BUY ME OR RENT ME I’M ALWAYS AN OBSESSION
Certainly one of the most crucial decisions that every individual encounters at various stages in life, Shall I buy a house property or rent out one?
On approaching this situation the obvious answer that would strike would be to buy a house property. Ownership does give a sense of pride which in most cases is second to none. Others with a broad outlook would consider this to be a subjective call that is a function of a wide host of factors such as age, number of family members, whether a professional or a self employed and so on.
Let us try to gain more perspective by analyzing both the alternatives.
Firstly let us consider the option of buying.
Buying a house does give us a feeling of pride and to a great extent is a dream of every Indian; this does give us psychological satisfaction. However, due consideration has to be given to financial factors as well. Real estate is an asset and by definition every asset is purchased with the intent to generate returns from the same. Returns can be further broken down into revenue returns and capital returns. Revenue return may occur only if the property is let out for rent. Capital returns are basically the increase in value of the asset over time. These returns are recognized only on sale. In addition to this if the house property is financed using a loan, the EMIs paid does offer tax benefit and in certain cases such as interest paid on property that is let out there is no cap on the benefits that can be availed.
The costs that the property owner would have to incur include property and other municipal taxes along with the maintenance costs.
In context of renting out a house property, there are various benefits associated with it. Benefits include but are not limited to savings in excessive cash outflow towards capital investment, no stress to service EMIs at regular intervals over a long tenure and so on.
On stating the brief facts, let us proceed on a logical note to an area of focus.