Should you buy or rent real estate?
Well when you buy, if you use your own money, the answer could be different. Borrowing changes things.
No, I am not getting into the calculations. When you buy a house, you are buying steel, cement, paint, glass, services of a builder, architect…..right?
YOU ARE BORROWING MONEY TO BUY IT. In economic parlance, you are taking MONEY ON RENT and paying rent for using the money.
When you rent a house, you are renting steel, cement, paint…..right?
So you are just deciding on whether to take these commodities on rent or take money on rent.
If you use your own money, you are NOT TAKING ANYTHING on rent. Nothing.
Anyway my views on this topic are well known. I live in an area where I just saw a flat owner sell off his flat for Rs. 1 crore. He was being offered rents of Rs. 8000 per month for the same. Actually he was getting about Rs. 11,000 per month, and he was paying Rs. 3000 per month to the society. So net he was to get 96,000 Rs. on a house with a market value of Rs. 1 crore…so about 1% per annum was the rental yield. He did not get much appreciation too…so read on…
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