes etc are not considered in calculations
4. renter has an advantage to move, buying/selling has its own expenses
Buy or Rent
RRK those are good articles.. made my calculations easy.. as I am looking at $250k condo to buy over next year or so. The rents here are way too high - for a $250K condo - I would end up paying $1500 as rent today.. and then add to it the yearly rent increase (which has been to the tune of 5-7% in last couple of years). Looks like atleast in my area, the conditions are getting better to buy v/s rent - but ofcourse its a declining market, so am planning just sit on sidelines for prices to fall for some more time while I build up my 20%+ downpayment.
Buy or Rent
RRK;239481. apartment price to rent is unrealistic ( 25L apartment wont rent for 13.5K/month)
expenses
Sorry for the stupid question.. is 13.5 K too high or too low?
Buy or Rent
RRK,
This is simply superb!!
I have to see how can we put this into practice..:)
Thank you again.
This is simply superb!!
I have to see how can we put this into practice..:)
Thank you again.
Buy or Rent
RRK,
I gave this article a serious thought. I think there're various factors here, now I'm not referring to emotional factor. Now I think about more, it reminds me of an article "Cost of Raising Kids", of course which I read in a US newspaper a couple of years back.
I guess it is ok if you're single and live in an apt. But house living is different whether in India or the US. We cannot evaluate from only financial point of view. I see the following issuses (some are applicable to both: India and US):
1) There's no security, the owner can kick you out @ any time for whatever the reason. May be he wants to move in, gets better offer or encash on the current value. It takes 6 months to a year to really finish the move and settle things in a new house. Also going away from your (or kid's) friends etc..etc.. If you have school going kids, I think it'll be worse.
2) A house is more about living i.e. indoors and outdoors. Indoors: You want to upgrade/change kitchen, different rooms. Same goes with Outdoors: Fence/not fence, trees, plants, sun/screenroom. You'll need to seek your house owner's approval in many cases. Again it all depends on what kind of lifestyle one lives. For example, I would like changes every year if not every season. I know many friends in India who always have things going on in/around their apt/house.
It is an excellent article but everybody cannot implement it.
I gave this article a serious thought. I think there're various factors here, now I'm not referring to emotional factor. Now I think about more, it reminds me of an article "Cost of Raising Kids", of course which I read in a US newspaper a couple of years back.
I guess it is ok if you're single and live in an apt. But house living is different whether in India or the US. We cannot evaluate from only financial point of view. I see the following issuses (some are applicable to both: India and US):
1) There's no security, the owner can kick you out @ any time for whatever the reason. May be he wants to move in, gets better offer or encash on the current value. It takes 6 months to a year to really finish the move and settle things in a new house. Also going away from your (or kid's) friends etc..etc.. If you have school going kids, I think it'll be worse.
2) A house is more about living i.e. indoors and outdoors. Indoors: You want to upgrade/change kitchen, different rooms. Same goes with Outdoors: Fence/not fence, trees, plants, sun/screenroom. You'll need to seek your house owner's approval in many cases. Again it all depends on what kind of lifestyle one lives. For example, I would like changes every year if not every season. I know many friends in India who always have things going on in/around their apt/house.
It is an excellent article but everybody cannot implement it.
Buy or Rent
shoonya,
25L apartment will commend rent of about 8K-12K depending on location.
I use 4% and 6% R/P ratio. ( Rent to Price).
If it is below 4%, it is good to rent, above 6% good to own. 4%-6%, ok both ways.
VRG,
Thanks,
Yes, there are several factors that apply.
Buying your own home is just not pure investment decision. (first home)
But when you are ready for second, it is an investment and look at that from financial point of view.
Also one should consider how long you intend to live in that location before you decide to buy a property. If your job is changing in nature and calls for frequent relocation, it is better to stay rented, even though you have money and love for your own home.
I know several NRI wish to invest in second houses either in India or US as an investment. When it comes to India, they check past prices and current prices and quickly decide it is a great investment to buy an apartment in India and venture out without second thoughts. In reality many of them are not ready to be house owners, they thrust this job on their parents or in-laws who does all the running around and take care of day to day maintenance.
Several of them are blindsided when it comes to RE investment. Either they become emotional and fall in love and forget the figures or overestimate the risks and shy away.
Some one invested in apartment might have seen 10-20% price raise and very happy about their investment selection but what they dont know is they might have invested in plots and got 40-50% price appreciating in the same duration, without any maintenance expenses.
25L apartment will commend rent of about 8K-12K depending on location.
I use 4% and 6% R/P ratio. ( Rent to Price).
If it is below 4%, it is good to rent, above 6% good to own. 4%-6%, ok both ways.
VRG,
Thanks,
Yes, there are several factors that apply.
Buying your own home is just not pure investment decision. (first home)
But when you are ready for second, it is an investment and look at that from financial point of view.
Also one should consider how long you intend to live in that location before you decide to buy a property. If your job is changing in nature and calls for frequent relocation, it is better to stay rented, even though you have money and love for your own home.
I know several NRI wish to invest in second houses either in India or US as an investment. When it comes to India, they check past prices and current prices and quickly decide it is a great investment to buy an apartment in India and venture out without second thoughts. In reality many of them are not ready to be house owners, they thrust this job on their parents or in-laws who does all the running around and take care of day to day maintenance.
Several of them are blindsided when it comes to RE investment. Either they become emotional and fall in love and forget the figures or overestimate the risks and shy away.
Some one invested in apartment might have seen 10-20% price raise and very happy about their investment selection but what they dont know is they might have invested in plots and got 40-50% price appreciating in the same duration, without any maintenance expenses.