vidya12

When the best time buy the property

Unless you have enough money to buy a couple of houses, it is safe to assume that like anyone else on the lookout to buying a house, you are also waiting for the right time to purchase a property. Usually, people who have had experience in buying a property will say that the best time to purchase a house is during times when the interest rates are cheap. Others will advise that the best time to buy a home is when the move is suited to your present situation like, prior to the start of school so as to let your children move to a new school. Still, there are some who insist the best time is when there’s a buyer’s market.

However, there are some real estate experts who suggest certain dates of the year considered as the best time to buy a home. One of these dates is right at the start of the spring season. The start of spring signals a number of real estate advertisements swarming various neighborhoods in the United States. As the snow begins to melt across the country, many buyers, sellers and real estate agents pick up steam and engage in a busy marketplace. Spring also signals the increase in the number of real estate offers that make their way in email inboxes and fax machines. It seems that everyone wants to make up for the sluggish activity during the winter season. Everybody is looking to getting a good deal, and sellers are excited to dispose their properties.
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lovebird

As soon as you have surplus money

ks2071746

Dear friend,

Your comment is true in the case of land.
In the case of flat, of course for own use, any time is good time, if you come across a dream flat of your choice in a location best suited for most of your important needs in a locality most preferred, and better to go for a decent size not limiting to a smaller flat area. Small or big, it is your family's palace to live till you are capable enough to go for the second flat, a better one at that point of your life. Nothing like living in one's own flat or house even restricting your over all house expenses to the bare minimum, of course after catering to the basic needs. In my own experience, I went in for a 2 bed 850 sq. ft. flat in Saidapet at a value of Rs. 7.7 lakhs which was a high figure at that time, 15 years back, when my take home salary was less than Rs. 10,000 pm and the EMI was a whopping Rs. 7700 pm for 10 year tenure of loan. I contained my expenses within the Rs. 2300 pm range initially ( self, wife and a son in school ) and I could manage in the subsequent years. The loan got fully paid off 2 years back. About 7 to 8 years since my first loan start, I did go for a large 3 bed flat of about 1300 sq. ft. at Trichy costing about Rs. 13.0 lakh for investment/living and I do manage the EMI of about Rs. 12,000 pm ( 10 years tenure). This flat is being asked for Rs. 30 lakhs now.
My experience is that contrary to advise that one should only limit his EMI to the tune of 50 or 60% of the take home pay, may restrict his choice of size or location of the flat or house. It can depend on the expenses at the time of loan, his future income and expenses including for education etc. and suitably decide. It may even be necessary for the individual to sell some/part of the gold jewellery in the family to pay for the margin money, this may not be a bad idea at all if one decides to go for a good flat or house best suited for him. Friends in this forum may have different opinions and may or may not agree to my way of thinking indicated above.

ks2071746

randy

In this recession there is no any specific date because property rates are going down by down. We have seen that the flat which price was 30 lakh now it is being sold in about 22-24 lakh. Specially, in the NCR residential and commercial property rate is down.

wiseman

ks,

There is good reason for the 40% thumbrule which should be the limit in terms of debt servicing (or paying off EMIs).

You are lucky that, in the last so many years, there was no serious medical emergencies and other expensive costs loaded onto you. Besides, you will also note that your entire wealth would be skewed towards RE which is not as liquid as you would want to be when needed - example, if you had 10 lakhs in FDs and wanted to get 5 lakhs somehow within 2 weeks, it would well-nigh be impossible with RE to do that, while with FDs it would be easy.

Therefore, while we all live in hope that we will live till 100 with no major illnesses or other sudden emergencies, the 60% free cash is for your monthly expenses, saving (which most of us do very poorly) and other emergency reasons.

Another point I'd like to make is that you will notice that a vast majority of us have no real savings to talk about, except that it has been built up thru RE. But that comes back to the point I was making. Most of us in this world do not really save money. We play the high-leverage game thru RE and hope that we can build wealth for the next 7 generations. This gamble is also perpetrated by the Govt which creates sops for this kind of - after all, if you can call Stocks in good companies which make good products selling for a decent profit a gamble, isn't land also that? Since in most cases, only a few areas you park your money in grows and other areas don't grow. Besides there are other issues like litigation, fraud, etc which make land/flats quite a gamble at the best of times. And if you bought land at reasonable prices you will make a good asset over the long term. But there are so many who have bought from 2006 onwards, fo whom property would not even equate to FD kind of returns over the next 10-15 years if you include the interest costs. So, RE is not the bed of roses that its made out to be by the banks, realtors and Govts, besides the lucky few who made it!!!

And I have not even looked at inability to pay thru income loss or job loss in the 20-year loan tenure!!!

All in all, RE is also a minefield in which 99% of us play with highly leveraged (loan is 9 times equity) debt financing. Therefore the message some of us "Bears" are trying to pass on, that RE is only good as an asset builder when bought at reasonable prices and not any price that the builder, banker and broker/speculator would like you buy should be looked at from this angle!!!

These are the reasons we are cautioned by the experts/experienced to not get carried away and keep the debt servicing to manageable levels (40% is just a general level, you can plug any value there so long as you keep a level head on your shoulder when doing so!).

cheers

ks2071746

Dear friend,

I have seen in this forum, wiseman's arguments are difficult/sometimes impossible to disagree.

ks2071746

amit_2009

rightly said wiseman!

Dipti

I do agree with Wiseman about keeping EMIs 40% of your take home salary. But does it mean if you do not have that much income forget about having your home in the city you work/live. As your income/savings will grow even the flat prices will grow. and even the rents are so high, its almost equal to the EMIs for a loan. So I think rather than paying 15,000 per month for rent, paying around 20,000 of EMI is not a bad choice.

amit_2009

especially in the case when the property rates it self is falling.

Suppose a 75L property falls by 40% in 1 year i.e. to 45L
Savings = 30L


And your rent outgo is Rs15000/month X 12 = Rs 1.8L
Expenses = Rs 1.8L


Hence overall savings of Rs 28.2L in one year!!
There is no rush, the economies will take 3 to 5 years to get back on feet... then the employment will pick up with a lag of 1 to 1.5yrs .... then finally the RE will pick up after another lag of 1 to 2yrs. Hence expect the prices to keep on declining for the next 5 to 8yrs

If any expert says otherwise or gives you BS about economy bouncing back by 2010 or 2011.. you should slap him.. shake him.. wake him up to reality.

the same experts were saying that the economy will bounce back by Diwali 2008.... then said that it will be by Dec/Christmas 2008.... then said by end of Qtr 1 , 2009... then end of Qtr 4 2009... and now they say by end of 2011 but the dates keep on extending..

But, if social pride of owning a house is more important.. then go for it.. It all depends on your priorities!

Sansei

Hi Wiseman

What abt salaried people in secure job like Govt job.

Or people with almost nil liability

Wats ur perspective