5 Questions To Ask To Figure Out Whether To Rent Or Buy A Home

A home is one of the biggest financial commitments most of us will ever make – so it’s understandable that we might get a little stressed over what seems like a straightforward question:

Should I rent or buy a home?

To try and ease that anxiety, we spoke with a financial expert and a certified financial planner to get their take on when buying a home is in your best interest.

While there’s no universal “right” answer, start your decision process by asking yourself these five questions:

1. Can you afford it?

Having the money for a down payment is only the first step. Next, you need to make sure you can afford to pay your home loan … and costs like utilities, maintenance, furniture, taxes, and inevitable surprise costs like emergency replacement of the broken boiler.

“Understand what you’re getting into,” says certified financial planner. “You have to be able to afford to purchase and maintain the property, and expect that your bills will change on a monthly basis.”

Plus, she points out, you’ll need to be able to pay all of the fees during the buying process. “The best thing you can do is educate yourself,” she advises. “If you don’t do your research, making the wrong decision to buy could really set you back financially.”

Rent if: You don’t have the money saved to buy and carry a home.

Buy if: You’ll have the cash to cover the initial transaction, plus the ongoing costs of home ownership.

2. Are you financially secure?

To be in a financial position that’s secure enough to responsibly to buy a home, you need:

  • Decent credit (“You don’t need perfect credit or even good credit,” he says, “but generally  CIBIL score above 650 you can qualify for a conventional loan.”)
  • A stable income
  • Moderate liabilities
  • Enough cash on hand to cover down payment and closing costs
  • Liquid assets as financial reserves

When expert says “financial reserves,” he’s talking about an emergency fund. It’s not a good idea to scrounge every paisa from each of your accounts for a down payment, leaving yourself without a safety net for an emergency or hobbling your retirement savings.

“I wouldn’t recommend that someone without an emergency fund buy a house,” cautions most of the experts. “It really sets you up for trouble when you wipe out your savings to reach this goal and don’t have any money set aside.”

Rent if: You can’t check off one or more of the above bullet points, or if buying would completely wipe out your savings.

Buy if: You’re financially secure outside of your home savings.

rent or buy a home
Rent or Buy a home. Which road to take when

3. What are your other financial goals?

While buying a home is a major financial accomplishment, it’s unlikely that it’s the only one you ever intend to make. I remember a client and her husband who were “really gung-ho on buying their first home.” But after getting a financial plan and seeing exactly how much money they would need to lay out, they decided to postpone their purchase for another few years in order to finance their other financial goals, like starting a business.

“It’s all about breaking it down into steps, and getting clear on the numbers,” says experts. “If you have any major life transitions coming up, you may want to hold off and see what happens.” How will your home purchase affect your pursuit of your other financial goals?

Rent if: You’re currently prioritizing other financial goals above homeownership.

Buy if: Homeownership is your primary financial goal, and you’re both aware of and comfortable with how the cost will affect your progress towards your other goals.

4. Are you willing to be the super?

This isn’t a financial question, but a lifestyle one: If the sink springs a leak, the yard needs to be mowed, the door handle breaks, who deals with it? It won’t be your landlord or super, experts points out, so either you’ll need to DIY or find the cash to hire someone.

Rent if: You want someone else to step in when things get complicated around the house.

Buy if: You don’t mind dealing with the increased chores that come with being your own landlord.

5. Where do you see yourself in the near future?

Different experts have different estimates, but generally, it’s recommended that a home buyer spend at least four to five years in a home to offset the costs of buying.

But aside from the numbers, “buying a home is as much an emotional decision as it is a financial one,” says experts. “Of course, you must crunch the numbers to determine whether buying makes financial sense, but it’s just as important to feel that you’re in a place in your life where buying just makes sense. It’s no coincidence that most people seriously start considering buying a home when they get married and are comfortable with the idea of settling down and raising a family.”

Rent if: You’re unsure where you’ll be in the near future.

Buy if: You expect to be in the same place for a few years and want to own your home.

Second Home – A Relaxing Option?

With increasing affluence on the one hand and a growing realization that there is a need for a relaxed lifestyle at least on weekends, the concept of second homes appears to be gaining popularity. According to the National Council of Applied Economic Re­search, the number of households de­scribed as rich is expected to reach 11 million by 2013 from 3 million in 2003. Meanwhile, the number of mid­dle class aspirers is predicted to leap even more dramatically, from 46 mil­lion to 124 million. The number of HNW Is in India is growing at 20% YoY, second only to Singapore.

This growing opulence of Indians surely makes the second-home mar­ket pretty hot. According to a study conducted by Kapston.com, a Banga­lore-based E-business consulting firm, second-home sales in India in­creased by 50% from 2002 to 2007. The trend slowed a bit in 2008, most­ly due to the economic woes of the US. Then it picked up in mid-2010 to slow down slightly only in the recent time, although now it’s a normal, reg­ulated market where good stuff sells very quickly.


Motive 

Different people invest in a secondproperty with different motives. For some, second home is to have a re­laxing place away from the hustle and bustle of city life, extreme heat and the stresses of work. There are many who’d like to have a second home to spend the rest of their lives in, post-retirement. Others invest in a second home in order to earn rental income.

The primary reason for buying a second home is still lifestyle among Indians; however people have start­ed realizing the investment potential, but the investment consideration comes in a strong second place.


Be Wise 

Even if buying a second home in­volves spending a lot more money be­fore retirement, you will be wise to consider it as an investment. If, for ex­ample, you buy a second home five years before you retire, you will be able to earn money by renting out your property for the next five years, and cover a part of the mort­gage costs.


For NRIs

And it’s not only for Indian dwellers. Non-resident Indians are buying this mid-level housing as well. NRIs can easily attain housing in In­dia because they were born there— but they can also buy even if their parents or grandparents were born there.

Many NRIs choose to go back to where they came from; they have dreams of having India as a possible place to retire, where hired maid ser­vants will run their day-to-day tasks while they relax close to friends and family. The home towns where they grew up always have a certain draw on their heart strings.


A second home is not a bad idea. It can serve the purpose of a change from the routine, once in a while, and leave you refreshed and energized. It can also be a wise investment. In fact people in the higher income brackets even opt for more than one second home as part of their long term in­vestment strategy.

What do you prefer, single family home or multi family home?

Are you looking for a good investment? Do you want to invest in a house? Are you in a dilemma whether you should go for single family home or multi family home? Here we are to help you.

single family homeWhen you consider single family home (1 or 2 bhk) and small multi family home (3 or more bhk), for investment purpose, though you can afford for a bigger house, it is always better to go with a single family home.

Here are some facts why a new investor should go for 1 bhk or 2 bhk. 

1. Expenses :

A house to maintain it neat, it needs some extra attention. This ofcourse charges your wallet. When you buy only for investing, it is better to go for a small house as the expenses on repairs and replacements are minimum. Advantage is that for a smaller house, tenants usually take interest and initiative on these small works.

2. Vacancy :

Tenants usually stay for longer in small homes than in bigger homes. Also, single family homes rent more quickly than multifamily ones. This means, fewer days actually your house is sitting vacant.

3. Tenant Interaction :
This may not seem like a big deal, but it can be. In a single family home, you don’t have to worry about the tenants getting along. In a small multi family, it is tough to have understanding and cooperation. This might affect your home and might result in more repair works or association problems and discipline problems aswell.


4. Pride of ownership :
We know that our tenants love the fact that they have a home. It may not be theirs, but they treat it as their own. They keep it clean. They love to stay in it as they hold on many memories. Ofcourse, we have some who don’t. But the ratio is on lower side. But taking the ownership and maintaining the house well, leaves us happy and tension-free


5. Sale of the property :
The best thing about single family home buyers is that, it appeals to the largest amount of buyers. Apart from retail buyers, investors would be interested in the property as well. 

It is always, the demand for 1 bhk and 2 bhk is relatively more when compared to a 3 bhk and a 4 bhk, irrespective of the area and the luxury. 


Hence, as a new investor, you will have fewer headaches with a smaller home and more profit in future.

5 Tips to sell your home fast! Learn how to keep house sale on track!

Pankaj, a 30 year old smart guy, have been staying happily with his family in his home for over 5 years. He has a son whom he is thinking to join for schooling. His son got an admission in a school to where he has to travel for an hour from his house.  Pankaj doesn’t want his son to travel so far everyday. So he decided to take a new house near his son’s school and sell off his present house. Emotional Pankaj, tags a ‘for sale’ board to his house. It’s been three months, the tag is still hanging. He doesn’t know what went wrong for the situation. So, he starts browsing about his need. He finds an article that answers his queries.


Here it goes


Your house is a home filled with love and affection for you. But for the buyers, it is a house, just a house. Once your home is on sale you need to keep a track and insure you get to closing with minimal to no hiccups. Mess something up and you may find yourself without a buyer or with the buyer walking away after the deal implodes.


This article provides  needed tips to sell your home and also explains how to keep your home sale on track.

Tips to sell your home

1. Inspect it


Without question, the number 1 thing a seller can do to prevent delays on selling their home is to ensure that the owner has the list of verified documents prior to placing the home on market. This is to ensure the potential buyers that they are acting in good faith and have all required documents.


List of documents needed before you hit the ground.

1. Original sale agreement ( to make sure there is no outstanding loan on this property)
2. NOC from the society for sale of the flat ( to make sure the society is formed and is in existence)
3. Share certificates issued by the society.

4. Occupation certificate issued by the municipal corporation

5. Plan approval/sanction certificate

6. Proof of payment of all municipal taxes, society charges and electricity bills upto date to make sure there are no outstanding dues.

7. Income tax receipts from the seller to make sure he has paid all the income taxes and has no restriction to sell his property.

8. Lawyer certificate, if any of the original documents were lost


2. Price it 


In real estate, slow and steady wins the game. If you rush the sale and don’t get your property in decent enough shape, you will miss an opportunity of getting more money from it. If you let your feelings get a hold of you and dictate the price, you’ll not only miss the chance to sell, but also have that mistake follow you, for the future, possible transaction. 

So, it is absolutely positively essential that your home is priced correctly from day one. Remember that over priced homes take longer to sell and often sell for a much smaller percentage of the original list price.


3. Prepare it


To make the house ready for the sale, the must do things are cleaning, painting, and decluttering. Your home must truly be ready to show before it hits the market. You cannot do anything with the location, but keeping the home clean and tidy with all the modifications done, would attract the buyer. You only get one chance to make a first impression and this is especially true when selling a house!


4. List it


For those who want to keep their home sale on track,  it is good to have an experienced real estate professional in your corner. Since there are so many pieces to a real estate transaction, it is critical that you hire a professional who has experienced nearly every possible scenario that is possible.


5. Communication 


If you have an agreement with the agent, make sure you are in constant communication with all those who are involved in your home sale process.

Hence, when going for a home sale, ensure that you are not in a hurry while pricing . Ensure that you are on the correct path by taking experts decision. If you cannot take the burden or if you are running out of time, its better to go with a professional real estate agent.