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    Decision - Should I Rent or Buy A House? Option 1 Buy Your Own Home

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    Vikas Gajpal
    Based on the information provided, renting may be a better option than buying a house. If renting for 20 years and investing the money that would have gone towards a down payment and mortgage payments, the total expected return from investments would be around ₹64 million on average. In comparison, the total cost of buying the house including interest payments would be around ₹35 million and the expected appreciation of the property value would be around ₹45 million. Therefore, renting and investing strategically could provide a higher net return over the long run. However, buying a house does come with the benefit of owning an illiquid asset with potential for appreciation.

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    Decision - Should I Rent or Buy A House? Option 1 Buy Your Own Home

    Uploaded by

    Vikas Gajpal
    24 views5 pages
    Based on the information provided, renting may be a better option than buying a house. If renting for 20 years and investing the money that would have gone towards a down payment and mortgage payments, the total expected return from investments would be around ₹64 million on average. In comparison, the total cost of buying the house including interest payments would be around ₹35 million and the expected appreciation of the property value would be around ₹45 million. Therefore, renting and investing strategically could provide a higher net return over the long run. However, buying a house does come with the benefit of owning an illiquid asset with potential for appreciation.

    Original Description:

    House rent vs Buy decision spreadsheet

    Original Title

    House-Rent-vs-Buy-Decision-Unovest

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    Based on the information provided, renting may be a better option than buying a house. If renting for 20 years and investing the money that would have gone towards a down payment and mortgage payments, the total expected return from investments would be around ₹64 million on average. In comparison, the total cost of buying the house including interest payments would be around ₹35 million and the expected appreciation of the property value would be around ₹45 million. Therefore, renting and investing strategically could provide a higher net return over the long run. However, buying a house does come with the benefit of owning an illiquid asset with potential for appreciation.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as xlsx, pdf, or txt
    24 views5 pages

    Decision - Should I Rent or Buy A House? Option 1 Buy Your Own Home

    Uploaded by

    Vikas Gajpal
    Based on the information provided, renting may be a better option than buying a house. If renting for 20 years and investing the money that would have gone towards a down payment and mortgage payments, the total expected return from investments would be around ₹64 million on average. In comparison, the total cost of buying the house including interest payments would be around ₹35 million and the expected appreciation of the property value would be around ₹45 million. Therefore, renting and investing strategically could provide a higher net return over the long run. However, buying a house does come with the benefit of owning an illiquid asset with potential for appreciation.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as xlsx, pdf, or txt
    of 5

    Decision - Should I rent or buy a house?

    Input in yellow coloured cells only


    OPTION 1 BUY YOUR OWN HOME
    Cost of home you want to buy 18,000,000
    Downpayment 20%
    Downpayment 3,600,000

    Loan 14,400,000
    Rate of Interest 8.50%
    Tenure of Loan years 20
    EMI per month 124,967

    One Time Costs


    Stamp Duty + Registration 6.00% 1,080,000
    Furnishing cost 2.00% 360,000

    Annual Costs every year


    Taxes + Insurance 0.20% 36,000 First year
    Ongoing Maintenance 0.50% 90,000 incl improvements

    Inflation in costs avg yearly 8.00%


    Growth rate of property value 8.00%
    www.unovest.co
    oured cells only
    OPTION 2 RENT + INVEST
    Rent of similar house per month 45,000
    Increase in rent avg yearly 8%

    Initial Lumpsum investment 5,040,000


    Tenure of this investment years 20

    Equity Allocation in investments 50%


    Exp rate of return on equity 11%
    Exp rate of return on equity 8%

    Regular Investment EMI + Annual Costs - Rent


    Decision - Should I rent or buy a house?

    SUMMARY After 20 years


    OPTION 1
    Total Cost of Property incl interest 35,031,971
    Expected avg value of property* 79,939,905 DECISION
    Expected avg appreciation* 44,907,934
    You may be better off living
    OPTION 2 Based on chances that investment v
    Total Rent Paid 24,711,461
    Amount invested 16,560,582
    Expected avg value of the Investments* 64,267,254
    PROBLEMS OF BUYING A HOUS
    *Average (Median) of 100s of scenarios MONEY LOCKED INTO AN ILLIQU
    UNLIKELY TO SELL, SINCE YOU LI
    In hand Income required** per month 249,933 NOT AVAILABLE FOR OTHER GOA
    Total Income required** per month 357,047 SERVING EMIs COULD BE STRESS

    **approx.,assuming no other liability / loans


    www.unovest.co

    ou may be better off living on rent than buying.


    sed on chances that investment value will be higher than property appreciation.

    OBLEMS OF BUYING A HOUSE PROBLEMS OF RENTING


    ONEY LOCKED INTO AN ILLIQUID ASSET MAY NEED TO MOVE HOUSES OFTEN
    NLIKELY TO SELL, SINCE YOU LIVE THERE NEED DISCIPLINE TO MAKE INVESTMENTS (WITH SAVED EMIs)
    OT AVAILABLE FOR OTHER GOALS
    RVING EMIs COULD BE STRESSFUL IN UNCERTAIN JOB SCENARIO
    (WITH SAVED EMIs)

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