Real Estate Purchase To Occupy Or To Invest?

HEY-LO!

Sorry for being MIA last week! I hope you are doing very well and that August has been easy-peasy for you. Home is where the heart is, but is a home also where profits are for an investor?

Let’s perhaps revisit this poll after you’ve read our newsletter to see if it changed something, LOL!

Here’s what’s in store for you:

• Monthly Market Review - July 2024

• Homebuying: Use vs Rent

• Buying A Home In ‘24-’25

• Binge Of The Month

• Noteworthy stuff served within 4 mins

‘Sup with the market

August was quite a ride for investors! 🚀 Any hopes of a quiet summer were quickly dashed at the start of the month. Disappointing U.S. economic data and an interest rate hike by the Bank of Japan led to a sharp sell-off across global equity markets. 🌍📉

On the bright side, domestic markets had a great run. The BSE Sensex and Nifty 50 climbed by 1.58% and 1.66%, respectively, marking three weeks of gains. 📈 The rally was broad-based, with mid-cap and small-cap stocks also ending the week in the green. 🌟 The Indian rupee got a boost against the U.S. dollar, thanks to the positive vibes from our domestic equities. 💪💵

🏡 Homebuying To Occupy Vs To Invest

Owning a home has always had a special place in the hearts of Indians. For years, we've seen films showing families clinging to their ancestral homes, people dreaming about owning a house, and intense battles against shady builders and land mafias. Films like Love Per Square Foot and Gulabo Sitabo remind us of just how much the importance of owning a property is deep-rooted in our culture.

But here’s the big question: should you invest in real estate? Before you decide, remember that if you buy a house to occupy, it isn’t really an investment.

When you’re buying a home to live in, the focus should be on whether it suits your family's needs, not on how much money you could make from it. But if you’re buying property purely to make money, returns from price appreciation and rental income would be your prime concern.

Looking at the numbers from the RBI’s data, the 10-year returns from major cities show that real estate hasn’t outperformed other investments. After factoring in maintenance costs, taxes, and loan interest, the short-term returns can even end up being negative.

Of course, returns can vary depending on the location and the investor. Some areas might see high returns thanks to rising prices, but that’s not always the case. According to the Reserve Bank of India’s House Price Index, over the last decade, returns from house prices have been pretty similar to what you’d get from a fixed deposit. Rental income can help boost returns a bit, but it usually doesn’t change the overall picture much.

The bottom line: The best use of a house is for you and your family to live in it.

A Guide For Those Buying A Home Soon💡

3 things to keep in mind before buying a home, even if rates drop:

1. Can you afford it? 💸

First off, make sure you can actually afford the home. Ideally, the total value shouldn’t be more than 3-5 times your household’s annual income. You should also have at least 20% of the home’s value saved up for the down payment. And don't forget about those EMIs! Your monthly payments should be less than 35-40% of your income. Plus, you’ve got to be ready to cover not just the EMI, but also maintenance costs, property taxes, and any other payments that come up once you’ve bought the place.

2. Have you done your due diligence? 🧐

Buying a property is a big deal, so you’ve got to do your homework. Make sure all the legal documents are sorted and that the property can be transferred to your name. Double-check all the paperwork, do a title search to confirm ownership, and ensure there are no disputes or litigations. Also, make sure everything complies with local regulations, and look into the builder’s track record to see if they’re reliable.

3. Why are you buying the home? 🏡

Think about why you’re buying this home. It’s often an emotional decision for a lot of people, which is totally fine. But remember, it’s a huge commitment, so make sure you’re really prepared. If you plan to live there for a while and can comfortably manage the EMIs and other bills without drastically changing your lifestyle, then go for it! But if you’re moving around a lot or aren’t sure about taking on that much debt right now, maybe hold off. And if you’re buying as an investment or to rent it out, make sure to do the math and see if it makes financial sense.

There’s been a lot of talk about interest rates possibly dropping in 2024. With inflation expected to ease, India’s GDP looking strong, and a potential global trend of lower rates, we could see the repo rates go down soon. If that happens, and you’re thinking about buying a home, now might be a great time to start considering it!

🔖 Binge of the month

I binge-watched Presumed Innocent on Apple TV, and it's an absolutely amazing thriller! The cinematography is impeccable, capturing every tense moment with incredible detail. And the acting? It's top-notch. Each performance adds depth and intrigue, making the characters feel so real. Do catch it when you can!

🍸 Cocktail Pe Charcha

Is it too overwhelming to research & plan your investment? Say no more, we can personally guide you into mixing the perfect financial cocktail to manage your money!

This debate about whether to buy or rent has gotten so out of hand, it’s crazy! It’s a personal choice. Honestly, I don’t see anything wrong with buying a home. As against popular financial experts’ opinions, there is still a huge sense of relief when you own your own home, it’s a plan for our retirement, it’s a sense of security, that if everything else goes wrong, at least we’ll have a home to go back to.

To NOT following the herd and deciding for yourself🥂

Sayali❤️