Surprised? do not be..what I am going to say is not what the title says. Many people (including the author of the article at the bottom of this post) tell you how you should buy property …and you will make a lot of money..Lets see what they forgot to tell you:

  1. You had a nice job paying well, stable, non transferable, and your wife also had a great job near your house.
  2. all this helped you pay your EMI on time
  3. You did not fall ill during this period and could pay your EMI
  4. Your company did not put pressure on you to do something wrong – which would have made your life difficult
  5. The fall in price of the property was just temporary
  6. Your nice job allowed you NOT TO WORRY about temporary fall in prices of Real estate
  7. Today, in retrospect, you know that the price fall was TEMPORARY.
  8. It was a rising economy, and there was a huge demand for RE in the place that you bought
  9. People bought in places just because their parents said so
  10. If people’s taste changes, demand patterns could change
  11. In the same period Equities gave a far superior return
  12. I needed the house, so I bought it, it appreciated and made me look like a genius
  13. The only asset my father has is a house – and he has no liquidity now
  14. Can go on and on…..


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  1. The only question I keep wondering is .. “How do you get so much time to read all that online articles?” Do you have a team of people who does this for you. Friends may be, they stumble and give food for your blog.

  2. Interesting Comments!

    I read the article.
    The investor projects to make an absolute return of ~66% on the apartment value over 20 years. from $1.525 million to about $2.5 million. I dont even want to calculate the CAGR or IRR after account for mortgage on that.

    If you simply put away $305,000 in S&P500 from 2005 to 2016 you get $690,000 and if you stick with it till 2025 and also account for the mortgage savings, you would end up making much much more then $2.5 million.

    So i dont know where the author gets this idea of real estate is better than S&P500.

    And moreover at Indian inflation plus interest rates, the real returns on such a deal would be horrendous and absolute financial suicide.

    I hope all of you who read this article understand this and come to a similar conclusion!

    So the author

  3. @Subra:
    I am sure that stock market gives better return than RE but a real estate property is required for following reasons:
    1. You can’t keep shifting to another rented house every 11 months.
    2. Rents increase at 10% atleast each year (Salary does not increase at this pace)
    3. Shifting to another rented apartment means, paying brokerage, deposit, bear the cuts from previous deposit amount for stupid reasons given by previous land owner, shifting charges (movers and packers), time investment in finding the right property, mental pressure for all these activities, believe me, going to registrar’s office every year is a lot of pain.
    4. You can’t really buy a sofa of your like because you don’t know whether it would fit well in next apartment. Forget sofa, you can’t even put a nail on the wall without approval of apartment owner
    5. Sense of ownership is never possible
    6. (From experiences of my friends), they are not getting proper marriage proposal because they don’t own a house (although this sounds ridiculous but it is true in some cases)
    7. Usual conditions such as, no partying in house, you shouldn’t invite family members, friends for 31st party and what not.

    In short, I believe, if you can buy a house without compromising a lot on your lifestyle and can pay of the debt in fewer than stipulated timeline (with prepayments), then you should definitely own atleast one RE property.

    Counter comments are welcome.

  4. and to add,
    I have never seen a price fall in property price in a good location. I live in Pimple Saudagar, Pune.
    The RE prices in this location have atleast not dropped in last decade.

  5. @Vijay
    I live in Chennai (for the last 5yrs). Not once I have heard a demand of 10% increase from my landlord(s). We have changed houses in this period. The reason for changing were our own (had water issues in one place, could not park 2 cars in another). Being on rent gave us that flexibility to move according to our needs. We had some waterlogging issues in our area during the Chennai floods so are now considering another move to a better locality. Now imagine, if we owned a house, would we have this flexibility? And regarding moving a house, its just a one time payment to packers and movers of Rs. 3k. They come, pack and move. My current landlord owns 4 flats in our apartment out of which only 2 is occupied for the last 1.5yrs. So, obviously, an annual rent hike is out of the question. And just to let you know, we were the first occupants of the house. So we literally moved into a new house! 😀
    And regarding the “pain” you mentioned of finding a new place, hah, I find that funny. Being a renter, I can go very casual about finding another house. I can afford to make a mistake. Worst case, I may have to move again and lose a few single digit ‘000 in the process. Imagine a search for a house to buy. Can you afford that mistake? 😀 Regarding Sofa, I rent a house which can accommodate my sofa, not the other way around! Regarding marriage, I am married, you see. 😀 No partying? Depends on your definition of a party. But I think your residential association will have its rules regarding that.

    PS: All said and done, I encourage Real Estate buyers. This is more because of a selfish motive that unless many still buy into real estate, people like me cant rent so cheap! (I pay 11k as monthly rent for a 3bhk for which my landlord paid 70 lakhs!) 😛

  6. Same here, has been living in a rented apartment for last 16 years thats what my years of experience in IT. In between moved 4 jobs, 2 each in chennai and Bangalore. In between got married and now have two school going kids.stayed in mostly newly constrcuted houses for many years with 5% hike (and my current house owner hasnt increased rent in last 1.5 years). Staying in a Apartment worth 1Cr+ for a rent of 23K (which incluses 4K maintence) at a pretty good locality at Bangalore. So effectively my house owner gets 19K/month for his 1Cr investment.Another big reason is,it gives me the freedom to delay taking that one BIG decision of making a 1Cr+ purchase (apartment or individual house) when I feel I have enough knowledge to make such a purchase or there is a good deal avaiable. Till then let money grow at equity at 11-12+% CAGR. Probabbly I am only one in my friend circle without an own house.. No regret.

  7. i have seen more landlords worried about house lying vacant than boys and girls worried that they cannot find a land lord. In Navi Mumbai at least it is the landlord who is scared and an informed renter gets a good rate

  8. Reasons I won’t buy / buy later:

    – Majority of net-worth tied up in a single xxx sqft of property. Am considering Early Retirement, and i do not want that option to fly out the window.
    – Can’t handle a debt sword hanging above my head. Risk appetite varies from person-to-person. Not my cup of tea.
    – Area locked. Unless for eg. it is in south-chennai outskirts and i’ll always work in an IT park there.
    – In case of movement, handling property/renting/broker issues long-distance.
    – Quality of home. Complaints about building quality even from reputed builders. If i want to stay at a place that’ll last till i’m at least 60, then better to buy when i’m 40
    – Like Jithu said, let net worth grow enough for availing the smallest loan later.
    – There will be at least one more housing crash in my life-time. Will wait and take advantage of it if needed.
    – Interest rates are falling. Will wait and time a low-interest loan if needed.

  9. @Thomas/Subra: It’s great to hear that you don’t have to bear the pain. My comments might be more suitable to Mumbai/Pune. I have lived in both cities on rent and figures quoted by me do apply there. Also the price rise case in RE apply to Pune atleast. I bought a flat for 53 lacs (in my budget) 3 yrs back. Now flats here cost 70 lacs. I won’t sell my property becoz I did not by it for investment but for residing. I am always in favour of buying one RE property and use it for residing (not to see it appreciating).

  10. I have lived in both Pune and Mumbai for long. Pune is a renter’s market. There is excess supply everywhere. In my 6 year old building, almost 25% flats are vacant. 1 cr worth 3 bhk is available for 20k per month. I don’t see this situation improving with more supply coming in. Most of the people don’t understand IRR/cagr, etc so they are blissfully ignorant. They follow the herd

  11. i have lived on rent 1350 Sq feet, then one fine day something got into my head and i purchased a flat 950 Sq feet for some 30+ lakh and go the possession after 3 long years, stayed in my flat for 2+ years and managed somehow as i have shifter from 1350 to 950.
    before moving to my Home i was paying 20k rent and for my purchased flat i was paying 20K EMI as i took 20 Lakh loan only and heavy maintenance of Rs 3000 and some other expense close to 25K.
    now After living and managing in my own house i sold my flat and moved to rented house.
    MY new Rented House is 1600 Sq feet with lots of green park,trees in my society,peace and for this flat i am paying only 16k rent.
    i am happy to be back on rent.

  12. I read all above comments but still wondering how people are managing to find good flats/ houses in 20k in Metro Cities !
    Here in Delhi/ Gurgaon, a decent 2 BHK does not cost less than 25K (and it is just the starting rentals).
    I good Areas like Saket(Delhi) and other nearby areas in South Delhi the rents are approx. 35K for 2 BHK.

  13. Though every one can and will have different opinion, they cannot be generalized. My experience is as follows.

    I purchased a house in a southern city 20 years back, when I joined my job. I stayed in the house for 16 years before selling it off recently for good returns. 5 years back I purchased another house in a different city (with tough bargaining courtesy my father) where my father and brother stays. Planning to invest CG of the first house and some bank loan to purchase a new house near the place where my father currently stays and if materialises, planning to sell exiting house at a profit. I took a loan on my second house and paid it back in 4 years by taking loan from my father and mother. Thus they can get interest on their savings, better than the bank interest and I get captive loan.

    In my experience, there are many subjective issues, which may not be the case for all.

    Thus I feel that as an investment instrument, RE has its role in a portfolio.(Conditions apply).

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