How to make more money in Real Estate

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Renting vs buying real estate property


  • Renting Vs Buying how to decide?

  • Pros and Cons.

Comparison Friday, 26th February 2016

Renting Vs Buying property - How will you decide?

There is a wise saying which says “East or West home is best”. No matter where you are, nothing will ever compare to the feeling of home.

But getting a home of your own can be daunting task. Our cultural mind-sets have taught us that having a property of your own is a must in order to have some security in life.  But what is one to do in the present scenario when property prices are going through the roof especially in metros. The smaller towns too are catching up on this trend of spiralling prices.

Buying property and gold have traditionally been thought to be the safest investment in the long run. But we need to look at this from all perspectives.

Property is all about location, location and location!  So if you are thinking in terms of only return- on- investment then naturally a well located property, whether commercial or residential space,will be meaningful. Even if it is the size of doormat believe me it is worth the investment if you have the means.

 However  if you are thinking purely In terms of living purposes you may  consider getting  much better options in terms of built up area, total land, and quality of  construction, at cheaper rates, at location  a little off from the hottest neighbourhoods.   The value of such a property may not go up at the same rate as ones in more in demand localities but, definitely go up they will. I am yet to hear of any slightly decent property whose price has gone down over time.

This is a primary argument for buying propertyvsa rented one.  The value of your investment is bound to go up over time.  Whereas in a rented scenario whatever you pay as rent will not have any returns in future.

Buying a property is tough financially and it is best to plan early, so that your EMI’s can be spread out over a longer period and therefore the financial burden will be comparatively lesser. And when you are young it makes more sense to spend on EMI’s rather than paying similar amounts on rent.  Even if EMIs are higher than what you would shell out on rent it is definitely worth the effort and it is better to make some sacrifices in the present to secure the future.

If you have access to a chunk of money then of course such a constraint will not be there and then definitely buying something of your own will ensure that the money is well spent.

 But I have also seen people in their middle age who have been unable to afford buying a property for so long, and then even if they suddenly have access to a windfall they desist from buying one especially when they have nobody to pass it on to or their children are well settled in any case.Spending a chunk on property makes no sense at this stage and they prefer to keep the money in a bank and utilize the interest earnedon renting a good place and improving the general quality of life, plus have something to fall back on if there is an emergency.

 Also buying property at a later stage in life means higher EMI’s over shorter period of time. That makes it a harder although if one can manage it then having a secure property is a big relief. But of course it goes without saying that you need to be extremely cautious about frauds as there are numerous instances of people being duped of their hard earned money by unethical  property dealers.

The other very obvious disadvantage of a rented place is the insecurity whether your agreement with the landlord will be renewed.  And of course rents are also going up at pace which is unbelievable. But having said that a rented place is hassle free as far as maintenance, taxes etc. are concerned.

 So in the end it is really your circumstances which will be relevant while making a decision whether renting or buying a property is the better option for you