Owning or Renting Homes

Buy a flat or rent a flat? This is a question everyone ponders upon, as in certain cities people only stay for work purposes. It’s true that buying is always a second opinion for people as compared to renting. But, with Rentals there is a sure shot guarantee that there will be no return. On the other-hand there is Buying where there is a higher chance of you getting a good or a reasonable return! 

The disadvantages of buying are pretty limited! The #1 constraint is the interest you will pay. Although, the current government is taking certain steps for reducing the rate of interest of the housing sector. Yet there isn’t such an impact for the people who are not in the super-rich category. 

Looking on the brighter side. There is always the option of Purchasing. There are quite a few advantages of buying a house. Owning a house gives an individual the long-term benefits of security, equity and potential growth in personal wealth. The value of the real estate asset is bound to increase with a given period of time which gives you the luxury of enjoying profits if given a certain period of time. Also, this as well comes with its own risks.

Moreover, it depends on how you look at the matter. If you’re looking out for a short-term investment, then the best suggestion for you would be renting or if you’re looking out for a long-term investment then the option advisable to you would be Buying at any given day. 

In a country like India where people prefer living with their family. Those people wouldn’t prefer moving around as much. As we all know moving is always a pain to carry out. In these cases, also people do prefer buying as it gives them a sense of security and stability.  

So, coming back to the cons of buying a house. They would be that you would be bound to pay a certain amount every month no matter what the cost. Technically speaking that means a certain amount being blocked from your account before your pay-check even arrives. One last thing, maybe that. In certain cases, if the property is not well-evaluated before buying an individual ends up paying more as interest amounts as compared to the appreciation incurred by him. 

When it comes to living on rent versus living in one’s own home, people who advocate the former often argue that a rental home costs less, as compared to owning a home. Those who favour owning a house, cite the freedom that it offers. While owning a home is typically the dream of every Indian, sky-rocketing property prices in the recent past have led people to opt for renting, rather than buying, says Ajay Jain, executive director – investment banking and head real estate group, Centrum Capital Ltd.

“Landlords in most states also tend to restrict the number of years that a tenant can occupy their house, due to the weak protection provided by the law to the landlords. With lower interest rates and the government subsidy for first-time buyers of affordable homes, owning a home is now possible for many more people,” opines Amit Oberoi, national director, knowledge systems, Colliers International India.

Looking at all of these statements given by the big players in the market it is safe to say there are various pros and cons to both. The mindset and financial backing are a very important factor to be considered while dealing with decisions this intricate.

Owning a home is a financial commitment that requires you to plan ahead and reflect on where your life is headed. Before deciding whether to rent or buy, ask yourself what your budget is and if either choice would require you to stretch your finances. Write out your additional financial and savings goals to see how each choice might affect them. Make sure you still have enough money to save for retirement, for example. Compare some specifics to see which is a better fit. For years, the rule of thumb stated renting is cheaper than buying—so renting freed up money for other things, such as savings. However, that may not always be the case. Shifting real estate markets mean it may be cheaper to buy than rent in certain areas, though you likely need to pay more up front. The right option for you is the one that best fits your goals and finances.

Renting vs. buying a home is a big decision, and there are pros and cons to each option. In fact, a higher percentage of U.S. households are renting than at any point since 1965, according to a Pew Research Centre analysis of U.S. Census Bureau data released in 2016.

For some people, renting comes down to what they can afford at the moment.

“I was a long-term renter because I wanted to wait to buy until I could afford to stay in my current neighbourhood,” says Atlanta resident Jennifer Walker, a public relations executive who bought her first home this spring. “I didn’t realize that there were affordable options.”

The reason why the US was taken as an example is because the real estate market similarities are quite while being compared with in a couple states in India as well. 

A few questions to ask yourself and commit to are as follows. 

What can you afford?

How long do you plan to stay in the home?

Do you want stability or flexibility?

Can you afford to be responsible for home repairs/maintenance?

What are your financial, career and family goals?

The financial burden that an individual may go through may be unrealistic when his ends aren’t meeting this can be said by just putting the numbers together and making a simple calculation. There are different costs associated with renting and buying. Using Bank rate’s rent vs. buy calculator helps you break down some of these expenses.

Most rental properties require a security deposit, which protects the landlord against damage caused by the renter. You’ll usually put down the first and final month’s rent payments when you sign a lease. When evaluating a lease contract, ask if your monthly rent includes utilities, such as water, electric, gas, cable or internet.

For homebuyers, one of the biggest ongoing costs of homeownership is your monthly mortgage payment, which includes the loan’s principal and interest amounts. Your payments can go up or down over time if your loan is variable rate or your property taxes and homeowners’ insurance premiums change. If you put less than 20 percent down, your lender will typically require you to purchase private mortgage insurance, or PMI, which drives up your monthly payments, too.

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The synergy between economic growth and urbanization creates a robust foundation for the real estate sector, ensuring a steady flow of investment opportunities. Technological Advancements The real estate sector has embraced cutting-edge technologies such as VR and AR, revolutionizing property marketing and visualization. Potential buyers can now experience properties through immersive virtual tours, gaining a more profound understanding of their investments. These technologies not only enhance the buying experience but also allow real estate marketers to reach a broader audience, increasing the sector's appeal. Resilience Amidst Challenges The Indian real estate market has demonstrated remarkable resilience despite challenges such as regulatory changes and market fluctuations. The regulatory environment, though complex, is designed to enhance transparency and protect buyers' interests. While these regulations can create short-term uncertainties, they ultimately contribute to a more stable and trustworthy market. Market fluctuations, driven by economic cycles, are a natural part of the investment landscape. The Indian real estate market's ability to recover from downturns highlights its resilience and long-term growth potential. Population Growth and Urbanization India's large and growing population, coupled with urbanization trends, ensures a continuous demand for housing and commercial properties. As people migrate to urban areas seeking better opportunities, the need for residential and commercial spaces increases. This ongoing demand creates opportunities for developers and investors across various market segments, from affordable housing to luxury residences and commercial properties. Government Initiatives and Infrastructure Development Government initiatives like "Housing for All" and the development of smart cities are key drivers of the real estate market's long-term potential. "Housing for All" aims to provide affordable housing to all citizens, driving the construction of millions of new homes and stimulating demand. Smart city projects focus on creating urban areas with modern infrastructure, sustainable living solutions, and advanced technologies. These initiatives attract both domestic and international investors, eager to capitalize on India's evolving infrastructure landscape. Real Estate Investment Trusts (REITs) The introduction of REITs has opened the commercial real estate market to retail investors, previously dominated by institutional investors. REITs allow individuals to invest in income-generating real estate assets without owning or managing properties directly. This democratization of real estate investment offers new opportunities for portfolio diversification and income generation. REITs, traded on stock exchanges, provide liquidity and regular income through dividends, making them an attractive investment option. Challenges and Future Prospects While the Indian real estate market faces challenges such as regulatory complexities and market fluctuations, its dynamism, supported by technological advancements and favorable government policies, underscores its resilience and attractiveness. Regulatory measures, though challenging, aim to streamline the sector, enhance transparency, and protect consumers. These regulations contribute to the market's long-term stability and credibility. Looking forward, the Indian real estate sector is poised for continued growth, driven by urbanization, technological integration, and supportive government policies. The focus on affordable housing, smart city initiatives, and the growth of REITs will attract more investors and developers. Technological advancements will further enhance real estate marketing, property management, and investment strategies, increasing the sector's efficiency and appeal. In conclusion, the Indian real estate market offers a blend of opportunities and challenges, making it a compelling investment arena. The dynamic interaction of economic growth, technological advancements, and supportive government policies creates a resilient and attractive investment landscape. For those seeking long-term growth and diversification, the Indian real estate market presents promising prospects, underpinned by the nation's expanding economy and urban development.