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Correction 1: If Rent Increases then monthly saving decreases and investment also decreases, Returns also decreases Correction 2: Govt will not give complete rent as exemption, Use HRA exemption calculator to get right numbers Correction 3: Avg Interest rate on home loan for Long term will be far higher than 7% Correction 4: Effective interest rate for 7 perc home loan comes around 5.6 perc(*Upper cap of 2 lakhs tax exemption on home loan interest). Correction 5: Link to Excel sheet missing in the description. Correction 6: Compound interval was calculated monthly for RENT and Yearly for buying a house. Correction 7: We should see the value of property vs Total value of investment after 15 years. Need not to calculate net benefit.
Absolutely right. Even the 7% rate is the lowest in decades and has already gone up to 9-10%. The rate of growth in real estate has stagnated in many Cities resulting in near even negative rate since the last 10-12 yrs. Considering these issues the cost of owning the house in current time is not a good investment strategy at all. Only the 80s kids and earlier would have seen some good returns on their Real Estate investments that were acquired at a fraction of current market prices. The rest can just rent it from them rather
You dint discussed what's gonna happen after 15 years ....there would only be maintainance cost and no interest cost .....so buying is better in longer term
Well Investment principles changes every time . You are lucky if your parent owned a house . As rightly said you can't keep multiple properties with 2% rentel yield
Emotion hi toh baaju mein rakhne hai na sir. You most probably won't survive the same job for 25-30 years in today's dynamic industry as well as the same city especially if you are in service sector.
Madam post tax rebate, if we are getting the interest rate at 4.9%, and inflation is considered at 6%, then isn't it -1.1% interest? I am stuck here🤷♂️
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I don't like the lack of freedom in rented houses. You are always answerable to the landlord. Even flats are not completely yours. Individual houses are the way to go even if it's a small one.
What kind of lack of freedom do you mean? If it's an apartment I understand there are a lot of rules but an independent house can be modified if you're a long time renter and when you leave the modifications can sometimes benefit the landlord right? Just want to know your view
@@uthkarshrajeshwar6525 owners allow you some modifications but like I said you always need to ask for permission. Also many owners set a lot of rules like other people are not allowed to stay and stuff. As for flats you know how annoying the flat association is. I have a friend who received an email from the flat association saying bachelors are not allowed in the flats even though it is his own flat. Imagine a rented flat..
If you like retired uncles tracking who comes and leaves your home, buy a flat. If you like to be told what isn't allowed in your home, rent a house or a flat. If you like freedom and quality of life , build a small home in a good locality.
U can make the changes in ur own house. Colour furniture garden .but rent house every 11 month .n landlord thinks tentent are nothing as compare to him
There is one major flaw in this calculation i.e The saving on EMI, the Effective rent will increase over the period of 15 years, whereas the EMI will remain the same. Hence, the saving on EMI will be much less.
@@asinghal9666 if you refer to the calculation sheet given in the description, The saving on EMI of 36082 is calculated by subtracting effective rent i.e 14000 from EMI i.e 50082. then it was bought to future value. the effective rent will increase over the period of 15 year
1. HRA benefit isn't plain 30% of the rent, you need to reduce 10% of basic. 2. Whie taking the difference in saving to be invested, you need to account for the rent increase every year. 3. The difference you have shown in driven by 6% return on home whereas 10% otherwise. 4. In places like Bangalore or Hyderabad, monthly maintenance is paid by tenant. 5. Even by 3% rental yield benchmark, monthly rent for a flat worth 75 lakhs shall be higher than 20K.
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We both are working couple. In 2011. We purchased a 2bhk flat in Navi Mumbai at 22 lacs and the EMI was 16500 which was equal to one of our salary. Now after 10yrs our salary is 80,000, the rent is 10,000-12000 and flat price is hiked from 70lacs to 75lacs. I think it was our good decision at good time. By taking this decision I think we have reduced a major tension of instability and struggle for permanent accommodation in our after retirement and next generations life. After retirement when peaceful environment and relax life with complete family members is most needed, our income becomes limited, Big or small health issues arises, chances of getting loan becomes low, at the stage of life when we are physical, mentally and financially insecure, unstable and unable to take risky decision, at that stage of life the feeling of owning a home becomes wise decision.
i dont think a 2bhk flat will last by the time you guys are old and why would you live in Navi Mumbai when you are old its too costly , you can build a house in a countryside with peace before you retire
@@bhargavreddy7038 in Navi Mumbai commonly minimum life of a building is 50yrs. After that, when the building comes for redevelopment, you get more FSI and latest Amineties. Now why Navi Mumbai and not country side. We own agriculture land and house in country side but we are born and brought up in Mumbai, working in Mumbai, relatives, friends in Mumbai, adapted to local transport like train, Bus, Taxi, mono and metro. From Ulwe You can travel to any place Mumbai, Thane, Pune, Goa, by good Road connectivity and by international airport all over the world. After retirement In old age, you need a City equipped with modern and multipurpose Hospitals with good health facilities which lacks in the country side. When you have spent most of the life time with busy, rushing, fastest shedule, online services, your lifestyle, your body and your mind are adapted to this environment. you can visit for a change in country side but can't stay for more than a month.
For those planning to buy a readymade house (which anyday feels altogether different {emotional angle} over renting), Try if you can rent a house in the same locality where you are about to buy, ideally the same society and see how it feels, experience on rent the good and bad of that locality. This way you will be fully assured of go ahead or look for another society instead of committing and adjusting to that locality, ofcourse at some added cost but we don't usually buy house every year, so this effort is totally worth and also try to set aside EMI amount to see if you are financially comfortable in committing to such long term loan.
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Similarly, saving the money while staying in rental house is giving money for more and more fruits to your children. You may even buy different fruits rather than sticking to only 1 type of fruit.
This is the nonsense that real estate sellers say. Fact is, your kids will immigrate to bigger cities for better jobs. Unless you buy in South Mumbai, this argument is nonsense
@@manishjape3196 thats difficult as saving money in other ways is more difficult , property rates will always be well ahed of any other comodities after 15 years
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Rachana this is like comparing marriage vs staying single. Obviously staying single will win at any given time. You save lots of money too if you stay single.
Depends. If the spouse also works. That is extra income, and hence extra savings and investment..... Right? Of course all this is just opportunities. Financial discipline is very important and that is lacking
I dont think that both things are analogous to each other. Rachana is only presenting financial angle as she explained in the beginning. If one is invested in emotional angle then this video is not for him/her. He/she can still buy house so as to have that emotional satisfaction. Marriage cannot be compared for this since it is "almost" a social need for a human. The way someone is not going to stop eating for saving money on the same line one is not going to avoid marrying because of money (but ofkos exceptions.)
IMO, mutual funds in India are much better given that, in the current state of real estate in India, the rental yield is too low (3-5%) in most cities, esp. in metros. Also, there are benefits of liquidity with mutual funds. However, if you are looking from the point of view of having a stable (and less risky as compared to mutual funds) income for let's say retirement and have some money to spare to buy the property, second house may be a good option.
Although she deducted the cost of buying a house to compute net benefit in Column G32 but She missed to deduct the amount deposited from the net benefit in column B26 :D The final benefit of renting the house as per her expected return on investment in case of renting a house will be (1,57,43,750 - 11,25,000 - 36,082 * 12 * 15) = 7605000/- Benefit Renting a house: Rs. 76,05,000/- Benefit of buying a house: Rs 72,49,798/-
The best suggestion i can give based on my personal experience is ( keeping Hydreabad, Bangalore and other Tier 3 cities in view)... Rent an apartment in the city and buy open plots in different parts of the outskirts of the city from your savings and by taking (personal loan or plot loan)... These open plots cost may vary from Rs.5000 per sq yard to 25000 per sq yard.. with in 15 years these open plots can give you appreciation of 200% to 1000%. (based on the plot values that myself/my friends/relatives bought in last 15 years in different outskirt locations of Hyd and BLR i'm giving these figures)...
Wonderful approach. However your timing is excellent. You bought it during the CBN effect. Now the city growth stage is at peak. The effective growth will be slow if someone buys now when compared to your timing.
I feel that after 15 years ,in the rented place expenses will keep on increasing but once you complete EMI in your own house , the expense is only the maintenance.
After 15 years you will have home or if you are renting and saved emi amount then you will have 1570000 rupees in your pocket so calculation is correct in one hand you will have home and in other case(Rent) you will have 1.6crore in your hand
but your investment will also increase at 10% , it was already 1.5 Cr . 1.5 cr annually at 10% generates 15 lakhs .More than enough to cover rent , monthly expenses child education , thought of this ?
You just showed what we save at the end of 15 years, but the one who stays on rent does not own a house after 15 years and continues to pay rent, whereas the one who bought it, will save money and will have the house as well.
I have a golden reason here to rent a house..if I have 85 Lacs saved in 15 years by renting a house..I will go for world tour with wife in my early young age..which may not be worthy after 15 years...so renting house and enjoying tours for 15 years is the best option..as we have only one life....the owned house would not come with us in heaven...🤣
well after 15 years of saved money in more liquid assets you can buy a home of it. + renting gives you better options to move across for better income. so you can retire or buy a house in a tier 2 city and enjoy low cost of living
People who tell that renting is better than buying, they have there own home. I don’t understand why they tell like this. One should have at least one own home for permanent stay.
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After 15 years i.e., after completing my EMI, from 16th year I have to pay only maintenance amount for my house and live there through out my life time. But in a rented house I have to pay rent even when I am 70 years old.
yaaa i dont know why in india people think that they will plan for leaving 150 year of life...after 70 now 75% parents are dead or rest all leving in ashram or hospital...
@@kunalahuja1272 but average house age is around 60 yes so I think after 15 yes when you own your house you will be saving so much amount..it's just a thought I am not an expert
Imagine pain of moving after 11 or 24 months and what about of renovation and buying your favourite furnitures and artifacts for your house. I think you should not have more than 1 house instead invest in property in village agricultural land so that atleast you have food if things worse than covid come in future. After all, we all are going to office for food but even that is also not guaranteed, having an agricultural land guarantees food atleast.
The amount saved by renting will never be in ur bank account as savings to buy property after 15 yrs.. it will get empty by buying luxury car or an expensive vacation and finally roadpe
That will be from an emotional point of view. Luxury cars and expensive vacations are emotional decisions. From a financial point of view, you have to be practical, and that means you will be saving it diligently and investing in a market linked instrument like Mutual Funds. Keep emotions out of the game if you want to do a financial/practical comparison.
Yes the.fact is that people will regularly pay bills that needs to be paid but the amount which is saved by renting house (35000),they will not reinvest it and spend it until all money over😀...moreover all these are assumptions in some areas like hyderabad and delhi the properity increase rate is more than 30% a year...so, think yourself...😇
@@ganeshudathala5286 property application is 35% in last 10 years in Gurgaon. You can check prices of new Gurgaon. And DLF flates buyers in negative after 7 years
@@ganeshudathala5286 bhai olf flats ki value decrease hoti h after 12-15 years based on builder and construction quality. Dilli wale to nale ke upar wala ghar bhi lelete h dilli me
rented house is good for corporate couples but for ones(like me) who have their family responsibilities as well, they can't shift their parents to a rented house. With your own house, you have a mental satisfaction that yes my parents are there and the house is theirs. But if I want to live separately with my partner then choosing a rented house is the best option
Usually, I feel people are more interested in making a video than to think about logic... You have actually covered each and every point like a true BANIYA... Really liked your video... Keep it up..
how about the benefit of rent/ emi free house after 15 years..that had not been computed. assume at age 25 you are lucky to get this loan and buy the house then after age 40 until retirement you will live rent free and keep appreciating.
Also, several landlords charge advances (sometimes ten months’ rent, particularly in Bangalore) that gets locked up and only a part of it is returned to the tenant citing damages made to the house.
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But even after 15 years you need a house and that time the cost of the same house is higher than what we saved during that period via renting house even at 6% property grown rate. We have to consider this as well.
Arrey. This is not required. You should understand financial. If at all you need to buy then. You can still buy a 15 year old home for less than 1.5 crores easily whereas you have saved 1.6 crores in rent. Also, no surity that you will stay in same city over 15 years in this fast moving world and selling a 15 year old home is not that easy. Moreover she has given just 10% CAGR for investment. Any debt funds gives that. If at all we are decent on investment and go for bluechip funds or Nasdaq funds one can easily expect 13-15% CAGR then obviously rental is better.
100 percent. I see flaw in the logic used the video. In 15 years time, that 1.07 crore flat will cost atleast if not less 2.5 Cr. I have seen that change in our property as well.
@@dewanmohamed9167 True but when everything is hypothetical, then why not consider this as a situation too. With proper maintenance, one can use the property for as long as 50 years.
Try to invest in different strategies which will give you on avg 10% cagr.. You have to outrun the Inflation rate of 6%. In 15 yrs compounding you will have good amount to purchase the house
Dear Madam, "Saving in Monthly EMI " -> It gets reduced every year due to increase in annual rent i.e. 7% which will subsequently reduce "Value of EMI saved " for total rental period. Was it being considered in this excel ?
@@foreverkushal Very true, because when you rent a house, once the rent paid your amount is zero. However, when you pay EMI, you are owning the property. You are getting an asset and the value of property also increases. In case of renting the house, you are still paying rent after 15 years and when we take a loan after 15 years, we have our own house and no rent :). When we pay rent of 20,000 monthly with the interest rate of 5%, FV after 15 years is 53,45,778.88
Video is awesome. But we've got one life, by practical means renting might seem sensible but we need to keep our heart happy as well. Being either all practical or emotional is dangerous, there must be a balance always.
Have you considered the deposit amount in case of rental property? Further, the hassles of shifting the rental place atleast once or twice in span of 15 years may also affect the calculations.
The calculation needs to cover deposit amount, constant shifting amount charged by mover and packers, cost of investing time in finding new place every new year till the time you find an owner that puts only 7% increment. Usually the increment is 10%. Also, even if we rent house, we pay society and maintenance charges. And the cost of time that we invest in convincing the landlord for basic changes. The calculations seems very lucrative but practically, there is no saving if you live in constant fear that someday your landlord would throw you out of the house for any stupid reason. In all such calculations, the analyst don't consider such mental tortures and the price we later pay for mental health counseling.
@@archanarelan7906 indeed I'm new in delhi and i took 2bhk on rent , i paid brokerage , advance rent as security , ac installation , now after a year again now i shifted to somewhere else near to my job location i paid apx 40k again rent + security plus brokerage loading unloading again tv ac installation charges , it would be better buy a house on loan and live peacefully
hi, rachna, very few people know how to smile from eyes. Your eyes smiles. Keep it up. There are lot of people who praises you about your explanation of topics. Keep smiling.
While calculating "savings in monthly EMI", Why haven't u considered the average annual rent increment of 7%. Rent will increase annually however EMI will remain tha same which will lead to less savings in coming years.
Rajat is right. She mentioned it in the initial segment when she was calculating the cost of the rental house over 15 years. She did not factor for the increase in rent when calculating the savings in monthly emi. The rent increase will mostly eat up a lot of the benefit.
Me a robert kiyosaki fan : I will buy a house and then rent out 2 floors . 15 years later I get my investment back. I neither paid rent nor any emi from my pocket. Buy assets that gives income 🙂. After 15 yrs, life jingalala 😎
@@sagarkulkarni2590 First of all I never talked of 3 floors . I said 2 floors ! And I live in south mysore. The price of land in affordable and a 2 floor house is not a big deal ! I have relatives who make a living just by rent itself. They own 2 building. Bank emi is paid with the help of 3/4th income from 1 building. Rest all pocket.
You missed double brokerage, registeration charges, shifting charges, packing charges (if taken packers and movers service) etc for renting a house. + the hassle of changing houses time and again. (Hunting for house, packing, shifting, unpacking, new neighbours everytime etc all these things are tiring and exausting)
Plus the pain of getting your address updated everytime on your Aadhar, DL, passport, voters ID, Bank, gas connection etc., In cities like Navi Mumbai, the brokerage (minimum a month's rent) needs to be paid every year whether one shifts the house or not.
@@Sudanmadhu7 lol you are being taken for a ride by your broker. I have lived in Navi Mumbai also. Pay brokerage once and never again for the same property.
@@Sudanmadhu7 Exactly. This is the major deterrent in the renting decision. The instability. You are always at the mercy of the landlord. And this is the major factor that outweighs all the financial advantages the renting option may show on paper. If I want stability, I will never go for renting option, howsoever cheap it may look. This video should have covered this major factor
@@vkajarekar Most of the landlords are d*ck , they will never given pan number , so people are not able to claim full hra benefit, they have to submit fake proof even for real payments
yes, its yours for atleat next 100 years, but the point is that in today's globalized job market, if you are an employee, you never know where need to migrate due to employer's demand or own career growth. So if you are buisnessman, who have well established buisness in acity, buying a house in a posh township will be a good option. else you can rent a worthy house in a sub-urban area.
The comparison is done at the end of 15 years, you can just keep this calculation extending for more years. So the point of having house forever is not valid.
@@ankanmazumdar5000 but how many days you are going to work at some point of time you need to be take rest at the time you need definitely some property
@@amitojsingh5159 Lease is even more risky.. You deposit high sum with him on Condition he has right to recover for damages.. I have heard many people in Bangalore did not recieve their half of the deposit amount.. Reasons they gave are door lock is not working, electrical stuffs have malfunctioned, bla bla... On top of that 1 month rent will be recovered for cleaning and paiting... Edit: this won't happen if the owners are honest but how will you get to know who is good.. I changed house 4 times luckily all were very nice owners they deducted 1 month rent as promised..
Exactly. On Sunday late eve our landlord suddenly texted my husband to vacate in one month ASAP! Though we have a lease of 2 months! We are living here for last 6+years! it's really heart breaking.
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the property value is only in papers. You can't the sell the house you live in. The assets created while renting is 1.5 crore in liquid cash. You can buy a house directly if you feel like after 15 years or continue to live in a rented house. Your choice. No one buys a 15 years old house as those rates. Would you buy a 15 year old flat?
Very well explained. As far as I'm concerned, I would buy a house, irrespective of the calculation, if I intend to stay at a place for more than 15 years. I wouldn't want my family to keep moving from one place to another & I don't want to live at the mercy of my landlord.
As your rent is increasing every year, how your “Saving in monthly EMI” will be 36K for 15 years? It will reduce every year and In next 10-12 years your rent will be same as your EMI. Please clarify this point!
@@shriniwaspakalwad5178 That's true but when your rent will increase you won't have the same amount to invest. your investment amount will be reduced every year and at some point rent will be more than the EMI.
Nicely explained. But beyond the financial angle, one needs to also consider the emotional one: hassle of shifting (and cost), discrimination between tenants and owners in most societies, pride of ownership. In the end, I would say, one should own at least one permanent residence. Even if, as an investment it may not beat the market of even FD rates, and it is illiquid,
Hi Rachna Ma'am, There's a glitch in the calculation of EMI saved, as it's been calculated based on the difference (of EMI - Rent) of Year 1. While the EMI amount will remain fixed over the duration of 15 years, the value of Saving in Monthly EMI will keep on decreasing every year based on the increase in rental value. So, Renting doesn't look lucrative at all.
If you make the right financial decisions, you will save enough money to retire early and buy a house of your choice, rather than making builders and politicians wealthy.
This is exactly what is was thinking, plus after 15 years you won’t get property in same location if you get that too will be very high. Also , Home loan is forced saving . Rarely any body will invest 50-60k for savings. I believe this happens in reality.
Honestly, the property appreciation value is also flawed, the reason being ageing! Property does not always appreciate, dilapidation causes massive losses and Maharashtra has the worst redevelopment rules.
Paheli Mumbai hie ek city thi toh 13 percentage appreciation tha Mumbai me ab toh pune nagpur nashik navi Mumbai Thane bhi options me hai to appreciation 8 percent se jyada kahi nahi hoga Real estate will not good as investment As it was for last 2 deacade
Great Informative video ..but you have calculated direct 30% saving from tax on HRA ..but the actual formula is a bit different to calculate HRA exemption. Apart from that , I believe everything else is perfectly fine
That extra cost is paid for the luxury of the "OWN Feeling".. its the cost of living in ur own home. The emotional value is much more than the financial value. To be precise ... " tyaa welechi tya kshananchi mojleli kimmat aste... we are humans... not robots... " .. paisa upar leke jaa nahi sakte :)
Hi madam, You missed one point , once we own a house it's just not you but for your future generations as well and value keeps adding. Very big asset to future
It may not be possible to own a house in cities. Find the right owner. I'm staying in a rented apartment for over 10 years and I haven't had any issues.
@@venomium4360 Of course I will move but I will definitely find the right owner. In case of apartments, there is no big difference between owning and renting. Only thing you can't modify anything. But, you will have the freedom to shift in case of any issues. Selling is far more difficult.
Point is why do you want to buy that house.. weather you rent it or buy it you are staying in the same house. End of the day you have 1.5 cr cash.. and if you have a apartment it's difficult to sell old resale property you will not have money in hand.. that's the whole point of this video.. if you emotionally make a decision you will have a concrete house which has paper value.. if you financially make a decision you will have money in had that can be taken out used for any emergency... As she said we Indians are always go for making emotional decision.
@@Aav27-l3k Financially, it's a 22 Lac hit that we take with the renting option. And renting has it's own cons. Moving every couple years takes a toll not only on finances, but also your family life. Your relationships, neighbors, wokplaces and schools, all are affected with renting a house. Makes no practical sense to me.
Don't know which 22lac you are referring to .. anyway as I said we Indians as you said live for others like partner , parents , relatives and neighbours that's what emotional means.. this issue is not there in other countries so most of them live in rent not caring about anyone and they live their life fully.. were as us we live for our others .. that's the fact ..
@@Aav27-l3k Welp, don't see anything wrong with involving emotions in a decision as big as this. And it's a misconception that people other than Indians don't involve emotions in such a decision. If any, are exception than the norm. Additionally, we also assume perfectly meticulous planning and our plans panning out as we think. It'll take immense serendipity for it to come to fruition as any calamity in those years of investment can wreck our plans and our future. OTOH, with immovable property, you lock in a safe future for yourself.
You forgot to add intangibles of buying..Stress we would be carrying for 15 yrs..Health depreciation due to stress..Sleepless night for 15 yrs.. And if we lose the job then forget everything.. :D
But buying a house would secure future for your children also, and btw whatever it is life is always stressful. Every month paying rents around 10 k is still like paying a unknown to make him grow. Instead the same 10 k u can pay emis for loans n own ur house for life time and for next generations
Owning a house gives mental peace that no one can ask you to leave. Can't put a price on that. Having said that, the video is a very good tool to help with investment decisions.
@@priyanair5686 easier said than done.. Finding somone Is a task negotiating rent(pay to real estate agent since you are in different city), paying property tax + maintenance. Society would want you to be present in meetings and decision making.Flat Repair expense. After every 2-3 years after tenant changes. Assuming there is a gap of 2-3 months after every tenant goes. The flat that I am staying in was vacant for 6 months and hence the owner gives in less than market rate and fears that I will leave the house he will face the same problem.
@@priyanair5686 Issue is, like in this example, rent I'll get is 20k but EMI I've to pay is 50k. And then, when I move to another place and stay on rent there, I've to pay another 20k.
In 20 years I bought and sold Six properties and also lived in each of it for 3-4 years. Now I am living in a Rented house after our Retirement and are very much happy and satisfied with it and left with A Good investment Made in the last 2-3 years and getting a decent ROI... My experience says it all, When you have two incomes and young, buy properties and live for 3-4 years in them and sell it when you get a decent resale value, buy elsewhere and so on and keep doing it till you are 55-58 and by 60 Stop investing in properties, sell them and accumulate funds and finish off All your Life commitments. Then Choose A good rented house with All those amenities and facilities, keep paying rent for the rest of your life and in case you get bored with the same house just keep changing to New homes every 4-5 years, change area, even city like what we did and I assure you you will never feel bored in your post retirement period...🥰😂👍✌️😍
@@SAGARTHAKUR-zn7vq You owe them a strong foundation on which they could build their life upon and no more. You definitely dont owe them wealth. In fact if they get things ready-made on a platter, they will never understand the value, will not be able to hold on to the wealth and will blow it away within 5-10 years. lots of proper studies done on this - if you care to do your research. And there is a different pride to building your own life and wealth instead of living on baap ka paisa. Talking from experience - been there done that.
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good analysis and yes, from a pure financial pov it always makes sense to 1. rent a house over buying one 2. travel in uber/ola over personal vehicles etc etc..but "aisa jeena bhi kya jeena" :)
there is very much less value for building or falt as it really old ....only land where flat is there is value...if any builder do any new building on ur current flat then only you get good value...
Actual tax benefit is 50% (in metro) or 40% of basic salary. In most of cases it's much lesser than actual rent payment. So in above example effective rent paid (in most of cases) will be 16K in stead of 14k
@@shivachitti5274 if u buy one flat in the city area now.. after few years you will be capable of buying triple the properties.. bcoz you will not have burdon of loan.. you will be staying near or inside market place.. and you will have alternate jobs and earning capacity.. than being in rent or high paying loan house.. where future is not predictable.. both scenario you have to compromise many things.. covid is best example .... Atleast normal times you will have scope to manage your financial crises.. now you can't yell at govt nor yourself.. bcoz you chose your future.. you have to live with it..
@@kumarancvk flats sell at exaggerated prices .... I am 100% sure it is a waste ... Stay in rented appartment, buy land. . . Don't buy flat. It is a waste.
@@shivachitti5274 buddy.. lands and properties are sky rocketing inside cities.. or where you get all facilities.. if you go far from city.. it's future.. future.. future.. see I am advicing for those people.. who are staying in city.. want to get great future.. you buy a flat first.. a locality where house is 1cr.. land is 60 80 lk.. you get flat for 25 30lk.. go for it.. max to 50 60 yr he will live there.. still that time.. the outer city will devolop.. he too be earning big.. he will be capable of buying land and building house.. if you take a huge loan... Which you can't predict what's your earning future.. how you will be capable of paying loan or enjoying life my friend.. yes if you have good bulk cash..already owning a house.. than you can risk.. you can buy plenty of houses.. but if you are in rent.. and you want to buy cr value of property.. it's risky and at present even you will not get big resale value.. bcoz all city properties already touched its peak.. so think wisely and purchase property.. 2nd option.. if you are not money minded.. you don't have that much craze or family don't prefare lavish life.. you can purchase a land outside city.. build house stage by stage.. rent one floor.. or built are business establishment and live there happyly.. but water, electricity and other transport facility will burdain you for some extent..
In cities like Bangalore, there is rental deposit that needs to be pay upfront which is usually 10 month's rent. So in that case it has to be deducted from down payment amount before investing it as deposit is only returned after 15 years. Also there is apartment maintenance in many societies is paid by tenants which is not shown in rent amount.
One point missed here, I feel, is at the end of 15 years we land up with a house + 70L cash in hand. But, for a rent option, 1.5cr is left. I personally feel 70L + house is a better gain than 1.5cr of money. 1.5cr may not buy you a home you wanted.
tipical indian midset you can easily generate 25% to 30% intrust ....selling after 15 years u dont get loan for ur new buyers i can say max u will double the amout which u buy for tge house and property price will increase only if new builder build new building removing ur present one then u can accept more..
So technically what you are trying to say is that you gonna stay your whole generations in rented house cos you don't own a house. And after 15 yrs, with that 1.5 cr you won't get the same house which was worth 75 lakhs. On the other hand when you own a house worth 75 lakhs, after 15 yrs the house will be worth crores plus the 70 lakhs i saved.
@@ambitionmoirangthem if your builder he will sell thats his job...who and and staying that house that no sell...if they have only 1 house.....but equity u can sell or by... withen no time....
@@ambitionmoirangthem well I didn't mean that. All I was telling is if you'll own one house then you've to stay there for whole life and my profession is pretty unstable in starting phase so it may cost me a huge lump of cash and still there is no guarantee that i'll stay there. so for me renting a house till my late 45 is good option. After that I'll surely buy one as till that time my kids needs a stable life. Guess what, after that my house would have nice and modern devices and amenities as well. And choices can differ anytime so you may not be ok with my choices and vice versa.
Ma'am you substracted rent amout from EMI (50000-14000=36000) Then atlast you substracted total rent paid from final amount as well...if I am not wrong
The new trend I find in Mumbai is renting your own house and then rent a bigger better place. So you still have a house to fall back on if things don’t work out for you in future.
Quick queries on total cost of flat 1. What if we are purchasing the flat permanently? Rather than 15 years 2. What if we pre closure the home loan? 4. What if we purchase the flat in under construction project? Where you get time to submit your own contribution 5. What if you are leaving in rented apartment and owner asks you to end the rental contract where your school and other day today setup is established? 6. Are you able to design the furniture and interior in rented apartment even after your financial condition is improving So if you think atleast buying one own flat is good deal
@@gramagiri Real estates valuation are very tricky and depends on many factors. Usually it takes around 10-15 years for real estate to give you the value. It's a tangible asset and definitely for a very long term.
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When u buy house, you save rent or the money saved by occupying the property, u have not considered it in calculation
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" Take a home loan, you will start loving your JOB! " Spot on😂👌
This is y..... harassment increases @some work places
😂😂😂😂
Though we have to love our job to pay house rent.😀
It can act as leverage if the underlying assets hold its value and if the borrower is able to make his payments
😂
"Buy a House, you love your Job" Great words. 🙏
Buy a big car and you love your boss too.
😂😂😂😂😂😂😂
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@@tarunkumarchhaya5987 bhari
Correction 1: If Rent Increases then monthly saving decreases and investment also decreases, Returns also decreases
Correction 2: Govt will not give complete rent as exemption, Use HRA exemption calculator to get right numbers
Correction 3: Avg Interest rate on home loan for Long term will be far higher than 7%
Correction 4: Effective interest rate for 7 perc home loan comes around 5.6 perc(*Upper cap of 2 lakhs tax exemption on home loan interest).
Correction 5: Link to Excel sheet missing in the description.
Correction 6: Compound interval was calculated monthly for RENT and Yearly for buying a house.
Correction 7: We should see the value of property vs Total value of investment after 15 years. Need not to calculate net benefit.
Wonderful observation
Insane how nobody is noticing correction 7. That's the dealbreaker.
Absolutely right. Even the 7% rate is the lowest in decades and has already gone up to 9-10%. The rate of growth in real estate has stagnated in many Cities resulting in near even negative rate since the last 10-12 yrs. Considering these issues the cost of owning the house in current time is not a good investment strategy at all. Only the 80s kids and earlier would have seen some good returns on their Real Estate investments that were acquired at a fraction of current market prices. The rest can just rent it from them rather
You dint discussed what's gonna happen after 15 years ....there would only be maintainance cost and no interest cost .....so buying is better in longer term
Spot on!
A house is an emotion,,
You can not live in a same rented house for years and especially when your family grows within time 😀
still u have the option of changing the rented house right when the family grows..!!!
Well Investment principles changes every time . You are lucky if your parent owned a house . As rightly said you can't keep multiple properties with 2% rentel yield
Emotion hi toh baaju mein rakhne hai na sir. You most probably won't survive the same job for 25-30 years in today's dynamic industry as well as the same city especially if you are in service sector.
I bought house just because of house owner of rented flat. He was a mess to handle especially his wife who would come for most stupid things
Madam post tax rebate, if we are getting the interest rate at 4.9%, and inflation is considered at 6%, then isn't it -1.1% interest? I am stuck here🤷♂️
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I don't like the lack of freedom in rented houses. You are always answerable to the landlord. Even flats are not completely yours. Individual houses are the way to go even if it's a small one.
What kind of lack of freedom do you mean? If it's an apartment I understand there are a lot of rules but an independent house can be modified if you're a long time renter and when you leave the modifications can sometimes benefit the landlord right? Just want to know your view
@@uthkarshrajeshwar6525 owners allow you some modifications but like I said you always need to ask for permission. Also many owners set a lot of rules like other people are not allowed to stay and stuff.
As for flats you know how annoying the flat association is. I have a friend who received an email from the flat association saying bachelors are not allowed in the flats even though it is his own flat.
Imagine a rented flat..
@@tradehut2782 😂
If you like retired uncles tracking who comes and leaves your home, buy a flat.
If you like to be told what isn't allowed in your home, rent a house or a flat.
If you like freedom and quality of life , build a small home in a good locality.
U can make the changes in ur own house. Colour furniture garden .but rent house every 11 month .n landlord thinks tentent are nothing as compare to him
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@@fenyx2558 😂😂 Feeling samaz bhai bande ke...grammars nahi 🤣
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There is one major flaw in this calculation i.e The saving on EMI, the Effective rent will increase over the period of 15 years, whereas the EMI will remain the same. Hence, the saving on EMI will be much less.
She did consider increment in rent amount.
@@asinghal9666 if you refer to the calculation sheet given in the description, The saving on EMI of 36082 is calculated by subtracting effective rent i.e 14000 from EMI i.e 50082. then it was bought to future value. the effective rent will increase over the period of 15 year
@@achingarg48 YES YOU ARE RIGHT RENT INCREAMENT SHOULD BE CONSIDERED
@@achingarg48 she did subtract the total rent paid i.e 42lac.. you can check again..
@@pnjathar No she didn't G20-B13 i.e 50082-14000. She did consider the annual gain on rent on 42 L Calculation but missed it on Saving on EMI
1. HRA benefit isn't plain 30% of the rent, you need to reduce 10% of basic.
2. Whie taking the difference in saving to be invested, you need to account for the rent increase every year.
3. The difference you have shown in driven by 6% return on home whereas 10% otherwise.
4. In places like Bangalore or Hyderabad, monthly maintenance is paid by tenant.
5. Even by 3% rental yield benchmark, monthly rent for a flat worth 75 lakhs shall be higher than 20K.
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We both are working couple. In 2011. We purchased a 2bhk flat in Navi Mumbai at 22 lacs and the EMI was 16500 which was equal to one of our salary. Now after 10yrs our salary is 80,000, the rent is 10,000-12000 and flat price is hiked from 70lacs to 75lacs. I think it was our good decision at good time. By taking this decision I think we have reduced a major tension of instability and struggle for permanent accommodation in our after retirement and next generations life. After retirement when peaceful environment and relax life with complete family members is most needed, our income becomes limited, Big or small health issues arises, chances of getting loan becomes low, at the stage of life when we are physical, mentally and financially insecure, unstable and unable to take risky decision, at that stage of life the feeling of owning a home becomes wise decision.
i dont think a 2bhk flat will last by the time you guys are old and why would you live in Navi Mumbai when you are old its too costly , you can build a house in a countryside with peace before you retire
@@bhargavreddy7038 in Navi Mumbai commonly minimum life of a building is 50yrs. After that, when the building comes for redevelopment, you get more FSI and latest Amineties. Now why Navi Mumbai and not country side. We own agriculture land and house in country side but we are born and brought up in Mumbai, working in Mumbai, relatives, friends in Mumbai, adapted to local transport like train, Bus, Taxi, mono and metro. From Ulwe You can travel to any place Mumbai, Thane, Pune, Goa, by good Road connectivity and by international airport all over the world. After retirement In old age, you need a City equipped with modern and multipurpose Hospitals with good health facilities which lacks in the country side. When you have spent most of the life time with busy, rushing, fastest shedule, online services, your lifestyle, your body and your mind are adapted to this environment. you can visit for a change in country side but can't stay for more than a month.
That's just a CAGR of 8-9% over the 10 years
@@UK-tm1ne perfect explanation
Same case same example same situation bought flat in same location but just 1bhk
For those planning to buy a readymade house (which anyday feels altogether different {emotional angle} over renting),
Try if you can rent a house in the same locality where you are about to buy, ideally the same society and see how it feels, experience on rent the good and bad of that locality. This way you will be fully assured of go ahead or look for another society instead of committing and adjusting to that locality, ofcourse at some added cost but we don't usually buy house every year, so this effort is totally worth and also try to set aside EMI amount to see if you are financially comfortable in committing to such long term loan.
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And by the time you decide.. no property available there !!
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Buying a house is just like planting a plant, you won't get much fruit from it but your children will surely get.
Similarly, saving the money while staying in rental house is giving money for more and more fruits to your children. You may even buy different fruits rather than sticking to only 1 type of fruit.
This is the nonsense that real estate sellers say. Fact is, your kids will immigrate to bigger cities for better jobs.
Unless you buy in South Mumbai, this argument is nonsense
@@manishjape3196 thats difficult as saving money in other ways is more difficult , property rates will always be well ahed of any other comodities after 15 years
👍 Smart son
Over long period of time say 15-20 years real estate's return will out beat any other form of investment
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Rachana this is like comparing marriage vs staying single. Obviously staying single will win at any given time. You save lots of money too if you stay single.
Lol
Depends. If the spouse also works. That is extra income, and hence extra savings and investment..... Right?
Of course all this is just opportunities. Financial discipline is very important and that is lacking
HAHAHHH
I dont think that both things are analogous to each other. Rachana is only presenting financial angle as she explained in the beginning. If one is invested in emotional angle then this video is not for him/her. He/she can still buy house so as to have that emotional satisfaction.
Marriage cannot be compared for this since it is "almost" a social need for a human. The way someone is not going to stop eating for saving money on the same line one is not going to avoid marrying because of money (but ofkos exceptions.)
Kharach LOL
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Please make a video on “buying 2nd house (to give on rent) VS investing in mutual funds”
Yes I too agree. That topic will also be interesting
IMO, mutual funds in India are much better given that, in the current state of real estate in India, the rental yield is too low (3-5%) in most cities, esp. in metros. Also, there are benefits of liquidity with mutual funds. However, if you are looking from the point of view of having a stable (and less risky as compared to mutual funds) income for let's say retirement and have some money to spare to buy the property, second house may be a good option.
I think mutual fund is best.
Watch Parimal Ade sir video
@@drraghavnarang8085 that is also just rent VS buy analysis, right ?
Although she deducted the cost of buying a house to compute net benefit in Column G32 but She missed to deduct the amount deposited from the net benefit in column B26 :D
The final benefit of renting the house as per her expected return on investment in case of renting a house will be (1,57,43,750 - 11,25,000 - 36,082 * 12 * 15) = 7605000/-
Benefit Renting a house: Rs. 76,05,000/-
Benefit of buying a house: Rs 72,49,798/-
The best suggestion i can give based on my personal experience is ( keeping Hydreabad, Bangalore and other Tier 3 cities in view)... Rent an apartment in the city and buy open plots in different parts of the outskirts of the city from your savings and by taking (personal loan or plot loan)... These open plots cost may vary from Rs.5000 per sq yard to 25000 per sq yard.. with in 15 years these open plots can give you appreciation of 200% to 1000%. (based on the plot values that myself/my friends/relatives bought in last 15 years in different outskirt locations of Hyd and BLR i'm giving these figures)...
Super bro
This is such a great idea 💡. 👌👌
What is the CAGR sir? Especially if it becomes 200% after 15 years.
Wonderful approach. However your timing is excellent. You bought it during the CBN effect. Now the city growth stage is at peak. The effective growth will be slow if someone buys now when compared to your timing.
@@tulyamahamunigotrasya what is cbn effect
Buying own house and making beautiful , useful furniture and living there is a peace mind
I have started liking my job too after home loan😃
I feel that after 15 years ,in the rented place expenses will keep on increasing but once you complete EMI in your own house , the expense is only the maintenance.
Yes, the scenario after the 15yr loan period is to be taken into account. She has misled completely
👍
After 15 years you will have home or if you are renting and saved emi amount then you will have 1570000 rupees in your pocket so calculation is correct in one hand you will have home and in other case(Rent) you will have 1.6crore in your hand
but your investment will also increase at 10% , it was already 1.5 Cr . 1.5 cr annually at 10% generates 15 lakhs .More than enough to cover rent , monthly expenses child education , thought of this ?
Where can I find excel sheet for calculations
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You just showed what we save at the end of 15 years, but the one who stays on rent does not own a house after 15 years and continues to pay rent, whereas the one who bought it, will save money and will have the house as well.
Right..
I have a golden reason here to rent a house..if I have 85 Lacs saved in 15 years by renting a house..I will go for world tour with wife in my early young age..which may not be worthy after 15 years...so renting house and enjoying tours for 15 years is the best option..as we have only one life....the owned house would not come with us in heaven...🤣
Absolutely! The kind of confidence a property owned gives an entire generation in a family wouldn't be just an 'emotional decision'
well after 15 years of saved money in more liquid assets you can buy a home of it. + renting gives you better options to move across for better income. so you can retire or buy a house in a tier 2 city and enjoy low cost of living
Find me a house owner who will give his house on rent for 15 yrs or are you suggesting to change houses every year?
Most of us are not gonna even buy or rent a house but still watching
Plz don't write us write I cause ill not buy a house but house's
@@manaschoudhary3924 good for u
Then where are you staying?
You must either rent or own. What else can you do, stay on the street?
Yeah, we live on the streets.
People who tell that renting is better than buying, they have there own home. I don’t understand why they tell like this. One should have at least one own home for permanent stay.
bro, you can buy if you have emotional attachment to home and u can buy if the property value increment is more than 9% per year . she told that
True bro, instead of putting money into somebodies pocket, it's better to buy a home & pay the emis
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Had the same discussion with dad yesterday, but now that I see your calculations, He was right as always XD
After 15 years i.e., after completing my EMI, from 16th year I have to pay only maintenance amount for my house and live there through out my life time. But in a rented house I have to pay rent even when I am 70 years old.
yaaa i dont know why in india people think that they will plan for leaving 150 year of life...after 70 now 75% parents are dead or rest all leving in ashram or hospital...
But vijay you should also know the that your house will also grow old too! ;)
@@kunalahuja1272 but average house age is around 60 yes so I think after 15 yes when you own your house you will be saving so much amount..it's just a thought I am not an expert
It is an amazing point ,
Imagine pain of moving after 11 or 24 months and what about of renovation and buying your favourite furnitures and artifacts for your house.
I think you should not have more than 1 house instead invest in property in village agricultural land so that atleast you have food if things worse than covid come in future.
After all, we all are going to office for food but even that is also not guaranteed, having an agricultural land guarantees food atleast.
The amount saved by renting will never be in ur bank account as savings to buy property after 15 yrs.. it will get empty by buying luxury car or an expensive vacation and finally roadpe
That will be from an emotional point of view. Luxury cars and expensive vacations are emotional decisions. From a financial point of view, you have to be practical, and that means you will be saving it diligently and investing in a market linked instrument like Mutual Funds. Keep emotions out of the game if you want to do a financial/practical comparison.
You need to be wise for that and learn nsc
Depends on how you handle your finances
Why buy expensive car and vacations?
Invest that money. If it's difficult open an SIP.
But generally the amount saved in rengting, will not be reinvested and that too at 10%. Therefore buying atleast 1 house is not a bad choice.
totally agree
True
Yes the.fact is that people will regularly pay bills that needs to be paid but the amount which is saved by renting house (35000),they will not reinvest it and spend it until all money over😀...moreover all these are assumptions in some areas like hyderabad and delhi the properity increase rate is more than 30% a year...so, think yourself...😇
@@ganeshudathala5286 property application is 35% in last 10 years in Gurgaon. You can check prices of new Gurgaon. And DLF flates buyers in negative after 7 years
@@ganeshudathala5286 bhai olf flats ki value decrease hoti h after 12-15 years based on builder and construction quality. Dilli wale to nale ke upar wala ghar bhi lelete h dilli me
rented house is good for corporate couples but for ones(like me) who have their family responsibilities as well, they can't shift their parents to a rented house.
With your own house, you have a mental satisfaction that yes my parents are there and the house is theirs. But if I want to live separately with my partner then choosing a rented house is the best option
Usually, I feel people are more interested in making a video than to think about logic... You have actually covered each and every point like a true BANIYA... Really liked your video... Keep it up..
how about the benefit of rent/ emi free house after 15 years..that had not been computed. assume at age 25 you are lucky to get this loan and buy the house then after age 40 until retirement you will live rent free and keep appreciating.
Madam , you forgotten to mention about Property Tax on own house if owned.
Also, several landlords charge advances (sometimes ten months’ rent, particularly in Bangalore) that gets locked up and only a part of it is returned to the tenant citing damages made to the house.
@@user-qk2mf4yv4r fake account...let's report 🙏
@@shobhakaore3962 done
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@Jason Aldean l've been in such situation before and it wasn't an easy one
But even after 15 years you need a house and that time the cost of the same house is higher than what we saved during that period via renting house even at 6% property grown rate. We have to consider this as well.
Arrey. This is not required. You should understand financial. If at all you need to buy then. You can still buy a 15 year old home for less than 1.5 crores easily whereas you have saved 1.6 crores in rent. Also, no surity that you will stay in same city over 15 years in this fast moving world and selling a 15 year old home is not that easy. Moreover she has given just 10% CAGR for investment. Any debt funds gives that. If at all we are decent on investment and go for bluechip funds or Nasdaq funds one can easily expect 13-15% CAGR then obviously rental is better.
100 percent. I see flaw in the logic used the video. In 15 years time, that 1.07 crore flat will cost atleast if not less 2.5 Cr. I have seen that change in our property as well.
@@user-qk2mf4yv4r 💩
@@dewanmohamed9167 True but when everything is hypothetical, then why not consider this as a situation too. With proper maintenance, one can use the property for as long as 50 years.
Try to invest in different strategies which will give you on avg 10% cagr.. You have to outrun the Inflation rate of 6%. In 15 yrs compounding you will have good amount to purchase the house
Dear Madam,
"Saving in Monthly EMI
" -> It gets reduced every year due to increase in annual rent i.e. 7% which will subsequently reduce "Value of EMI saved
" for total rental period.
Was it being considered in this excel ?
Right
Also the appreciation value is calculated wrongly . It should be calculated on 75 lakhs 😁
Please correct Ma'am. This is an inaccuracy in the video and people take decisions based your mistakes.
Every year your yearly income is also increased by approximately that much, so both cancel out each other.
After saving 1.5 Cr by renting the house, my mindset would be let's buy a house with this amt .. haha. So its better to get now itself rite? Lol
Same
Renting is good only on paper. In all practical scenario, buying a fair price house with shorter loan duration is a better option.
@@foreverkushal Very true, because when you rent a house, once the rent paid your amount is zero. However, when you pay EMI, you are owning the property. You are getting an asset and the value of property also increases. In case of renting the house, you are still paying rent after 15 years and when we take a loan after 15 years, we have our own house and no rent :).
When we pay rent of 20,000 monthly with the interest rate of 5%, FV after 15 years is 53,45,778.88
I would rather invest in index funds. 😂
Awesome suggestion mam. I was actually in this dilemma
Video is awesome. But we've got one life, by practical means renting might seem sensible but we need to keep our heart happy as well. Being either all practical or emotional is dangerous, there must be a balance always.
Have you considered the deposit amount in case of rental property? Further, the hassles of shifting the rental place atleast once or twice in span of 15 years may also affect the calculations.
The calculation needs to cover deposit amount, constant shifting amount charged by mover and packers, cost of investing time in finding new place every new year till the time you find an owner that puts only 7% increment. Usually the increment is 10%. Also, even if we rent house, we pay society and maintenance charges. And the cost of time that we invest in convincing the landlord for basic changes. The calculations seems very lucrative but practically, there is no saving if you live in constant fear that someday your landlord would throw you out of the house for any stupid reason. In all such calculations, the analyst don't consider such mental tortures and the price we later pay for mental health counseling.
also she calculated total total interest not so accurately as she hasn't considered RBM (Reducing Balance Method) for it
True no one allows to stay for more than 3y
also one should also consider that even if wr prepay 1 more extra emi per year we can close home loan in half the years.
@@archanarelan7906 indeed I'm new in delhi and i took 2bhk on rent , i paid brokerage , advance rent as security , ac installation , now after a year again now i shifted to somewhere else near to my job location i paid apx 40k again rent + security plus brokerage loading unloading again tv ac installation charges , it would be better buy a house on loan and live peacefully
hi, rachna, very few people know how to smile from eyes. Your eyes smiles. Keep it up. There are lot of people who praises you about your explanation of topics. Keep smiling.
Just because your friends have it doesn't mean you should have it 😂😂
because that moment Rachna mam also want to purchase that duplex which his friend bought
@Manjula Edlabadkar We live in 'hawa yeu dya times', so no joke is small if you can pretend to fall off your chair laughing. :-D
@Manjula Edlabadkar ugach naahi, taai - tyala paise miltaat tyache. Tumhala kaahi sense of humour'ach naahi ! ;-)
While calculating "savings in monthly EMI", Why haven't u considered the average annual rent increment of 7%. Rent will increase annually however EMI will remain tha same which will lead to less savings in coming years.
She mention the rent increment, check again
Rajat is right. She mentioned it in the initial segment when she was calculating the cost of the rental house over 15 years. She did not factor for the increase in rent when calculating the savings in monthly emi. The rent increase will mostly eat up a lot of the benefit.
Also consider inflation : that 7% is a fixed amount, it will lose value with time.
Me a robert kiyosaki fan : I will buy a house and then rent out 2 floors .
15 years later I get my investment back.
I neither paid rent nor any emi from my pocket.
Buy assets that gives income 🙂.
After 15 yrs, life jingalala 😎
Goodluck finding 3 floor affordable houses in Mumbai
@@sagarkulkarni2590
First of all I never talked of 3 floors .
I said 2 floors !
And I live in south mysore. The price of land in affordable and a 2 floor house is not a big deal !
I have relatives who make a living just by rent itself.
They own 2 building.
Bank emi is paid with the help of 3/4th income from 1 building.
Rest all pocket.
You missed double brokerage, registeration charges, shifting charges, packing charges (if taken packers and movers service) etc for renting a house. + the hassle of changing houses time and again. (Hunting for house, packing, shifting, unpacking, new neighbours everytime etc all these things are tiring and exausting)
Plus the pain of getting your address updated everytime on your Aadhar, DL, passport, voters ID, Bank, gas connection etc., In cities like Navi Mumbai, the brokerage (minimum a month's rent) needs to be paid every year whether one shifts the house or not.
@@Sudanmadhu7 lol you are being taken for a ride by your broker. I have lived in Navi Mumbai also. Pay brokerage once and never again for the same property.
@@Sudanmadhu7 completely agree in Mumbai it's double brokerage and every year they charge brokerage even if you continue in same house..
@@Sudanmadhu7 Exactly. This is the major deterrent in the renting decision. The instability. You are always at the mercy of the landlord. And this is the major factor that outweighs all the financial advantages the renting option may show on paper. If I want stability, I will never go for renting option, howsoever cheap it may look. This video should have covered this major factor
@@vkajarekar Most of the landlords are d*ck , they will never given pan number , so people are not able to claim full hra benefit, they have to submit fake proof even for real payments
She ended it really well. It all depends on where you buy and what is expected appreciation in that area.
I guess excel is not added to the description ?
Life is not jst 15 years, Think about after 15 years, the house is yours, No rent No EMI.
yes, its yours for atleat next 100 years, but the point is that in today's globalized job market, if you are an employee, you never know where need to migrate due to employer's demand or own career growth. So if you are buisnessman, who have well established buisness in acity, buying a house in a posh township will be a good option. else you can rent a worthy house in a sub-urban area.
True
The comparison is done at the end of 15 years, you can just keep this calculation extending for more years. So the point of having house forever is not valid.
@@ankanmazumdar5000 but how many days you are going to work at some point of time you need to be take rest at the time you need definitely some property
after 15 years, you can but the same house(even with a premium) and still have enough left
What about the Shifting cost whenever Landlord tells u to get out from his house and the Deposit amount and mental stress given by him...
Lease bnti h sir
On that you can't move out without atleast a month's notice. If you do so, you will loose most of the money from the deposit amount 🙄
@@amitojsingh5159 Lease is even more risky.. You deposit high sum with him on Condition he has right to recover for damages..
I have heard many people in Bangalore did not recieve their half of the deposit amount.. Reasons they gave are door lock is not working, electrical stuffs have malfunctioned, bla bla... On top of that 1 month rent will be recovered for cleaning and paiting...
Edit: this won't happen if the owners are honest but how will you get to know who is good.. I changed house 4 times luckily all were very nice owners they deducted 1 month rent as promised..
Exactly. On Sunday late eve our landlord suddenly texted my husband to vacate in one month ASAP! Though we have a lease of 2 months! We are living here for last 6+years! it's really heart breaking.
@@amitojsingh5159 ghar lease pe ?
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Faulty POV. After end of 15 year tenure, asset created while renting is 1.57 cr while after repayment of loan, the property value is 1.8 cr.
the property value is only in papers. You can't the sell the house you live in.
The assets created while renting is 1.5 crore in liquid cash. You can buy a house directly if you feel like after 15 years or continue to live in a rented house. Your choice.
No one buys a 15 years old house as those rates. Would you buy a 15 year old flat?
Very well explained. As far as I'm concerned, I would buy a house, irrespective of the calculation, if I intend to stay at a place for more than 15 years. I wouldn't want my family to keep moving from one place to another & I don't want to live at the mercy of my landlord.
bro agree with what you said, but what about the compounding interest on loan?
Are we stopping you ?
5 years of continued efforts brought you here... the success is well-deserved!
Sahi bat he.👍👍
As your rent is increasing every year, how your “Saving in monthly EMI” will be 36K for 15 years? It will reduce every year and In next 10-12 years your rent will be same as your EMI. Please clarify this point!
I have same question , could you please clarify Rachana..?
She has taken 7% increment in rent every year. That's sort it out.
@@shriniwaspakalwad5178 That's true but when your rent will increase you won't have the same amount to invest. your investment amount will be reduced every year and at some point rent will be more than the EMI.
@@Justanotherguyinutube but your earning/salary will also increase every year at least by 6-7% so the net savings will remain same.
@@rohitmalhotra1254 That increment money will be there even you buy the house.
Nicely explained. But beyond the financial angle, one needs to also consider the emotional one: hassle of shifting (and cost), discrimination between tenants and owners in most societies, pride of ownership. In the end, I would say, one should own at least one permanent residence. Even if, as an investment it may not beat the market of even FD rates, and it is illiquid,
The biggest mistake is to thinking with ur heart and not your mind , poor people buy homes , rich people Live in them
Because of you my english improved.
Hi Rachna Ma'am,
There's a glitch in the calculation of EMI saved, as it's been calculated based on the difference (of EMI - Rent) of Year 1. While the EMI amount will remain fixed over the duration of 15 years, the value of Saving in Monthly EMI will keep on decreasing every year based on the increase in rental value. So, Renting doesn't look lucrative at all.
At old age you need a place to stay. You can be moving on rent. I feel we should start loan early and close early in life.
If you make the right financial decisions, you will save enough money to retire early and buy a house of your choice, rather than making builders and politicians wealthy.
This is exactly what is was thinking, plus after 15 years you won’t get property in same location if you get that too will be very high.
Also , Home loan is forced saving . Rarely any body will invest 50-60k for savings.
I believe this happens in reality.
its better to build a house during 40s in a serene countryside, cheap , peace
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At the end of 15 years, 1 option will give you an asset/ security other option will give you nothing
Money is an asset no? You'll probably be holding the money in some mf/stocks
i feel clearing the home loan of 15 years in less than 10 years would influence your decision to go for a own house rather than renting
Good point. There will be a saving on interest component.
The EMI in that case will be much higher.
Honestly, the property appreciation value is also flawed, the reason being ageing! Property does not always appreciate, dilapidation causes massive losses and Maharashtra has the worst redevelopment rules.
Yeah something she should have considered
I think apartments don't appreciate that much
Or do they can someone clarify
Khud bhi kuch kar liya karo..she has given the excel sheet..
@@pradyumnamundhe8643 hahahaha I know. I was just discussing. We love her work and really appreciate it.
Paheli Mumbai hie ek city thi toh 13 percentage appreciation tha Mumbai me ab toh pune nagpur nashik navi Mumbai Thane bhi options me hai to appreciation 8 percent se jyada kahi nahi hoga
Real estate will not good as investment
As it was for last 2 deacade
@@Ask-li9ok Yeah, last 30 to 40 yrs was really amazing for real estate. My father had gained almost 1200 times return in real estate
When you have parents and children you got to have a permanent house.
Great presentation as usual. Thanks for the video
Great Informative video ..but you have calculated direct 30% saving from tax on HRA ..but the actual formula is a bit different to calculate HRA exemption. Apart from that , I believe everything else is perfectly fine
That extra cost is paid for the luxury of the "OWN Feeling".. its the cost of living in ur own home. The emotional value is much more than the financial value. To be precise ... " tyaa welechi tya kshananchi mojleli kimmat aste... we are humans... not robots... " .. paisa upar leke jaa nahi sakte :)
According to me buying a house is always a better option than renting.
It will give you more confidence in life. Its always more worth than anything
Hi madam,
You missed one point , once we own a house it's just not you but for your future generations as well and value keeps adding. Very big asset to future
Renting house and moving here n there. Deal with owner is painful.
U must have own house , small or big does not matter
It may not be possible to own a house in cities. Find the right owner. I'm staying in a rented apartment for over 10 years and I haven't had any issues.
@@Viator9 u will soon. note it down man.
@@venomium4360 Of course I will move but I will definitely find the right owner. In case of apartments, there is no big difference between owning and renting. Only thing you can't modify anything. But, you will have the freedom to shift in case of any issues. Selling is far more difficult.
Your job place can change anytime in private sector, how will you afford houses in various cities
@@sagarkulkarni2590 My dad bought our apartment at the age of 40. I think after that age you need to decide which city/town to settle in.
What bugs me is after 15 years you can't buy that same house worth 1.79 cr for 1.57 cr...
Yes you are right...there is a bug in this calculation, she has deducted rent twice while calculating net benefits from renting
Point is why do you want to buy that house.. weather you rent it or buy it you are staying in the same house. End of the day you have 1.5 cr cash.. and if you have a apartment it's difficult to sell old resale property you will not have money in hand.. that's the whole point of this video.. if you emotionally make a decision you will have a concrete house which has paper value.. if you financially make a decision you will have money in had that can be taken out used for any emergency... As she said we Indians are always go for making emotional decision.
@@Aav27-l3k Financially, it's a 22 Lac hit that we take with the renting option. And renting has it's own cons. Moving every couple years takes a toll not only on finances, but also your family life. Your relationships, neighbors, wokplaces and schools, all are affected with renting a house.
Makes no practical sense to me.
Don't know which 22lac you are referring to .. anyway as I said we Indians as you said live for others like partner , parents , relatives and neighbours that's what emotional means.. this issue is not there in other countries so most of them live in rent not caring about anyone and they live their life fully.. were as us we live for our others .. that's the fact ..
@@Aav27-l3k Welp, don't see anything wrong with involving emotions in a decision as big as this. And it's a misconception that people other than Indians don't involve emotions in such a decision. If any, are exception than the norm. Additionally, we also assume perfectly meticulous planning and our plans panning out as we think. It'll take immense serendipity for it to come to fruition as any calamity in those years of investment can wreck our plans and our future. OTOH, with immovable property, you lock in a safe future for yourself.
EMI remains constant through out 15 but the rent changes so you cant invest 36K every month which will affect all your calculations a lot
Considering your yearly increment at an avg of 7%
You forgot to add intangibles of buying..Stress we would be carrying for 15 yrs..Health depreciation due to stress..Sleepless night for 15 yrs.. And if we lose the job then forget everything.. :D
Yeah!
The point you made is the most important and also most neglected one. Sir
Same problems even if you live in rent.
But buying a house would secure future for your children also, and btw whatever it is life is always stressful. Every month paying rents around 10 k is still like paying a unknown to make him grow. Instead the same 10 k u can pay emis for loans n own ur house for life time and for next generations
@@krishkrishna4778 Flats won't be there for next generation, their life is max 80 years
It depends on individual perspective. Everything can be brought on rent or owned by emi Including AC, furniture, car, bike etc.
You missed to consider the yearly property tax that is to be paid when house is bought
@@manishaadak5679 lol who said? Property tax has to be paid every year.
I guess we can this cost under maintainence, when doing our calculation
When she said ''smash the like button'', I remember Graham Stephen.
He like dead ass says that 50 times in a 2 mins video
Smash the like button for the TH-cam algorithm 😂😂
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Hey graham's it is guy's 🤣🤣
Smash the like button - Ozzy Man
Owning a house gives mental peace that no one can ask you to leave. Can't put a price on that. Having said that, the video is a very good tool to help with investment decisions.
Another benefit of renting: You can move to a different city if you get a better opportunity.
👍
If you have an own house in one city, you can rent it out to someone and work in a different city🤷
@@priyanair5686 easier said than done..
Finding somone Is a task negotiating rent(pay to real estate agent since you are in different city), paying property tax + maintenance. Society would want you to be present in meetings and decision making.Flat Repair expense. After every 2-3 years after tenant changes.
Assuming there is a gap of 2-3 months after every tenant goes. The flat that I am staying in was vacant for 6 months and hence the owner gives in less than market rate and fears that I will leave the house he will face the same problem.
Only if you don't have family to tag Along.
@@priyanair5686 Issue is, like in this example, rent I'll get is 20k but EMI I've to pay is 50k. And then, when I move to another place and stay on rent there, I've to pay another 20k.
But what about owning property angle? Doesn't matter where u have a property in future the ROI will increase for it for sure!
She did calculate that right? At 6% interest rate?
In 20 years I bought and sold Six properties and also lived in each of it for 3-4 years. Now I am living in a Rented house after our Retirement and are very much happy and satisfied with it and left with A Good investment Made in the last 2-3 years and getting a decent ROI...
My experience says it all, When you have two incomes and young, buy properties and live for 3-4 years in them and sell it when you get a decent resale value, buy elsewhere and so on and keep doing it till you are 55-58 and by 60 Stop investing in properties, sell them and accumulate funds and finish off All your Life commitments.
Then Choose A good rented house with All those amenities and facilities, keep paying rent for the rest of your life and in case you get bored with the same house just keep changing to New homes every 4-5 years, change area, even city like what we did and I assure you you will never feel bored in your post retirement period...🥰😂👍✌️😍
Dude your logic worked in the 80's and 90's maybe up to mid 2000's when prices were a lot lower. It does not work in todays day and age.
What about your children? You owe them nothing?
@@SAGARTHAKUR-zn7vq You owe them a strong foundation on which they could build their life upon and no more. You definitely dont owe them wealth. In fact if they get things ready-made on a platter, they will never understand the value, will not be able to hold on to the wealth and will blow it away within 5-10 years. lots of proper studies done on this - if you care to do your research.
And there is a different pride to building your own life and wealth instead of living on baap ka paisa. Talking from experience - been there done that.
Rachana - I'm a new subscriber. The TH-cam rabbit hole brought me to you and I don't regret it. You and your team makes some amazing content, simple to understand, a good dose of humor and quite catchy. Keep up the fantastic work!
Please make a video on how the home loans should be closed without hampering much of your money
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good analysis and yes, from a pure financial pov it always makes sense to 1. rent a house over buying one 2. travel in uber/ola over personal vehicles etc etc..but "aisa jeena bhi kya jeena" :)
But interesting part is I am not going to stay at house only for 15 years🙄 so make it to 30 years atleast then I feel more relatable decision to make
there is very much less value for building or falt as it really old ....only land where flat is there is value...if any builder do any new building on ur current flat then only you get good value...
Actual tax benefit is 50% (in metro) or 40% of basic salary. In most of cases it's much lesser than actual rent payment. So in above example effective rent paid (in most of cases) will be 16K in stead of 14k
I realized I would still buy a flat. Thank you for your vedio.
Never buy a flat .... It is a modern waste
@@shivachitti5274 we don't know someone else's situation
@@shivachitti5274 if u buy one flat in the city area now.. after few years you will be capable of buying triple the properties.. bcoz you will not have burdon of loan.. you will be staying near or inside market place.. and you will have alternate jobs and earning capacity.. than being in rent or high paying loan house.. where future is not predictable.. both scenario you have to compromise many things.. covid is best example .... Atleast normal times you will have scope to manage your financial crises.. now you can't yell at govt nor yourself.. bcoz you chose your future.. you have to live with it..
@@kumarancvk flats sell at exaggerated prices .... I am 100% sure it is a waste ... Stay in rented appartment, buy land. . . Don't buy flat. It is a waste.
@@shivachitti5274 buddy.. lands and properties are sky rocketing inside cities.. or where you get all facilities.. if you go far from city.. it's future.. future.. future.. see I am advicing for those people.. who are staying in city.. want to get great future.. you buy a flat first.. a locality where house is 1cr.. land is 60 80 lk.. you get flat for 25 30lk.. go for it.. max to 50 60 yr he will live there.. still that time.. the outer city will devolop.. he too be earning big.. he will be capable of buying land and building house.. if you take a huge loan... Which you can't predict what's your earning future.. how you will be capable of paying loan or enjoying life my friend.. yes if you have good bulk cash..already owning a house.. than you can risk.. you can buy plenty of houses.. but if you are in rent.. and you want to buy cr value of property.. it's risky and at present even you will not get big resale value.. bcoz all city properties already touched its peak.. so think wisely and purchase property.. 2nd option.. if you are not money minded.. you don't have that much craze or family don't prefare lavish life.. you can purchase a land outside city.. build house stage by stage.. rent one floor.. or built are business establishment and live there happyly.. but water, electricity and other transport facility will burdain you for some extent..
In cities like Bangalore, there is rental deposit that needs to be pay upfront which is usually 10 month's rent. So in that case it has to be deducted from down payment amount before investing it as deposit is only returned after 15 years. Also there is apartment maintenance in many societies is paid by tenants which is not shown in rent amount.
No one is taking 10 months these.. you can easily negotiate to 6 months. Maintenance is paid by the owner if you buy there is no difference.
One point missed here, I feel, is at the end of 15 years we land up with a house + 70L cash in hand. But, for a rent option, 1.5cr is left. I personally feel 70L + house is a better gain than 1.5cr of money. 1.5cr may not buy you a home you wanted.
tipical indian midset you can easily generate 25% to 30% intrust ....selling after 15 years u dont get loan for ur new buyers i can say max u will double the amout which u buy for tge house and property price will increase only if new builder build new building removing ur present one then u can accept more..
bit that's a liability and also what will happen when you will loose your job all of sudden due to some unforeseen reasons.
So technically what you are trying to say is that you gonna stay your whole generations in rented house cos you don't own a house. And after 15 yrs, with that 1.5 cr you won't get the same house which was worth 75 lakhs. On the other hand when you own a house worth 75 lakhs, after 15 yrs the house will be worth crores plus the 70 lakhs i saved.
@@ambitionmoirangthem if your builder he will sell thats his job...who and and staying that house that no sell...if they have only 1 house.....but equity u can sell or by... withen no time....
@@ambitionmoirangthem well I didn't mean that. All I was telling is if you'll own one house then you've to stay there for whole life and my profession is pretty unstable in starting phase so it may cost me a huge lump of cash and still there is no guarantee that i'll stay there. so for me renting a house till my late 45 is good option. After that I'll surely buy one as till that time my kids needs a stable life. Guess what, after that my house would have nice and modern devices and amenities as well. And choices can differ anytime so you may not be ok with my choices and vice versa.
Ma'am you substracted rent amout from EMI (50000-14000=36000)
Then atlast you substracted total rent paid from final amount as well...if I am not wrong
For those who don't invest their money wisely, buying house will be wise decision.
Definitely had doubts about this topic. And here you have delivered. Thanks for the vidoe. Worth it
The new trend I find in Mumbai is renting your own house and then rent a bigger better place. So you still have a house to fall back on if things don’t work out for you in future.
Quick queries on total cost of flat
1. What if we are purchasing the flat permanently? Rather than 15 years
2. What if we pre closure the home loan?
4. What if we purchase the flat in under construction project? Where you get time to submit your own contribution
5. What if you are leaving in rented apartment and owner asks you to end the rental contract where your school and other day today setup is established?
6. Are you able to design the furniture and interior in rented apartment even after your financial condition is improving
So if you think atleast buying one own flat is good deal
The boy be like " why am I a part of it" 😂
Great video
While paying the EMI of home loan, buying a home will look costly. But shouldn't we compare the savings once loan amount is fully paid?
Bought a house for 85 lakh 5 years ago and now it is going for 75 lakhs..... property prices are not going up nowadays
@@gramagiri Real estates valuation are very tricky and depends on many factors. Usually it takes around 10-15 years for real estate to give you the value. It's a tangible asset and definitely for a very long term.