[NEED ADVICE] Should I buy a house at 23?
Context - Buying as an investment, don't plan to live there. I plan to live on rent. Current rent is 17k/month.
I'll keep it short for max input. I'm looking at some flats priced around 60-70L for a 2BHK. Rent in the area will be ~30k. If I pay 20L down and take a home loan for 40L, EMI will be approx ~65k for a period of 7 years (I want to pay it off ASAP, to pay the least amount of interest).
I earn around 1.5L per month. Personal expenses are ~50k per month. Assuming I get 30K as rent I'll have to pay a maximum of 40K as emi. This is a very recent thought on which I've just researched for a couple of hours so apologies if I missed anything important but honestly this looks quite doable to me.
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Are you sure you have researched enough where you will get 2BHK for 60 to 70L and yield 30K? For context I am paying rent of 70k for 4BHK in Bangalore and property is worth > 4CR ( Standalone building). Yearly yield % is 2.1. Yours is almost 5.1%
95% of all flats in metro cities are depreciating asset. It's advisable not to buy flat for investment and buy only if you plan to live. Instead you can buy Plots in tier 2/3 cities which will provide good amount of returns.
Why are flats in metro cities depreciating assets? One would think the opposite is true, no?
After a few years, the building itself becomes very old. Resale (and proportionally, rental) value plateaus after a while and then it goes down. (Adjusted to inflation of course, for example you can expect an “appreciation” of 4% for a 10y old building, when inflation is 6%)
Build some more savings first. Make sure you have enough savings that after down payment (assuming parents not involved here) you have enough to pay emi and survive for a year without job. Also some emergency funds.
That'll allow you to find other employment without missing payments. Don't rush it.
Yes, that's the plan. I always keep a 6 month emergency fund. If I go ahead with the plan I'll make sure my emergency fund accounts for the emi as well. Thanks for the input :)
Is this ready to move in flat? Which city? I doubt you will find something for 60-70L with a 30k rental yield.
Nevertheless, also consider other costs like taxes, maintenance etc.
IMO In today's market, it's ideal to buy a flat only if you plan to live there.
Flat is in prime office area in Bellandur, BLR. Considered taxes. I'm actually more inclined towards using it to write off my income tax. Thanks a lot though for the input :)
I'm not sure if such a property exists in Blr. Would you mind sharing the details over dm? It looks interesting. Just an advice: at this age, don't commit to a long EMI just to save taxes.
If you're considering purchasing it as an investment, why not opt for commercial property instead? If you are looking to invest in property, commercial property is more advisable if you are only interested in buying it as an investment.
I don't think commercial properties can give such a high yield given the budget.
If he is willing to pay 60l to 70l using a loan and 20l down payment, he can acquire a godown in the industrial area. However, the price may vary from city to city.