pentelaravi
New Member
Hi Friends,
The real estate agents are making money by cheating the common people. They are converting the agricultureal land to residential plots and selling to people by exaggerating it as a future investment.
If we consider the population growth of India, it is constant and slightly decreasing. Only Bihar and UP has considerable population growth and remaining all states doesn’t have as required, consider the statistics if we need to maintain the current population, every couple should have more than 2 children(2.7), but now a day’s we generally see single child else two and rarely three.
When there is no growth in the population, what do people do with the purchased plots at surrounding areas? If you consider the cities expansion, in 10 years the expansion of city is very limited and that too for a luxury homes.
The real estate agents increase the price by five times and sell, the common people’s life is ending up with paying the loans and installments. If they invest that in other (At least government saving schemes), they will get money at the time of need for children education, marriage or retirement.
This is also applicable for buying a home. I will explain it with a simple example.
Assume you have got a job and considering to buy a home for 25Lakhs. Now days, in city limits this is average price for an apartment in decent residential area. If you have 20% of the cost, means you have to take 20Lakhs as home loan. For 20L of home loan, you have to pay 18k for best interest rate of 8.5% per annum.
So you have to pay 43Lakhs at the end of 20 years. After 20 years, we don’t know the price of the home. Generally, the flat rate decreases, even you made a good decision in buying a home in good location, and demand increased in that location, the home price may become 30L.
So you committed to buy a home and ready to pay 18k for month as bank loan.
Ok, consider the below plan.
Rent the above home, you can rent the above home for paying max of 6k-10k per month.You can have 12k-8k per month for savings, invest this amount in secure savings plans like LIC, PF or any other pension plans. If you invest that amount in Govt. saving schemes also, after 20 years you will be getting 40L to 50L in hand, that is useful for doing business, Childs education, marriage and retirement.
When you change the job to other location, you can rent another home in that location. Not need to stick at one location by buying a home.
If you are not able to spend 18k per month by means any cause, you can balance the life by renting small home, decreasing savings, but if you commit to buy a home you lose entire payment done till that time.
If your earnings power increased, change the life by renting big home, increasing the savings in stocks, mutual funds. If you have commitments for mortgage on home, you may miss this.
So when to consider investing in real estate?
One simple rule for deciding is, the return of investment (Rent) should cover at least 70% of the loan. Even if you have full amount to buy a home, consider the other investment options, which may make your money grow more than 4 times in 20 years.
Your comments/Opinions are welcome
Regards,
Ravindra.
The real estate agents are making money by cheating the common people. They are converting the agricultureal land to residential plots and selling to people by exaggerating it as a future investment.
If we consider the population growth of India, it is constant and slightly decreasing. Only Bihar and UP has considerable population growth and remaining all states doesn’t have as required, consider the statistics if we need to maintain the current population, every couple should have more than 2 children(2.7), but now a day’s we generally see single child else two and rarely three.
When there is no growth in the population, what do people do with the purchased plots at surrounding areas? If you consider the cities expansion, in 10 years the expansion of city is very limited and that too for a luxury homes.
The real estate agents increase the price by five times and sell, the common people’s life is ending up with paying the loans and installments. If they invest that in other (At least government saving schemes), they will get money at the time of need for children education, marriage or retirement.
This is also applicable for buying a home. I will explain it with a simple example.
Assume you have got a job and considering to buy a home for 25Lakhs. Now days, in city limits this is average price for an apartment in decent residential area. If you have 20% of the cost, means you have to take 20Lakhs as home loan. For 20L of home loan, you have to pay 18k for best interest rate of 8.5% per annum.
So you have to pay 43Lakhs at the end of 20 years. After 20 years, we don’t know the price of the home. Generally, the flat rate decreases, even you made a good decision in buying a home in good location, and demand increased in that location, the home price may become 30L.
So you committed to buy a home and ready to pay 18k for month as bank loan.
Ok, consider the below plan.
Rent the above home, you can rent the above home for paying max of 6k-10k per month.You can have 12k-8k per month for savings, invest this amount in secure savings plans like LIC, PF or any other pension plans. If you invest that amount in Govt. saving schemes also, after 20 years you will be getting 40L to 50L in hand, that is useful for doing business, Childs education, marriage and retirement.
When you change the job to other location, you can rent another home in that location. Not need to stick at one location by buying a home.
If you are not able to spend 18k per month by means any cause, you can balance the life by renting small home, decreasing savings, but if you commit to buy a home you lose entire payment done till that time.
If your earnings power increased, change the life by renting big home, increasing the savings in stocks, mutual funds. If you have commitments for mortgage on home, you may miss this.
So when to consider investing in real estate?
One simple rule for deciding is, the return of investment (Rent) should cover at least 70% of the loan. Even if you have full amount to buy a home, consider the other investment options, which may make your money grow more than 4 times in 20 years.
Your comments/Opinions are welcome
Regards,
Ravindra.
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