What say??????????????????
Some basic statistics on rates of houses / rental rates in different areas of the Chennai follows. Before you go thru those points, please understand that
* None of stats these are accurate and only represents the authors perception of the rates.
* These stats are used for the sole purpose of this blog.
* So, please dont get lost in the actual stats but try and think over the force behind this argument.
AnnaNagar/T.Nagar/Mylapore/Adyar/Alwarpet/BesantNagar - 3.5 - 10/18
Vadapalani/W.Mambalam/AshokNagar/Kodambakkam - 3.1 - 7/15
Velachery/Triplicane/Royapettah/Saidapet/Thiruvanmiyur - 2.8 - 6/12
Aadambakkam/Nanganallur/Chrompet/Pallavaram/K.K.Nagar - 2.5 - 5/9
Madipakkam/Porur/Ambattur/Perambur/Villivakkam - 2.0 - 3/7
* The first number indicates the amount in millions of rupees that one needs to spend to buy a 1000sqft flat in that area.
* The second number indicates the amount in thosands of rupees that one needs to spend to rent a 1000/2000 sq.ft flat in that area.
* I reiterate, these are only some vague numbers based on the authors perception.
Most people start thinking about buying a house at about 22 and actually fall into the trap at about 25. Now that with India Shining, most people are upwardly mobile, especially the IT folks. So they plan to spend 3M in buying a house. ICICI/HDFC/HSBC and all the other financial instituitions are just waiting to give you that loan that you need, albeit at a hefty interest rate which will ensure that you will repay 5M in a period of 20 years.
This means you will stay in your 'own' house, a 1000sqft house, for say the next 20 years atleast. So one ends up spending 5M to own a 1000 sq ft house in a decent area of the city. I am sure most of the real estate eagles would mostly agree with this small maths.
Now, consider this alternate maths about spending that 5M in another avenue.
To rent a 2000 sqft (twice the size which you can buy) house in the same area will probably cost 15K. So, every year it will set you back by 180K. So, after 20 years, you would have spent 3.6M in rental alone. Obviously rent rates will increase. So let me add another 400K to cover that. So at the end of 20 years, you would have spent 4.0M for your living.
Which is a better choice. IMNHO, the second choice rockz. I get to live for 20 years, (the bulk of my middle age) in a nice and plush house (rememeber I am paying a huge rent). I end up spending 1M less which can be used for many things. You can even become a good philanthropist if you so desire. Alternatively you can also travel across the globe. :)
Also, if you think, 'Hey come on.. why do I need a 2000sq ft house. After all, I am going to have one wife and one child. A good two bedroom house would be sufficient.' In this case, thou art indeed blessed. For, you will be spending far less on rentals and will be easily left with about 25M at the end of 20 years. If you spend say 2lakh every alternate year on international travel, then you would have covered most of the places on earth. You might actually be left with some more money despite the travels :)
Of course, everything has a flip side. The flip side is, you will not own a house when you are 50. But hey, do you realize that with all the pollution around us, do you really stand a chance for a healthy(if you are unhealthy, it does not matter if you are living in a 1000 room palace or a 1 room house. you are gonna be stuck in 1 bed) life (if at all you live) beyond 60? Dude, it helps to be a bit philosophical. There have been millions of humans all over the world right thru the ages, owning all sorts of things. Eventually, everyone dies. Remember the cardinal rule of god. You cannot take anything from this earth with you when you die :). Understand this. YOU WILL DIE VERY VERY SOON (wrt to astronomical time scales). So, in this brief period that you are here on earth, make it as fruitful as possible, as happy as possible. Dont get caught into this trap of buying a house and get stuck to it for life. Do things that will excite you and give your brethren tremendous pleasure.
Of course, you are now thinking, "what will my sweet little beta do? He deserves a house of his own." Come on. Give me a break dude. Your son will have a d**k and brain of his own. He will be able to stand on his own leg. Spend the money that you intend to spend on the house on him. Give him good health and good education. He will be able to lead a wonderful and happy life.
What say?
Some basic statistics on rates of houses / rental rates in different areas of the Chennai follows. Before you go thru those points, please understand that
* None of stats these are accurate and only represents the authors perception of the rates.
* These stats are used for the sole purpose of this blog.
* So, please dont get lost in the actual stats but try and think over the force behind this argument.
AnnaNagar/T.Nagar/Mylapore/Adyar/Alwarpet/BesantNagar - 3.5 - 10/18
Vadapalani/W.Mambalam/AshokNagar/Kodambakkam - 3.1 - 7/15
Velachery/Triplicane/Royapettah/Saidapet/Thiruvanmiyur - 2.8 - 6/12
Aadambakkam/Nanganallur/Chrompet/Pallavaram/K.K.Nagar - 2.5 - 5/9
Madipakkam/Porur/Ambattur/Perambur/Villivakkam - 2.0 - 3/7
* The first number indicates the amount in millions of rupees that one needs to spend to buy a 1000sqft flat in that area.
* The second number indicates the amount in thosands of rupees that one needs to spend to rent a 1000/2000 sq.ft flat in that area.
* I reiterate, these are only some vague numbers based on the authors perception.
Most people start thinking about buying a house at about 22 and actually fall into the trap at about 25. Now that with India Shining, most people are upwardly mobile, especially the IT folks. So they plan to spend 3M in buying a house. ICICI/HDFC/HSBC and all the other financial instituitions are just waiting to give you that loan that you need, albeit at a hefty interest rate which will ensure that you will repay 5M in a period of 20 years.
This means you will stay in your 'own' house, a 1000sqft house, for say the next 20 years atleast. So one ends up spending 5M to own a 1000 sq ft house in a decent area of the city. I am sure most of the real estate eagles would mostly agree with this small maths.
Now, consider this alternate maths about spending that 5M in another avenue.
To rent a 2000 sqft (twice the size which you can buy) house in the same area will probably cost 15K. So, every year it will set you back by 180K. So, after 20 years, you would have spent 3.6M in rental alone. Obviously rent rates will increase. So let me add another 400K to cover that. So at the end of 20 years, you would have spent 4.0M for your living.
Which is a better choice. IMNHO, the second choice rockz. I get to live for 20 years, (the bulk of my middle age) in a nice and plush house (rememeber I am paying a huge rent). I end up spending 1M less which can be used for many things. You can even become a good philanthropist if you so desire. Alternatively you can also travel across the globe. :)
Also, if you think, 'Hey come on.. why do I need a 2000sq ft house. After all, I am going to have one wife and one child. A good two bedroom house would be sufficient.' In this case, thou art indeed blessed. For, you will be spending far less on rentals and will be easily left with about 25M at the end of 20 years. If you spend say 2lakh every alternate year on international travel, then you would have covered most of the places on earth. You might actually be left with some more money despite the travels :)
Of course, everything has a flip side. The flip side is, you will not own a house when you are 50. But hey, do you realize that with all the pollution around us, do you really stand a chance for a healthy(if you are unhealthy, it does not matter if you are living in a 1000 room palace or a 1 room house. you are gonna be stuck in 1 bed) life (if at all you live) beyond 60? Dude, it helps to be a bit philosophical. There have been millions of humans all over the world right thru the ages, owning all sorts of things. Eventually, everyone dies. Remember the cardinal rule of god. You cannot take anything from this earth with you when you die :). Understand this. YOU WILL DIE VERY VERY SOON (wrt to astronomical time scales). So, in this brief period that you are here on earth, make it as fruitful as possible, as happy as possible. Dont get caught into this trap of buying a house and get stuck to it for life. Do things that will excite you and give your brethren tremendous pleasure.
Of course, you are now thinking, "what will my sweet little beta do? He deserves a house of his own." Come on. Give me a break dude. Your son will have a d**k and brain of his own. He will be able to stand on his own leg. Spend the money that you intend to spend on the house on him. Give him good health and good education. He will be able to lead a wonderful and happy life.
What say?
8 comments:
I just have this calculation. If I rent a house now @ 10K and period I assume is 20 years. The premises are :
My rent is gonna increase atleast by 1000 /- per annum. a 10% rise. so on an average my rent amount is 20,000 for next 20 years.
It amounts to : 20000 * 12 * 20 = 4.8Million rupees given to my esteemed landlord. I just made my landlord richer. Instead since anyhow Iam going to spend ~ 5 million, I get a loan of 3 million buy a house, live in that for next 20 years by which it breaks even for my rent amount. At this my age is 45 years at which I still have atleast 10 years to live by.
Then, I sell the property for 5 million atleast and get back the money. Take that and continue the life. -- what say?
What you are going to loose monitorily is not just 1M in 20 years. The house/flat that you have purchased or 3M will then be around atleast 12M with inflation and appreciation. So in net you loose around 12-1 ie 11M.
A house for a middle class in India is a emotional thing, not just anoter mundane asset. So, in mastr card style
A house in Vadapalani - 3 M
A house in Adambakkam - 2 M
But the pleasure and satisfaction of owning a house - Priceless
Moreover a house/land is an asset which is always going to be in demand in a country like ours which breaks its own record in population every day.
Regarding pollution, I do agree that the urban India is getting more and more polluted and is becoming unfit for living. But pollution is is a different issue altogether which needs research and invention of enviroment friendly source of energy like electricity or solar energy. Other thing would be to shift to sub-urban or country side like say somewhre like ECR/OMR in Chennai which will still be nearer to your work place. Life will be cool and polution free while the COO will be relatively lower.
And the best thing is go stay with the crowd. Else you may be left alone.
PS : There is no guarantee that you will always spend the 1M you save every year the way you want or you will save it for your future. Demand for housing or land is driven by macro-economic policies of the nation and the government and it channot be changed easily.
To add more with the ever increasing life expectancy due to advancement of medical science, it is imperative that you save more for your future.
i really think u are missing out on the idea that buying a house is an investment.
u live in a rented house, yes, u might end up paying less, but u don't "make" anything from it. in fact, u end up losing 3.5M in 20 years.
but!! u buy a house today. and surely u will not only get back ur investment, but u will also get a huge bonus - with the present rise in real estate rates, "huge" will be an understatement.
bottomline, u are looking at a super comfy bed at the age of 45-50, if u invest in ur own house today.
@ba3 - my point is, what will you be doing with it at 50? life is here and now and one should try and make this time (the next 20-30 years) the most productive. instead spending all your life in purchasing a property is a futile excercise.
@baskar - please dont get lost in the statistics (I had mentioned that in my blog too). one of my friends often says, 'people keep on postponing happiness'. this is what u r doing. u r sacrificing ur current life for an uncertain future 25 years hence. my questions is, is this worth it?
@DK - never knew you visited my blog.. thx.. :)
my point is, is the effort that goes into this investment for life after 50 worth the results? when u r 50, u have certainly lived 70% of your life on earth. Is wasting the next 25 years of your prime lifetime towards securing the last 20 years worthwhile?
Also, I am not saying dont save and stuff. For if you dont save for a rainy day, you are doomed. But, building a house, really eats into all your resources. I've seen this father. He spent 15 years of his life counting every single paise for building a house. Now, he does have a house of his own, but he completely spent his 30s and 40s for this. I am not sure if it is worth it...
well, i guess the question is about personal taste.
Do you want to relax now, and probably be a little worried later?
or
do you wanna worry a bit now, and probably relax later?
yes, if u think u are gonna end up saving enough to have the best of both halves of ur life, then u might wanna do what partha suggests.
another thing is that people still like their security: u never know how life's gonna turn out - some people might see the trouble of adding security to their lives as a worthy pursuit.
it really boils down to what u think is 'sufficient' - and to the extent that people's actions (in this respect) are more for psychological satisfaction (not physical), it might be difficult to convince people to change.
The ideal of relaxing all the time isn't impossible to achieve, again, it depends on what u need to be 'relaxed' - fewer the requirements - the longer the period of relaxation - The sanyasi's relinquishment of family and wordly goods is a case in point - fewer needs/responsibilities --> more relaxed --> more time to consider the bigger picture.
so, just like how u (partha) insist on "living" for the moment (to some extent), another could say well u could be most happy if u give up ur ambition/wordly goods/family - is it then the right way?
again, i repeat, it boils down to what you think is 'sufficient'.
Bottomline, I don't think there is a right way, or a most optimal way, or even a most practical way - it all depends on the individual and what he thinks he wants from life - to the extent that he gets those wants, he is happy.
and yes, I do read your blog pretty often:).
Partha - I donot agree with your arguement.
For me, you should cash in and procure what you can when you can because when you are 50, you cannot. What abt when you are 50+, retired and you arent making money to rent - what do you then?
I can accept this for arguement sake but if you are contemplating this, i urge to act otherwise.
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