To Buy or Rent??

Important decisions dawn us at every walk in life and so is it in the case of this decision of renting or buying a house in your place of work away from your home town.

Ah! Calculations and math and speculations and anticipations all form a thorough block in your mind and coax you to become impulsive and sometimes impractical. But such decisions should be taken with a cool and calm mind and without any peer pressure.

Room on rent in Mumbai is high as EMIs prevailing in some parts of the city. You would then need to consider the following points before you make these decisions. To begin with:

  1. Down payment: The down payment you will make towards the house will be a part or whole of your savings and hence the interest out off it will be eliminated from your income. The liquidity you hold will be deducted partially and hence the burden to start the bank up again.

This however does not take away the fact that as asset in the long run is in the making!

  1. Financial independence: The financial independence when you have no loan on your salary slip as against one that you have one is different. For all major financial decisions you will have calculate the fact that a particular sum will go out of your salary every month and needs to be catered for.
  2. Ready to Use: In case the apartment is under construction and mainly that’s when the launch rates are introduced and are supposedly the best deals offered you will be shelling out another additional sum on the rentals too!
  3. Transfer of job or better opportunities: And it so happens like our phones and TVs or gadgets that we purchase. As soon as we purchase these the prices go down in the next few days. and it’s the same every time. I don’t want to believe it’s a co-incidence. The same thing happens when we do decide or book a home in one place expecting to manage our finances better is when a great opportunity comes knocking your way in other city or at the other end of the city.
  4. Investment return: It’s not always that you would get the return in the form of giving the place on rent as equivalent to that of your EMI. It mostly is much less and may take a very long time if it does to cover the cost of EMI.
  5. Tenant options: In some places it is difficult to give the place on rent as the society may have certain rules and regulations which do not gain you that kind of cliental and you may be at a loss for no fault of yours! The society may be close to an IT park or college and hence bachelors and single working women or students may be your main cliental and the society does not support the stay of this group due to social biases.

The choice is to make or not to make any permanent decisions and to go with the flow. Whilst personally I would like to make as many assets as the government may allow tax free under my name as I am a believer in property investment there are others who feel it is a blockage of liquidity with no fixed and calculated returns.

Concepts and mindsets vary with availability and experience. Room on rent in Mumbai as against buying give you all the above points to ponder about and decide your course of action.

Its a dream come true to live in a house with your name on it and again its a need to have available finance in your bank for the rainy day. If smartly worked both can be easily achieved and truly lived!

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Matthew Okafor