Does buying a 90 lakh apartment make sense as an investment ?

At 30 years of age should you buy that 90Lakh(1500 sqft) Apartment in a large city ?   Is the question which many of my friends have asked me over the last 2-3 years and each time i wanted to tell them it is a foolish thing to do because …. But held myself back  and advised them to really think if is makes sense  allowing them to commit hara-kiri. Most of my friends tell try to justify this as retirement planning  , i think that’s a convenient justification  . Today after reading the wonderful article on <Children in parents ego trap> i felt that this needs to be examined in several lights (Practically as well as from a Finance point of view)

Buying an apartment at 30 years  thinking that you are making an investment towards retirement planning  is almost akin to buying a car and using it for the rest of your life , the car will simply not last long enough. Let me explain

  • If you decided to buy  a  90 Lakh apartment(1500 sft)  for which you have made down-payment of  30lakhs  and the rest of the 60 lakhs is own loan it would mean that you will pay ₹59k EMI over 20 years . This means that the total cost of apartment would be  Rs 1.4 crores(towards EMI) +1.3 crores (30 lakhs down-payment earning  compounded interest of 8 %). Thus the apartment costs 2.7 crores Rs in practical terms and not 90 lakhs as u imagined . This is the most important aspect which is missed in investment i.e people always say i paid 90 lakhs for my apartment and now it is valued at 1.5 crores  and boost about it to friends.
  • Average Life expectancy of Indian male is now 68 years , since this is the average across people living with access to lower income and healthcare level , it would be safe to assume that you and ur wife would live for 75 years. You may live longer , but hey am quoting statistics here 🙂
  • Average life of a RCC structure is 30-40  years, with enough focus being given on maintenance of the building else  it would be much lower at 20-25 years .  This means that when u are 70 years and still statistically can live for another 5 years your home may not be livable ! or worse you may need to spend money out of your pocket for repairing the home to make it livable. This is the reason why flats are never to be seen as investment opportunity because the value of the building starts to depreciate fast  in fact most bankers start depreciating the value of the building in 10 years !
  • Now come to the value of land (undivided share of the land belonging to you) i.e if the building is demolished and sold how much will your share be worth !  . As the building as such is not worth anything after 15-20 years only thing that is valuable is your share of land.  From my personal experience and discussion with several of my friends who  own apartment i understood that a 1500 sq ft apartment  would mean  that you get an undivided share of 600 to 800 sft (depending on project having open amenities like garden , swimming etc) . So the valuable portion of what you have invested in an apartment is only 800 sft (higher side), which means that when you are investing  Rs 2.7 crores towards the 800 sqft of land this translates to Rs 33,000 /sqft in real terms.  Now what is expectation of the land prices after 20 years ?  Will it be more than Rs 33000/sqft  if so by how much more ?  i will leave the judgement to you … If Mumbai was a benchmark i think it is possible that in a city like Bangalore we may have a rate of 33000 Rs  in a normal locality of Bangalore after 20 years . So it really is not an investment as there is no returns or returns if at all would be very low !!!
  • Also when we consider the practical issue of flats aging and needing to be demolished . Imagine what would be the situation then ? You need to get all the owners together to agree to demolish the building before you can sell the land to another developer . Each owner would have his /her own dynamics so getting all of them to agree to a common terms will be a big challenge. I know this has been done in Mumbai where apartments over 50 years have been demolished and the land sold to new developers , but imagine the hassle of doing this when u are old !

So what is the practical way out, should one not invest in an apartment at all ?   I think it would be simpler to do the following

  • Stay in a rented home  during most of your working life (say till u are 55) => Lets calculate  what this means . Lets us assume you  would spend 15k to rent a apartment of your choice(similar apartment to what you can buy) . Assuming rental inflation of  5% each year you would end-up spending 85lakhs over 25 years. This way you always get to njoy the best maintained properties without the hassles of owning it !!! , but you dont own any asset ..:( . Yes that is a downside but upside is that you have only spent 85 Lakhs as against 2.7 crores , so you still have 1.9 crores in net savings as opposed to a home purchase !.
  • Now when it time to retire i think of 2 real options => Move to another city (tier-2 or tier-3) . Remember that 25 years down the line most cities will have all infrastructure that we will take from granted in a major metro cities , so moving to tie-3 town does not mean you are compromising on any thing at all in terms of life style , but yes properties there will be much more lower prices than the major cities. So buy an apartment with your corpus of 1.9 crores …
  • Second option would be to continue to stay in rented home , but of lesser requirements i.e move into a 1 bhk instead of 3 bhk now . Anyways kids will not be around then 🙂

I am sure these options may be sounding outlandish and too idealistic , but what am trying to highlight is that your 90 lakh apartment is not an investment !!! At best it is a way of saving money up for long term. The same objective can be achieved by putting money into stocks, fixed deposits over a long time. To give you the prespective , it is believed that over long term 20-25 years equities offer 10 -15 % returns thus instead of investing into an apartment you can save up a bigger corpus from the same money spent towards EMI. I can understand the emotional angle to own a house is also there but my point is that we should never mix up the emotional parts and the financial parts.  Purely from financial point of view i think buying an expensive apartment  (90 lakhs +) is akin to buying a lottery and hoping that you make much more than what you have paid for !…

To discuss more you are always welcom to write me @ …


Avinash MB



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Comments (61)

  1. Rakshith wrote::

    Good article. Forwarding it to my mom to read it.

    Monday, May 13, 2013 at 6:42 pm #
  2. Bharat wrote::

    So if at all I need to satisfy the emotional side of me and purchase a flat say in a tier 2 city which is developing now, would it be ideal to buy for 30lacks (12 downpayment and 18 loan). The value has increased 1.5 times in last 1.5 years and the construction is yet to be completed.

    Tuesday, May 14, 2013 at 3:51 am #
  3. Ganesh wrote::

    1. The EMI comes to 50.2k(compounded monthly) or 50.9k(compounded annually) at 8% over 20 years.
    2. You cannot just add the EMI’s at different times as the economic conditions are different. (Different salary, inflation, etc.)
    3.The present cost of the apartment is still 90 lakhs.
    4.The present cost of rent of 15k at 5% rental inflation (which I think is less and should be close to the compounded interest) and interest of 8% is 15000*12/0.03 = 60 lakhs.
    5.Now you say I get 33k per sqft after 20 years.
    The difference between the present costs of an apartment and those of rent is 30 lakhs.
    This 30 lakhs becomes 1.4 crores (compounded annually) or 1.48 crores (compounded monthly) at the end of 20 years. This is the amount you will be able to save if you had not invested in an apartment.
    6.Now if I have invested in an apartment, I’ll be able to sell my apartment land at 2.7 crores (at 33k per sqft) or a little less.
    But my returns are way more than the 1.48 crores that you saved by being on rent!
    This translates to 58 lakhs (compounded annually) or 55 lakhs (compounded monthly) today instead of the 30 lakhs you save by not investing in an apartment.

    So this essentially means that investing in a 90 lakh apartment does make sense (at the rates you have mentioned, at least).


    Tuesday, May 14, 2013 at 4:32 am #
  4. Mayank wrote::

    15K per month + rental inflation of 5% per year will amount to 85lakhs over 25 years. Why compounding is not considered here?

    Tuesday, May 14, 2013 at 5:02 am #
  5. name wrote::

    this article makes no sense at all. the flip sides of staying in a rented apartment all you life are not mentioned. is it soooooo easy to stay in another person’s apartment??? u cant really renovate much if one wants to. there is a risk of being thrown out anytime…
    very bad article!

    Tuesday, May 14, 2013 at 5:14 am #
  6. AM wrote::

    Good Read, However I have seen the value of the apartment value still going up, The apartment that I rented out some time back was purchased by my owner for 14 lakhs was sold for 34 lakhs after 8 years, thus the logic of value of the property depreciating is little tricky. I feel the value will still go up and even if the same goes up by only as little as 8% per years at year 20 the value will be 3.8 Cr which is still decent.
    Also an apartment in the 90L range today can give you a min rent of 25K, and will fetch you a monthly rent of 1L after 20 Yrs keeping in mind that rent will go up by approx. 8% Year on Year.
    Overall I think its not such a bad deal. What say ??

    Tuesday, May 14, 2013 at 7:17 am #
  7. Sachin Rodge wrote::

    Nice article.. I agree to most of your points and believe that house is more emotional than economical decision. You have missed an important point. We get HRA benefits so the effective interest is not as high as you have calculated

    Tuesday, May 14, 2013 at 7:21 am #
  8. Karan Batra wrote::


    It’s good to note that you’ve shown your analysis with computations and figures…

    I appreciate your viewpoints and would also like to share with you the fact that the average life of any building is minimum 50 years…

    Moreover, i agree tht the Rs 90 lakhs apartment ultimtely costs Rs 2.7 crore… But think of the value after 20 years…

    If you see the rate at which property has grown in the past 20 years, assuming the same rate of growth it wld be worth minimum Rs 10 Crore… 10 crores is still a conservative figure, may be more than that as well…

    Tuesday, May 14, 2013 at 8:07 am #
  9. vadakkus wrote::

    My thoughts exactly! many people I know buy up apartments for “investment”, to sell them off after 4 years at double the price. Another thing that people do not take into account is inflation. If you sell your flat at double the money after 4 years, you will notice that prices of everything else will have doubled too. So you will be left with nothing much extra in value. It does not make sense toiling one’s entire life to pay off a home loan to make someone else rich!

    Living in a rented apartment makes lots of sense financially and also gives peace of mind. Broken pipes/tiles etc., owner will fix it. Free of cost! And nobody can just “throw” anyone out just one fine morning. And there are almost infinite number of floor patterns, localities and structures to choose from if you decide to rent. Also, you never get tied down to one place. If an opportunity arises elsewhere, you just pack up and leave! This “living in one’s own house” is just misplaced vanity. The house does not belong to you, it belongs to the bank. And they really can throw you out anytime they want!

    Tuesday, May 14, 2013 at 10:04 am #
  10. Ravi wrote::

    The rent part is a bullshit argument –
    1. You will never get a apartment that worth 90L at a monthly rent of 15K. At present time, I think the rent would cost you a minimum of Rs. 25-30K.
    2. more over a 5% annual hike in rent is minimum that is mentioned in the agreement. Actually the hike can be 10-15% or more.
    It means, a rented apartment with a rent of 25K, 10% annual hike will cost around 3cr in 25 yrs….

    Tuesday, May 14, 2013 at 10:05 am #
  11. PD wrote::

    That’s called the difference between myth & reality. Myth is always ideal(which you wanted to show here, even you made some serious calculation mistake which were point out by the readers in their comments), but reality is real.

    Tuesday, May 14, 2013 at 10:49 am #
  12. AG wrote::

    Another aspect that needs to be factored in the decision making process :

    Tax benefit on interest and principal repayment of home loan which is substantial especially for people in higher tax brackets

    Tuesday, May 14, 2013 at 9:57 pm #
  13. Vaibhav wrote::

    Why have you not considered tax brackets. Also the ratio of rental Vs apartment cost is not good. If you want to rent an Apartment with the cost of 90 Lac the rental is no where less than 30K per month esp in Bangalore.

    Wednesday, May 15, 2013 at 5:19 am #
  14. Adithi wrote::

    Dude, there are a lot of aspects to consider when you are doing this. As said, IT exemptions, Pre-closure, ability to resell the house off in a few years etc etc….and further the most important – for what reason a person is buying a house…

    Wednesday, May 15, 2013 at 6:43 am #
  15. gURU wrote::

    All those arguing for buying the apartment at 90Lakhs does forget one point. Will the City be suitable for living when you reach ur retirement age. WIth the level of pollution increasing and the life style we have, we may not live to see our retirement too. So why invest and waste money and get tied up with a small budget left after spending on the EMI for the rest of your life??? Better Enjoy life to the fullest. After all you have only one life and let it not be wasted!!!

    Wednesday, May 15, 2013 at 5:31 pm #
  16. Prabhu wrote::

    The value of the apartment appreciating to 10 Crores and all is ridiculous. My salary was a meagre 10,000 10 years ago and I earn 1 Lakh now, but 10 years ago it was as good as it is now!!! People are missing the inflation factor. Just don’t go blindly with the amount of money you make, because its not its actual worth!!!

    Wednesday, May 15, 2013 at 5:37 pm #
  17. Vimal wrote::

    Having a house is always an assets.

    If you are talking about Mumbai,then go and check yourself what is the rent in Mumbai?

    Thursday, May 16, 2013 at 5:08 am #
  18. Anshul wrote::

    Rent calculation done by the writer of artical is totally wrong. It seems he is a young blood with no clear vision and experiance.

    Following should be considered.

    1. Rent is increased by land lord at a rate of 10% every year. You have considered this as only 5%.

    2. When you change your reneted house you have to money on brokerage, rent agreement, reloaction (movers and packer). In general broker take 1 month rent as brokerage.
    3. You spend some cost on maintainance of rented house too. For example every time you change your house, you have get your tatasky, RO, AC… and lots more.

    I did a calcualtion considering following point:
    Starting rent of average 2/3 BHK is 18000/- per month in a city where you mentioned the flat cost as 90 Lakhs.

    I am taking 10% increase in rent every year as this real figure what landlord is asking. I can understand after few year the magnitude of 10% will be a big amount. But be sure this increase in rent rate will not come down below 10%.This means in 2020, i will be paying double rent amount that of 2013. In 2013 i am paying 18K and in 2020 i will be paing 36K.

    In my calculation, I have also consider brokerage, movers and packers, deduction in security amount given back by previous landlord and other thing which every person living on rent can imagine. In general we live in rented house of 2 to 3 years. Landlord dont want you to stay more than that.

    So to get the annual rent cost, i will multiply monthly rent with 13 instead of 12. This will cover all broverage, movers and packers,deduction in security amount by previous landlord, installation cost and processing fee for your home product like tatasky, AC,RO, Fans, Internat etc.

    I know we will stay in same house for 2-3 year but i have averaged out cost coming from above all factors and hence i have taken 13 months in a year instead of 12 months. Hope every one understand my point.

    So starting 18K rent with 10% inflation and 13 months in a year, Total rent paid in 25 year is coming to Rs. 23013212/- which is 2.3 carore.

    Finally atfer 25 year, you end up paying 2.3 Carore as rent with no asset of your own.

    I am pasing result of my excel calcution, hope this come correctly foformated on this site.

    Year Monthly Rent Annual Rent
    2013 18000 234000
    2014 19800 257400
    2015 21780 283140
    2016 23958 311454
    2017 26354 342602
    2018 28989 376857
    2019 31888 414544
    2020 35077 456001
    2021 38585 501605
    2022 42444 551772
    2023 46688 606944
    2024 51357 667641
    2025 56493 734409
    2026 62142 807846
    2027 68356 888628
    2028 75192 977496
    2029 82711 1075243
    2030 90982 1182766
    2031 100080 1301040
    2032 110088 1431144
    2033 121097 1574261
    2034 133207 1731691
    2035 146528 1904864
    2036 161181 2095353
    2037 177299 2304887

    Total rent paid 25 year = Rs.23013588/ (2.3 CR)

    Thursday, May 16, 2013 at 6:12 am #
  19. Anshul wrote::

    And over and above most difficult thing is to find a 2/3 BHK in 18000/- metro. I am taking 18 K as minimum cost. I am paing 18000 K in delhi for “2+ study” and I am sure a new tanent searching for similar house will het in 20K+.

    You have spend your weekends (see i not writen weekend, it is weekends) or to take leave from office to find your “RENTED DREAM HOME” and to relocate.

    I cannot understand you writer of artical thinks that living on rent is better than owning your house.

    One more thing.. A rented house will always be a HOUSE, but a owned house you can make it HOME.

    So decide you need a “HOUSE” or “HOME”.

    Thursday, May 16, 2013 at 6:31 am #
  20. Anshul wrote::

    Only suggestion from my side to all buyer of appartment is to “dont spent more than 50% of your family income (Your+wife) on EMI”. Remember your wife have may have to leave her job for universally known reasons. SO go for EMI which will pay now as well as does not become problem in future.

    Thursday, May 16, 2013 at 6:35 am #
  21. Sachin wrote::

    Get rich so that this research is not required..

    Thursday, May 16, 2013 at 10:11 am #
  22. I feel really bad when i see old parents 60+ living alone in a grand apartment(3 BHK 90 lac :))and fighting with the fast pace life of metros , because their children are not with them …. son is abroad, daughter is married abroad…. it is better to invest money in some 2-3 tire cities where you can live with peace without spending much …better to have land and your own house. everlasting value and no depreciation at all,complete independence and flexibility.

    Thursday, May 16, 2013 at 10:26 am #
  23. wrote::

    Anshul is correct in rent calculation….
    which article writer missed

    Thursday, May 16, 2013 at 11:40 am #
  24. vv wrote::

    Good thinking. But some of the parameters are not calculated properly.

    For example, rent of a 90 lakh property is much more than 15k. It should be atleast 25k to 30K. I think you want to compare apple to apple.

    Thursday, May 23, 2013 at 4:53 am #
  25. Carefree wrote::

    Anshul though i appreciate your knowledge of maths , i seriously suggest you a course in economics as you intend to suggest that rent will become 1.7 lakh in 2037.

    Friday, June 7, 2013 at 4:44 pm #
  26. Aseem wrote::

    Nice post Avinash…definitely a value-add…I appreciate Anshul’s perspective on the rent agreement, but think the sarcasm was undeserving

    Friday, June 7, 2013 at 8:17 pm #
  27. Aseem wrote::

    To Avinash’s analysis, I would like to add that one needs to add an implicit “ownership”/”security”/”freedom to do what one likes with the property” premium which I think is and should be priced into an owned property

    Friday, June 7, 2013 at 8:23 pm #
  28. Vikram wrote::

    Hi Avinash,
    Decent effort mate!!You got the so called old aged, mature and financial big shots like Anshul thinking.
    And you pushed them to the point where they even got personal with terms like young blood and all. Cheers to that.

    Wednesday, June 19, 2013 at 12:48 pm #
  29. Bins wrote::

    This kind of thinking I was carrying from 2008 onwards and I didn’t buy anything till 2013. Now I have bought an apartment at 45L including registration.30L is loan and 28k is emi.interest part will come 3Lper year. Even if I am selling it after 50 L after one year, I am at profit. Because if I didn’t buy this I would have beenn ending with paying rent of 13-15k which cost arround 2 L.If we consider rent as a loss, 45+3=48L-2l=46L+INETREST ON DOWN PAYMENT ( 15L)1.5L = 47.5L will give me profit

    Tuesday, July 23, 2013 at 2:14 pm #
  30. Tarun Nangia wrote::

    Excellent write up. Justifies why it does not make sense to buy apartments which are prices more than their obvious utility.

    Saturday, August 17, 2013 at 2:37 pm #
  31. rajani wrote::

    If your apt appreciates in value in just a few years you can easily sell it. Just because you bought one doesn’t mean you have to keep it till you retire. India is one of the top countries in which real estate values have soared and still keep increasing. Of course the city, locality, amenities etc. come into play when we talk about real estate.

    Also, a rent of 15K is very less for an apt costing 90L.

    There are disadvantages of buying an apartment but not exact due to the reasons you have mentioned. If you buy and rent it out the headaches with the tenants etc. are bigger issues than purely the cost.

    Another important point to consider is what if you pay the 90L (or at least close) you have saved up towards the apartment and not take a loan then the logic you are talking about does not apply at all.

    Wednesday, August 21, 2013 at 9:27 am #
  32. Prashant wrote::

    Here is a nice buy/rent calculator. Though it is in dollar, but just pretend the values are in rupee and do your own math.

    Tuesday, August 27, 2013 at 3:50 am #
  33. Senthil wrote::

    Rent calculation misses an important point(loss of interest earning if invested). Rs.15000/- rent with 5% rental inflation and 8% interest loss totals to rs.1.3crore. Also the interest loss for the initial deposit amount(10months advance) amounts to 7L.

    Thursday, August 29, 2013 at 11:43 am #
  34. Vikas wrote::

    I support staying in a rented house till an age and once you feel like retiring move out to smaller city, may be a village too. By that time all amenities will be available everywhere. Many of you calculating the interest and other things, remember its rented place, if the rent is increasing, just shift to a new place, don’t stick your ass to one rented place. Shifting to a new place doesnt cost much with so many movers and packers competing with each other. Most of all is the PEACE OF MIND. No property tax, no monthly commitments, no fixing the tile and tap. However, during this time till you buy a property ensure that you invest your earnings properly to grow your investments. End of the worklife, make a nice bungalow in a nice place and enjoy the rest of the days with family.

    Friday, October 18, 2013 at 8:02 am #
  35. shivanand wrote::

    Staying in Rent gives more freedome, in terms you can shift whenver you want, if job get changes to distant location or some other reason. Moreover apartment value after 6, 7 years remains stagnant. If you are building own independent house, then it will appreciate, otherwise as time goes apartments will loose its value

    Thursday, March 20, 2014 at 8:22 am #
  36. Oh Boy!!! There are people out there who resembles my thinking. I definitely agree with this article.

    Nice Analysis man.

    Friday, April 4, 2014 at 7:17 am #
  37. sunil wrote::

    Actually wat happens after studies after the age of 28 we have to marry and afterwards wen our future children would raise the questions dat why we are leaving in rent

    Thursday, July 3, 2014 at 7:35 pm #
  38. House for every citizen by 2020 – Dont expect / dream getting rent your property in future .

    Sunday, July 27, 2014 at 3:08 am #
  39. nagaraj wrote::

    Let us think logically. Are you implying that the landlords are not including the cost of maintenance, taxes, and profit while deciding what rent to charge you? Why will any one invest money at a loss? So, if you rent, implicitly you pay for all the costs involved plus profit of the landlord. When you buy it, you save at least the profit part of the rent.

    Saturday, August 30, 2014 at 1:28 pm #
  40. bambebo wrote::

    Very interesting article. I do think that the rent would be a bit more for a apartment that costs 90l. Still the most important thing about renting is that you are not living in debt for the rest of your life. If you invest the difference between the mortgage and the rent in a mutual funds or in your own portfolio of stocks than you should have enough capital to buy 2 such houses in 20 years time without any loans. Remember that the real estate bubble in india will burst and we should see real estate prices fall under the reasonable category. It has already started bulging at the seams.

    Sunday, August 31, 2014 at 2:45 pm #
  41. Abhishek wrote::

    The title and the article don’t really match.
    Would I buy an apartment that costly for living- Probably yes.
    Would I buy a “second” apartment as “investment” if I already have one- Hell no!!!
    Many of the comments give examples where a property worth 30-40 lakh appreciated and they got a profit selling it. Agreed. Prices in that band are increasing. However, do realize that the cost of a 90 lakh apartment will not rise by the same percentage, because there are not many buyers in that band.
    Also, the prices of homes (and rents) will not continue to rise by the same percentage for 20 years. Eventually (maybe in 10 years), the rise will slow down, once the prices reach a certain price point where the salaries of people don’t permit any higher rents and the demand for very high rent apartments achieves a plateau.

    Wednesday, September 3, 2014 at 5:48 am #
  42. bhargav wrote::

    you should never add up the total outflows to arrive at the net investment. For instance, you should not consider the 2.7 crore as total cash outflow. This should be discounted to present value and should be compared to the PV of the rental outflows considering you stay in a rented house. That said, I totally agree with your point that equities give more return than real estate over a long term.. Further, the real estate may not see the same rate of growth in the long term (atleast in tier 1 cities) once they become too un-affordable to the middle class people

    Tuesday, November 25, 2014 at 1:07 pm #
  43. ss wrote::

    Why not buy a land and a apt?
    Land for retirement and apt for worklife?

    Thursday, December 4, 2014 at 8:52 am #
  44. hello.raj1986@gmail. wrote::

    This i call a jobby mindset…buy a emi…n thn wait for it to appreciate in value, why cant we think big here , why cant we simply aim to earn more, why cant we dream to hv a bunglow of our own…in a place where we like.Its not beacause we dont hv money its because we have stopped dreaming, we are leaving paycheck to paycheck.n if u dont dream u cant hv vision, if u cant hv vision there is no internal compelling reason for u to do something extra rather than leaving on paycheck to paycheck,Guys common this is one life we got we deserve bettr thn jst a 3 bhk apt for which also ee hv to work our ass off n then still hv to worry if our job goes how will i pay the rent..we deserve better than this but for that u first hv to hv vision which will come only come ehen u strt dreaming again…ur vision will guide u to bigger things in life..

    Friday, January 9, 2015 at 3:41 am #
  45. v.u.seshu kumar wrote::

    I am very happy by reading this article actually i opened my mind by reading your suggestion definitely i will follow this suggestion
    thanking you sir

    Monday, February 2, 2015 at 9:03 am #
  46. Rahul wrote::

    Well the analysis seems stupid to me.

    I agree that buying a piece of land is way much better investment than buying an apartment, but buying an apartment is better than staying in rented flat.

    Biggest downside of staying in rented flat is that you lack freedom, their is insecurity of have to leave the current place of stay, every time you change your place of stay you have to give fat deposit amount and moving your stuff is a hassle.

    yes you pay more in EMI, well usually the double of what you own, but then I guess its better to pay your loan early and even if you dont pay, the amount you pay as interest is tax-free.

    Idea is don’t carry the EMI to full term, try to fulfill your loan as early as possible, so if you take a loan for 20 years, if you can pay it in 10 years you will save lots of money.

    The price of apartment doesn’t rise with much speed, also I believe one should try to sell apartment in a span of 10-20 years of when it was built. after that the return value would be much less due to wear and tear.

    but hey I am not an expert.

    Wednesday, February 18, 2015 at 8:37 pm #
  47. baburaja wrote::

    this is one of the finest article i have read. people saying buying apartment is a bet won situation dont understand what they will do if they transferred to any diffrent location or lose job. i have seen many cases where flat owner was selling his flat 30% below the market rate………. yes invest in tier 3 city buy a small plot of 1000 sq feet and build it later. rates of land will also rise in this cass ….when u buy apartmwnt only builders and bank mafia get profit. i have seen mamy apartment which are 20- 30 years old and no buying them as they are cracked leaked torned . so rent in metro and buy land in tier 2-3 city and remain confident

    Saturday, June 20, 2015 at 3:20 pm #
  48. Nag wrote::

    My salary was ₹9000 per month in 2002,and flat cost was around 15lakh. Right now ₹ 1,15,000/- per month .the cost is around 60.00.000/- now ₹ 15L doen’t matter as compared 60L. The rate of inflation is driving the real estate prices .in addition to that the following reasons will boost up the prices.1) the material cost,labour cost,transportation cost,increasing very high. 2) The purchasing capacity of general puplic increases .the land size not increases and remains the same . More demand in good localities and boost up prices. 3) Black möney is floating in real estate sector to convert white . usually demand increases. The compound interest rate @8% for capital amount is very less as compared to asset cost and rent after 20 years for 90L. Remind that we are in india not in america.the appreciation of $ is good but ₹ is weak . Your theory is good for americans but not for indians.” DON’T STAND AGANIST THE FLOW OF INFLATION”. My perception is to buy an apartment or house in prime location is very good. Again saying that “Dont stand aganist the flow of inflation ,..” inflation is more powerful than the psunami and ₹weight is not withstand. ₹ convert in to immovable assets. It is my view only.

    Saturday, May 9, 2015 at 2:23 pm #
  49. Venkatesh wrote::

    Everyone is justified in their own sense. At the end of the day, it boils down to one thing: What do you think the value of an apartment is and whether it is overpriced or under priced.

    Value of an apartment is a subjective term and individual to each one’s personality. For me, some of the features which I consider while valuating an apartment are : Greenery, maximum ventilation, Municipal Water Supply, Viable public transport at all points of time, Spacious roads, Options to shop eat and visit, School/Hospital facilities and Distance from office (more or less..I have mentioned the features in my order of my priority). For others, some of the above said features might not even make sense or the order of priority might be different.

    If I take my example, I stay in Bangalore. The apartments which are closer to my office (Bellandur, Sarjapur) are comparatively higher priced to the area where I stay (Banashankari 3 stage..believe me it’s a very peaceful area). So, for me these apartments are overpriced because they don’t ‘deserve’ the price as they are not able to satisfy majority of my requirements. But for others, staying closer to office might be the main criteria and other things like water supply (Sarjapur doesn’t have municipal water line yet but who cares..”we have tankers. Just that we have to hold ‘all’ the stuff till the tanker comes” or “We pay 2K extra per month as both of us are earning.”), Greenery and ventilation (“Come on. We stay in office for 13 hrs. We need home only to go and sleep”), Viable public transport (“Chi. I can never take public transport. I travel by my own car”), Spacious and peaceful roads (“Anyway, my parents stay most of the time within our house. If they want to walk, they can do multiple rounds of walking within our apartment complex”), Places to eat shop and look around (“We have Total Mall, Central Mall, Complete Mall, Perimeter Mall. We don’t get bored going to the same place every week and we enjoy the long queues as there are no other options for people of our locality”).

    The above statements are not sarcasms but the statements of my colleagues (of course, I spiced them up). So, in their perspective they are correct. In my perspective, I am happy staying in my rental house (paying 14.5 incl mtce) which fulfills majority of my requirements (‘Distance from Work place’ is what I am sacrificing to get all other features but anyway, I sleep in my office cab and hence somewhat utilizing the travel time as well). At the end of the day, it’s demand and supply which decide the price. My personal view is that this is a housing bubble (considering lack of basic infrastructure in such type of localities in majority of the cities). Also, as majority of the people have herd mentality, the prices are going up. Another factor which we have to consider is that this home buying population is ‘floating’ and ‘virtual’ as well. If you do ground research, ‘virtual’ buyers are NRIs who invest their excess in Realty and are not so concerned about the ‘livability’ of such place. ‘Floating’ buyers are the ones who are constantly ‘onsite’ for years together to pay their EMIs and better opportunities. Because of this, majority of the houses are vacant. So, this is a weird scenario where the demand to buy a house is higher but the houses are hollow (may be that’s why they call it bubble). Basic economics will tell that rental income will be on downside in future as this trend shall only increase. Higher earning people buying houses for giving rent to freshers/less earning people. As I see many people start looking out for house right from the moment they start working, I feel this as a good sign for me. They are increasing the supply of houses so that I get the demanding rights for lesser rent. One more point, with so many newly earning people tending to buy houses, the prices are bound to be stable and it will be easier for me to buy house when I will be around 40 because I will be competing with 26-30 year olds in the market and I shall be in a position to get a comparatively better house the market has to offer. Till then, I shall pick and choose the houses which suit the constantly changing ecosystem of mine (changing jobs, kids education requirements, Spouse’s job etc) rather than stick to one place.

    Note: My analysis is only for Bangalore. Other cities might have different scenario because of different demographics.

    Tuesday, May 26, 2015 at 6:15 am #
  50. mohmedaakib wrote::

    1 house is enough for a living.if 30 years old have it then he can invest such amount else and if he don’t then he must buy home as this is the basic need.KISS

    Sunday, June 7, 2015 at 11:06 am #
  51. sunil wrote::

    Well,Many people forgot an important point.While the EMI you pay is constant through out 20 years,The rent you save increases by 10% year.For example as per the author of article you will pay 2.7cr for an apartment which costs actually 90lakhs.Fine,But the rent you would save after 12 years of buying the flat will be more than your EMI and the gap between rent saved and EMI will increase every year.So buying flat if you can pay the EMI in a good location is always advisable.

    Monday, June 15, 2015 at 12:13 pm #
  52. Shiva wrote::

    Well! I too had the same opinion in years 2005, 2010 and 2015My opinion has not changed over the yearsbut value of the property did 1000%.

    Tuesday, July 7, 2015 at 11:52 pm #
  53. Namita wrote::

    For a lay man both Renting and buying an apartment and paying EMI is a pain in the neck. The only advantage in the later is tax benefit and you dont become a real owner of your house and cant even actually lay your hands on your property papers till you repay your debt including processing fee plus interest accrued. Thinking from a lay man’s point of view I have a better option. Rent a smaller and economical apartment . Save and invest later at retirement age in a senior citizens housing scheme. Its already popular now a day with ample of amenities and choices.

    Monday, July 13, 2015 at 5:31 pm #
  54. Venky wrote::

    I don’t understand why people don’t understand that we as a human are not going to last forever. Time which is gone will never back. We save and die and leave properties for children to fight for. Just for owning a house people die a life of miser. One should also spent on his/her life whether its buying a car or buying good clothes or going on outings. live ur life or end calculating what u had spent or what u have saved.

    Monday, July 27, 2015 at 10:52 am #
  55. brahma wrote::

    My practical experience,

    if apartment age 5-6yrs old, then don’t expect in rent appreciation.

    defiantly tenant compare with old apartment rent and new apartment rent.

    I done with that i choose new apartment for rent.

    In Babgalore production is more than consumers.

    Most of the new apartment are simply “Ready to Move” only.

    Tuesday, December 1, 2015 at 11:27 am #
  56. Your apartment building may not last more than 25 year. After your children will have shell their lifetime earning to redevelopment.
    The present day partment building have FSI fully utilized so no chance of free redevelopment.

    The quality of structural work is not that good to last 100 year as it is supporsses

    Saturday, December 12, 2015 at 9:44 am #
  57. Raghav wrote::

    My wife told me to read the article I always read the comments first and then the article, sometimes the reverse engineering makes more sense. Owning a house is a must because its the only thing in this world possibly after gold which does not depreciate.

    Tuesday, February 23, 2016 at 2:49 pm #
  58. Raghu wrote::

    Yes,A common preson dream in his or her life is to be a owner of the house.

    Thursday, June 23, 2016 at 10:29 am #
  59. Vamsee wrote::

    If you are willing to sell out 90L for the flat and you are comparing it to staying in rented home with a rent of 15000. Just be logical!! 90L 3bhk flats have rentals of over 20K and atleast 25K here in Bangalore. So your argument doesnt hold good here. If you need to compare a flat for 15K rental, purchase a 60 to 70L flat and not 90L.

    Monday, June 27, 2016 at 4:43 am #
  60. The Bottom line is we Indians often copy America
    The biggest problem in India is the inflation
    This rising real estate will stop at some point
    The target is NRIS, but soon they will learn buying property in india is not a wise decision. Stop making builders rich. Rent & invest money or SBI FD , focus in simplicity

    Saturday, August 20, 2016 at 12:39 am #
  61. Jaspal Singh wrote::

    Down payment value also increase…after 5 to 6 year sale that apartment. 2. as long term investment property value av. give 25 to 30 % return home loan 8 % go and get that property..salary increase 5 to 20% per year after 10 year emi not pain u..

    Monday, November 14, 2016 at 7:46 pm #

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