Request to the to-be buyers & consumers - its festival time again for the next 3 months and builders/developers are hoping to clear their inventories at HIGH PRICES - this means the price will remain high for the next year to come - as even if they sell 25% in a project - they recover their costs....

So, my humble advice - to all - PLEASE DONT get sucked in by :

1. New offers such as agreement,car,parking FREE etc
2. New launches and pre-EMI by builers etc
3. Some Festive discount valid for first 20 buyers and for 15 days etc

All of these - AND similar are marketting GIMMICKS - if the BUYERS stay put now - for the next 3 months - they might get the SAME property at 10-20% less than whats available now ...

So, PLEASE DONT GET SUCKED IN --- AND GO AHEAD AND RENT !
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  • Originally Posted by realacres
    Well, I think on following lines:-

    If the price seems good to you & you can buy without compromising your current lifestyle & savings, go ahead & buy:). Issue kicks in when people buy with loan for 20-25 yrs, with 85-90% loan without considering expenses post marriage, kids, retirement incomes, holidays etc:o. While buying a house, one needs to think bare minimum for 10 yrs.

    My take:-

    >> Loan should not be more than 40% of the property value (60% is bare min for downpayment),

    >> Home loan EMIs should not be more than 30%, max 35% of your take home income based on 12-13% interest rates to be on safer side, no teaser rates here,

    >> Loan duration should be max to max 10 yrs.

    If these conditions are met, go ahead & buy irrespective of time. I am of the opinion that if one can but a Merc, one should buy one rather than buying a Laura & investing balance amount. If you can do something with ease, go ahead...if you want to buy a go_ld jewelry, buy one without thinking what the price of go_ld would be tomorrow. Not everything can be seen from the point of loss & profit.....there are some PLEASURES in life which can't be calculated based on money ;).

    Enjoy life, without over-leveraging.....as simple as that .


    I agree that overleveraging should always be avoided, but the 3 conditions mentioned by you are too tight. It's almost impossible for a salaried person to buy a home for his needs (not for investment) with these conditions.

    In my opinion conditions can be updated as

    1. around 30% down payment
    2. around 35% EMI of monthly take home
    3. max 15 yrs tenure

    This seems to be more realistic.
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  • Originally Posted by realacres
    I have something in my mind, but I won't disclose it right now coz the builders will not use these tricks in festive offers. So, waiting for builders to put their ads/offers first & then I will comment .

    ha ha ha ha...you are toooo smart...
    I can't guess what you will come up with :) keep it up man..!!!
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  • Originally Posted by pcpune
    Mahesh,

    :), ofcourse, its your money, you have pledged your future salary & income on the house, and have paid 10-20% + the interest over the initial years -- the bank has it mortgaged. In economics, its a simply - a liabiaility which you have levereged.

    Tommorrow, say if the property value goes down by 10%, will the bank/builder - reduce the interest or the price - ofcourse not !

    Infact, if you fail to pay your EMIs after 5 years, the bank will keep all your paid EMIs+ intial 10-20% principal, and also sell off the property --

    MOST consumers - need to learn WHAT IS LEVERGING ! Please read the below article -



    Mahesh's point is valid. Infaltion applies to money that you have in your hand. There is a concept called Opportunity Cost. So if you already have Rs 100 then whether you invest that money in a property or invest that money in FDs etc, you can do a comparison and check which one is giving better results to beat 7-8% inflation. So if you get 15% from property in 1 yr with infaltion at 8% then your return is 7% & similarrly if you get 10% from FD with inflation at 8% your return is 2%. This is fine.

    But the case is that you do not have Rs 100 with you. So there can not be a case that to beat inflation this 100 Rs should be 108 after 1 yr. You are borrowing it from bank. So let us say you invested that money in property and got 15% returns in 1 yrs & interest that you are paying is 10% then your return is 5%. To put itin numbers you earned Rs 15 from property & you spend Rs 10 as interest so at the end of 1 yr you have Rs 5 as a profit. No question of inclation here becasue 1 yr back you did not have Rs 100 with you and now also you do not have it as you have pais up the principal. So in short you earned Rs 5 in one year on a borrowed capital of Rs 100. This is how I think RE investment should be looked upon when it is done by taking loan
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  • Originally Posted by puser
    Diwali is in Nov. Which festival time is coming? Do builders offer for Ganeshotsava?


    well said...and spot on...builders and politicians are on ventilator :D
    check today's latest news on realestate -

    http://www.esakal.com/esakal/20100825/5277204918288718739.htm

    read the comments as well :)
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  • PCP, rsatitkar, real and all,

    I appreciate your points. Overleveraging for RE is bad.

    But having said that, the only thing for which one should take a loan for is also RE.

    It also has the lowest rates.

    Loans for cars, personal loan, jewelry, credit card for shopping, even education loan (in India, not USA) - all are much worse leveraging than a home loan. And are more expensiive than home loan.

    So if education loan is anticipated, take a home loan instead (assuming you need it) and pay cash for education.

    Also we had discussed earlier - it costs just 1.5% per annum to take a loan when you already have all of the cash (interest rate differential between FD and loan rates). If there is any anticipated need at all for cash, better to take the loan and keep the cash.

    Anyway, congrats to PCP for starting of this years "Diwali" post - where everybody keeps saying RE will crash and crash - while RE keeps climbing and climbing - until next Diwali 2011 also comes around - when the next thread on the same topic will again get posted !!!!!
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  • Originally Posted by Venkytalks
    PCP, rsatitkar, real and all,

    I appreciate your points. Overleveraging for RE is bad.

    But having said that, the only thing for which one should take a loan for is also RE.

    It also has the lowest rates.

    Loans for cars, personal loan, jewelry, credit card for shopping, even education loan (in India, not USA) - all are much worse leveraging than a home loan. And are more expensiive than home loan.

    So if education loan is anticipated, take a home loan instead (assuming you need it) and pay cash for education.

    Also we had discussed earlier - it costs just 1.5% per annum to take a loan when you already have all of the cash (interest rate differential between FD and loan rates). If there is any anticipated need at all for cash, better to take the loan and keep the cash.

    Anyway, congrats to PCP for starting of this years "Diwali" post - where everybody keeps saying RE will crash and crash - while RE keeps climbing and climbing - until next Diwali 2011 also comes around - when the next thread on the same topic will again get posted !!!!!


    Don't compare what loan is cheap and what is more expensive...
    Principally, one should buy jewallary,car,furniture,electric goods etc. from his savings and enjoy life free of debts :) If one saves surplus, then go for a home and take SOME loan...

    This is exactly I am trying to tell again and again to all readers...Invest in yourself, your family,education of your children and be RICH...enjoy life...debt-free...
    Why make a builder and his partner (politician, bank,) rich???
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  • Originally Posted by hitmady
    Nitesh and Realacres what you are implying is theoretically true but not practical.
    When making purchase decision we tend to do comparison, be it Merc/House.

    Irrespective of the buyer is rich/middle-class, an item appears cheap/expensive based on its past price or price in comparison to similar items.

    For e.g. I am really interested in I POD-Touch and can easily buy few for entire family. But found it expensive for features I need so bought Samsung.

    OK...here is the clarification man:-

    What I mentioned was simply based on safe financial health of RE buyer & it had nothing to do with VFM, infact in current scenario it is better one buys car, LCD TVs etc. as they are more VFM & when RE prices correct, move in with these white goods in your new house :)!! So, you make most of it right from today :).

    Originally Posted by rsatitkar
    I agree that overleveraging should always be avoided, but the 3 conditions mentioned by you are too tight. It's almost impossible for a salaried person to buy a home for his needs (not for investment) with these conditions.

    In my opinion conditions can be updated as

    1. around 30% down payment
    2. around 35% EMI of monthly take home
    3. max 15 yrs tenure

    This seems to be more realistic.

    I agree with you if the conditions mentioned above are for married person with kid/s, else 70% loan & 35% EMI of take home income for bachelors means a doom post marriage. However, for last point, I would personally wait, save & then make more down-payment & reduce duration of loan.

    Man, it is always better to stick to recommended position, so that once you are in, you need not compromise elsewhere. The above mentioned points made by you hold true as well, the only difference:- I prefer to wait & save to make bigger downpayment rather than rush in today with higher loan.
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  • Originally Posted by monds
    well said...and spot on...builders and politicians are on ventilator :D
    check today's latest news on realestate -

    http://www.esakal.com/esakal/20100825/5277204918288718739.htm

    read the comments as well :)


    I don't know which class I belong to...inspite of being s/w engineer and working hard lika dog, I am unable to find decent flat in my budget of 40 lakhs :o....So now new middle class or lower middle class (or may be poor class as well) are people whose income ranges from 5 to 10 lakhs.
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  • Originally Posted by puser
    I don't know which class I belong to...inspite of being s/w engineer and working hard lika dog, I am unable to find decent flat in my budget of 40 lakhs :o....So now new middle class or lower middle class (or may be poor class as well) are people whose income ranges from 5 to 10 lakhs.


    puser - cannot agree with you more!! Your budget is hefty 40 lacs - mine is 20-22 lacs!! Which category do I belong?? Below Poverty Line? Man - it's amazing!! Look what RE inflation has done to us. Even people earning healthy 5-10 lacs a year feel like beggars!!
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  • Originally Posted by hitmady
    Nitesh and Realacres what you are implying is theoretically true but not practical.
    When making purchase decision we tend to do comparison, be it Merc/House.

    Irrespective of the buyer is rich/middle-class, an item appears cheap/expensive based on its past price or price in comparison to similar items.

    For e.g. I am really interested in I POD-Touch and can easily buy few for entire family. But found it expensive for features I need so bought Samsung.


    I agree. Comparison should be done. I am saying about timing your move to buy your house to stay there (& not for investment). If someone is buying a home to stay there, he/she would be staying there ATLEAST for 10yrs. So how does appreciation of that house come into picture.

    About affordability, yes it is difficult for most of them to buy a flat of more than 40-50L. But without over-leveraging if one can afford to buy he/she must go for it asap. 5-6yrs ago 3BHK was easily available within 20L. At that time no one thought that the prices would be 3-4 times in next 5yrs. Even now we cannot say what will be the situation in coming years.
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  • Originally Posted by Murtaza_t
    puser - cannot agree with you more!! Your budget is hefty 40 lacs - mine is 20-22 lacs!! Which category do I belong?? Below Poverty Line? Man - it's amazing!! Look what RE inflation has done to us. Even people earning healthy 5-10 lacs a year feel like beggars!!


    Mutaza_t & Puser,
    Absolutely true...I echo what you both said above...
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  • Originally Posted by monds
    Mutaza_t & Puser,
    Absolutely true...I echo what you both said above...

    Yep, now I think we should discuss offers about Indira Awaas Yojana:D. For investors, better buy a slum, so as soon as rehab takes place before elections, you will get pucca makaan free of cost.

    Man, the illegal Bangus staying near Mumbai airport in slums, get pucca houses for free & here we are still scouting for a FLAT even with half crore in pocket:o.
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  • Originally Posted by realacres

    Man, the illegal Bangus staying near Mumbai airport in slums, get pucca houses for free & here we are still scouting for a FLAT even with half crore in pocket:o.


    Very very well said man...Bangde get pucca houses for free...this is India...perhaps we all have to teach our children right from their childhood about Indians and Indian Culture, at least me..!!
    What a shame...

    You know what...???
    The Nagar Sevak of Baner and his brothers runa prostitute racket right in the Veerbhadra Nager and adjecent area to it...they have grabbed couple of plots and two old bunglows and they run this racket from those houses..
    Most shocking thing is they are spreading a word that all NRI and IT girls / women do all this prostitution to earn more money...
    It is nothing but an attempt to spoil the society and make people accept whatever goes around their houses...
    All educated citizens must weak up now and fight against those guns, the cancer is spreading fast...guys in kothrud or somewhere else don't say that your problem is not my problem :D...this will reach you in no time...after all this is NCP raj...
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  • Everyone needs to understand why inflation keeps going up. Infact if we have indeed become truly productive over the years then we should be seeing deflation (we can make the same products with lesser inputs costs - hence prices should come down). Ever since the world moved from a x standard to a "fiat-standard" - inflation has ruled the roost. Politicians and Goverments across the world are lured by the ease of printing money out of thin air to finance their fancy schemes and largesse. As volume of currency/money goes up, its value goes down - so purchasing power reduces and you have inflation!
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  • Funny - the word "gld-BULLION" gets deleted from the post. Pls read "x" in the above post as "gld-BULLION" / "Aurum".
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