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Buy vs Rent Apartment in Pune - Bamboozled !

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Buy vs Rent Apartment in Pune - Bamboozled !

Last updated: May 23 2014
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  • #21

    #21

    Re : Buy vs Rent Apartment in Pune - Bamboozled !

    Originally posted by MrRajAlmyty View Post
    Dude 14k is lot...u can get a decent flat on rent in 12k in Wakad.
    True. I saw many in Wakad/Pimple Saudagar/Blue Ridge over the past month but settled for Blue Ridge 2BHK 14K per month.

    Blue Ridge 2BHK were the largest at 1047 sq.ft carpet. None of the others even came close space wise for comparable rent. I think if you think in terms of per sq.ft carpet area, Blue ridge is very competitive.

    And Blue Ridge has uninterrupted power supply for lights/fans. Anyplace else you have to fit an inverter.

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    • #22

      #22

      Re : Buy vs Rent Apartment in Pune - Bamboozled !

      Originally posted by abhayd View Post
      IMO, It's a fight between emotional part (Buy) and practical part (Rent) of the mind. You can not really control/hurt emotions of your family and most of the time end up buying the house sooner or later.
      But don't let that decision hamper ur future plans... Think of it as dead investment and then plan....good if u get returns out of it... Fine if u do not get

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      • #23

        #23

        Re : Buy vs Rent Apartment in Pune - Bamboozled !

        Originally posted by MrRajAlmyty View Post
        These are my views on how can we possibly overcome these renting disadvantages:
        1) 11 months agreement post which owner will throw you out - Why not look for a flat which is owned by an investor / NRI merely for renting purposes, and treat that flat like yours and pay rent on time. Inform the owner that you will be staying in the house of quiet a long time and try to get his buy-in. Hard but possible.
        2) Cannot have furniture of own: Why not? Each flat has a living room a dining room, kitchen and bedroom. All you need is a proper furniture as per your requirement (Now a days furniture is purchased as per flat's requirement and not owners) Gone are the days of Godrej Almirah which is replaced by lousy ill quality wooden ones.
        3) Still, own house is own house: Agreed, but at what cost? With such an amount you can have a big fat house with lawn and all in your hometown. With this money you can probably send your kids abroad for higher studies. Well its YOUR money, you can do whatever hell you want!!!!

        All I want to say is, If I am staying in Pune only for Employment purpose, it makes sense to rent it rather than buy it.

        Jury is out now.

        P.S: This thread is for those fellow mangoPeople who are sailing in the same boat as I am (20%-80% waale) and not at all out of frustration.
        Owning your house is a luxury in India so owning will always be more expensive than renting, no matter what calculations you do. The question now is how expensive??? or rather what premium are you willing to pay to live in a house of your own???

        At the current rates in Pune, I will not recommend anyone to invest even a single Rupee in the market as the market itself is so much overvalued and hyped that, it could come crumbling down any minute. Also if you look at the rental rates, which can be used as an indirect indicator for demand, you can rent a 1 crore property for about 15-20K per month.

        The best way to deal with it, is keep it flexible and keep on renting and leading on your life. Sooner or later the market is going to correct. A minor shock in US or Europe, is sufficient enough to send tremors down Indian IT services company. Another way to deal with it is that do not discuss it with your wife. Women generally tend to be more emotional and have that "nesting instinct". Unless your wife is a CA or a MBA in finance, she will most likely not care about the premium you are paying to take on your own house.

        Another thing is the kick you get out of something lasts for 6 to 12 months at max. Remember the video game you wanted as a kid, or the latest car you had your eye on? after you buy it, the transient happiness lasts for about 6 to 12 months at max. after that, life returns to usual. With RE its going to be the same case. For the first 6 to 12 months, you will be happy but then practical problems will start cropping up. You cannot think of switching to a company in hadapsar for a 20% hike because you have bought a flat in Wakad. Or you cannot afford to take a vacation because of the EMI and unplanned expenses there are no savings left in your kitty.

        Another false myth propogated is that, if its for end use, then just close you eyes and buy. this again is wrong because you end up paying almost double the amount of money when you take a 15-20 year loan. So for a 80 lakh house, at the end of 20 years, you will have paid 1.6 crore just for the house. Then there is maintenance, furniture, life uncertainties. In US infact, they have found a high correlation between house ownership and unemployment as renters can easily switch geographies in search of better prospects, but house owners are not. btw, RE is also one of the most illiquid asset you can ever get your hands on, so selling it off is not easy.

        RE markets are notoriously inefficient and always go through a boom-bust cycle. This is not just in India, but it is a global phenomenon. The boom is very much over, so let's wait for the bust!

        thanks for the link!!
        ...Thoda Aasman

        Comment

        • #24

          #24

          Re : Buy vs Rent Apartment in Pune - Bamboozled !

          ok analysis...but does not really account if rents and prices are both inefficient to varying degrees(rents being less efficient and prices being horribly less efficient). the rents, prices and everything is being paid based on underlying economic activity and in the case of house prices based on expected economic activity in a given micromarket for the next 10-15 years.

          I mean tomorrow if NRN like Raju says our books are cooked and Infy is going bankrupt, do you really think places like hinjewadi and wakad can hold up to the current rent and price level?

          The only way the analysis has accounted for economic activity is by assuming salaries will rise 10% per annum which is anyways highly over-optimistic if you are in the same job for the last 15 years.

          3.Assumptions

          The sale price and rental values are calculated for 1000 sq ft area ready to occupy residential property.
          20% of the cost of the house is considered as the required down payment to buy a house.
          The loan tenure is 15 years.
          The lending rate for the loan is 10.50%.
          Average savings rate is 25%.
          The minimum gross income required to buy a house is calculated by considering 50% of monthly take home salary= Monthly EMI to be paid.
          The gross income of the professional increases 10% annually.
          1.5% of the property value is considered as the property tax to be paid.
          10% annual increase in rent is considered.
          Property appreciation is not considered.
          There is no IT company in Pune or India for that matter which has paid 10% hikes on an annual basis. One could argue that you can always quit your job and get a net 10% hike over 15 years, but then once you buy a house, your options to quit and move to a different location are out of the window.

          So in a way faulty analysis.
          ...Thoda Aasman

          Comment

          • #25

            #25

            Re : Buy vs Rent Apartment in Pune - Bamboozled !

            Inflation, slow growth rate and saturation in IT salaries has pushed middle class back to what it was 20 years ago where owning a house was possible only when a man reaches the age of 35. Till then he lives on rent unless he has inherited property from his ancestors or both husband and wife are working and earning good salary. Looking at the current scenario, doesn't look like there will be a big bust in property prices. The reason is that all the young population of India wants to have his own house - a cultural thing. Also the input costs of raw materials, land acquisition costs, etc have risen far too much. Builders are very smart, they come up with new projects only when they see demand, when there is a slump, they wont come up with new projects. And, the Indian IT is also expected to continue its growth because of more and more offshoring. This will be until other countries like China and Vietnam beat India in terms of low cost. So demand for housing is going to continue.

            But yes, at the same time, doesn't look like the prices will rise. It is going to be a stable market for quite a while with little raises in price.
            Last edited April 29 2014, 01:56 AM.

            Comment

            • #26

              #26

              Re : Buy vs Rent Apartment in Pune - Bamboozled !

              Originally posted by ThodiSiZamin View Post


              There is no IT company in Pune or India for that matter which has paid 10% hikes on an annual basis. One could argue that you can always quit your job and get a net 10% hike over 15 years, but then once you buy a house, your options to quit and move to a different location are out of the window.

              So in a way faulty analysis.
              If salary hike is not going to same it will only lead to more time in loan closure and more time for break-even of buy to rent.

              Comment

              • #27

                #27

                Re : Buy vs Rent Apartment in Pune - Bamboozled !

                I think a couple of more factors over the next 1-2 years will help decide whether to buy or rent.
                1. change in government policy on real estate / regulatory bill/ transparency in the real estate business.
                2. increase in home loan tax benefits for first time buyers. The tax benefits are unchanged since a long time now.

                wait an watch for another 1-2 years...


                Originally posted by ThodiSiZamin View Post
                Owning your house is a luxury in India so owning will always be more expensive than renting, no matter what calculations you do. The question now is how expensive??? or rather what premium are you willing to pay to live in a house of your own???

                At the current rates in Pune, I will not recommend anyone to invest even a single Rupee in the market as the market itself is so much overvalued and hyped that, it could come crumbling down any minute. Also if you look at the rental rates, which can be used as an indirect indicator for demand, you can rent a 1 crore property for about 15-20K per month.

                The best way to deal with it, is keep it flexible and keep on renting and leading on your life. Sooner or later the market is going to correct. A minor shock in US or Europe, is sufficient enough to send tremors down Indian IT services company. Another way to deal with it is that do not discuss it with your wife. Women generally tend to be more emotional and have that "nesting instinct". Unless your wife is a CA or a MBA in finance, she will most likely not care about the premium you are paying to take on your own house.

                Another thing is the kick you get out of something lasts for 6 to 12 months at max. Remember the video game you wanted as a kid, or the latest car you had your eye on? after you buy it, the transient happiness lasts for about 6 to 12 months at max. after that, life returns to usual. With RE its going to be the same case. For the first 6 to 12 months, you will be happy but then practical problems will start cropping up. You cannot think of switching to a company in hadapsar for a 20% hike because you have bought a flat in Wakad. Or you cannot afford to take a vacation because of the EMI and unplanned expenses there are no savings left in your kitty.

                Another false myth propogated is that, if its for end use, then just close you eyes and buy. this again is wrong because you end up paying almost double the amount of money when you take a 15-20 year loan. So for a 80 lakh house, at the end of 20 years, you will have paid 1.6 crore just for the house. Then there is maintenance, furniture, life uncertainties. In US infact, they have found a high correlation between house ownership and unemployment as renters can easily switch geographies in search of better prospects, but house owners are not. btw, RE is also one of the most illiquid asset you can ever get your hands on, so selling it off is not easy.

                RE markets are notoriously inefficient and always go through a boom-bust cycle. This is not just in India, but it is a global phenomenon. The boom is very much over, so let's wait for the bust!

                thanks for the link!!

                Comment

                • #28

                  #28

                  Re : Buy vs Rent Apartment in Pune - Bamboozled !

                  I like such posts which encourages me to stay on rent

                  Comment

                  • #29

                    #29

                    Re : Buy vs Rent Apartment in Pune - Bamboozled !

                    One of the broker firm told me that they had around 300 flats available for rent in Wakad and around 500 flats for sell !!!!

                    Comment

                    • #30

                      #30

                      Re : Buy vs Rent Apartment in Pune - Bamboozled !

                      but still prices wont fall...
                      which broker has this much inventory in his side ??

                      Comment

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