should i buy a 2.5 cr flat?
- Thread starter hallie4
- Start date
anonymous27
New member
@anonymous27 Where's there a 50Lakh home in NCR?
greengoosepumpkin
New member
@hallie4 My father has made all our generational wealth via real estate, i have worked with my dad for 5 years then decided to quit to follow stocks.
I would advise against buying a flat in ncr region specially underconstruction one.The commission on these flats are as high as 7 % and the returns are usually negative or none.These flats are also hard to sell when you need the money.
If you want to buy a flat try to find a distress sale as in these regions it is not difficult to find and you will save a shit ton of money in commissions and what not.
South delhi in this budget would be out of reach.
I would advise against buying a flat in ncr region specially underconstruction one.The commission on these flats are as high as 7 % and the returns are usually negative or none.These flats are also hard to sell when you need the money.
If you want to buy a flat try to find a distress sale as in these regions it is not difficult to find and you will save a shit ton of money in commissions and what not.
South delhi in this budget would be out of reach.
hockeydude22
New member
@greengoosepumpkin hi bro how you doing trading wise?
greengoosepumpkin
New member
@hockeydude22 I don't trade bhai ,i invest.
hockeydude22
New member
@greengoosepumpkin much better imo. still the Q remains, hows it going?
greengoosepumpkin
New member
@hockeydude22 Made quite a lot of money fro. March to july ,holding 80%in cash waiting for a dip.
hockeydude22
New member
@greengoosepumpkin sensei are you looking for a padawan to train 
?
?greengoosepumpkin
New member
@hockeydude22 I wish i could buddy but tbh there are way better teachers than me .Internet is a goldmine and investing is something you learn by trial and error.
hockeydude22
New member
@greengoosepumpkin wise words guruji. all the best. next jhunjhunwala aap hi bano
@greengoosepumpkin Any links to learn to be a better investor?
greengoosepumpkin
New member
johnpereless
New member
@hallie4 Given your situation, I guess home is not the highest priority. Like you said you definitely 'can' buy. But I'd suggest the following:
Build a bigger corpus first. Your liquid assets seem to be disproportionately low compared to your income. I'd set aside enough for children's future, FI and other goals first. Atleast fill those buckets partially.
Don't buy under construction properties. It's not worth the hassles and risks you have to face.
Don't overestimate the landlord asking to vacate risk. It's one of the easiest reasons to come up for convincing yourself to buy. In reality it doesn't happen as often as you think. Believe me, i did this and I regret it. Your primary living house is the most illiquid asset. It's the biggest anchor when you want to move to a different locality or city for job, personal or locality specific reasons.
You seem to have a great savings rate and your current rent is a good deal compared to buying a 2.5 cr house. So wait 2-3 years and save up for a higher downpayment and get your other goals to a better position. Use https://fi.money/calculators/rent-vs-buy-calculator, I used it before and was surprised when I entered your numbers, I realised that the calculator has very low expectations for real estate growth in Delhi. If that is the reality, you have all the time in the world.
Build a bigger corpus first. Your liquid assets seem to be disproportionately low compared to your income. I'd set aside enough for children's future, FI and other goals first. Atleast fill those buckets partially.
Don't buy under construction properties. It's not worth the hassles and risks you have to face.
Don't overestimate the landlord asking to vacate risk. It's one of the easiest reasons to come up for convincing yourself to buy. In reality it doesn't happen as often as you think. Believe me, i did this and I regret it. Your primary living house is the most illiquid asset. It's the biggest anchor when you want to move to a different locality or city for job, personal or locality specific reasons.
You seem to have a great savings rate and your current rent is a good deal compared to buying a 2.5 cr house. So wait 2-3 years and save up for a higher downpayment and get your other goals to a better position. Use https://fi.money/calculators/rent-vs-buy-calculator, I used it before and was surprised when I entered your numbers, I realised that the calculator has very low expectations for real estate growth in Delhi. If that is the reality, you have all the time in the world.
@johnpereless thanks a lot for the effort and suggestion. great to see at many people like you in this group are genuinely helping and not here just to bash OP
davidanderson1985
New member
@hallie4 You just got a new job. You say you are getting 50 lacs of stocks every year but that hasn't materialized yet. Because your portfolio is still only at 30 lacs which means you haven't even got 1 years worth of the 50 lacs yet.
Honestly, it is your 50 lacs that is the key here. The rent you're paying is peanuts compared to the EMI you will be on the hook for (and that too for several decades). My point is - if your dream house is worth 2.5CR, then for real peace of mind, you're better off holding off for 3-4 years more.
In 3-4 years, you will have 1.5 or 2 crores worth of stocks from your annual 50 lac stocks. Heck, it will likely even appreciate in value and even 3 years worth of stocks might be enough for you to buy your flat outright. Or you can do a 75% downpayment and only take a small loan with a small EMI that's way more comfortable (such as if you lose your job and have to be in-between jobs for a few months).
In the meantime, if you're pissed with landlords asking you to move, then make sure your next rental is a 3 year lease or even a 5 year lease. There are plenty of landlords who are more than happy to lock in tenants on long term leases.
Lastly, considering how big and outsized this apartment cost is, are you 100% committed to living in NCR for the rest of your life? Personally, I liked Delhi when I lived in it, but when I moved out to other cities, I would NEVER come back. Much less lock in 2.5 crores of my money in Delhi. For me, safety is the biggest issue - and I lived in South Delhi. In Delhi, simple road accidents lead to an escalation in violence that is just downright scary. Or the open goondagardi.
Honestly, it is your 50 lacs that is the key here. The rent you're paying is peanuts compared to the EMI you will be on the hook for (and that too for several decades). My point is - if your dream house is worth 2.5CR, then for real peace of mind, you're better off holding off for 3-4 years more.
In 3-4 years, you will have 1.5 or 2 crores worth of stocks from your annual 50 lac stocks. Heck, it will likely even appreciate in value and even 3 years worth of stocks might be enough for you to buy your flat outright. Or you can do a 75% downpayment and only take a small loan with a small EMI that's way more comfortable (such as if you lose your job and have to be in-between jobs for a few months).
In the meantime, if you're pissed with landlords asking you to move, then make sure your next rental is a 3 year lease or even a 5 year lease. There are plenty of landlords who are more than happy to lock in tenants on long term leases.
Lastly, considering how big and outsized this apartment cost is, are you 100% committed to living in NCR for the rest of your life? Personally, I liked Delhi when I lived in it, but when I moved out to other cities, I would NEVER come back. Much less lock in 2.5 crores of my money in Delhi. For me, safety is the biggest issue - and I lived in South Delhi. In Delhi, simple road accidents lead to an escalation in violence that is just downright scary. Or the open goondagardi.
@davidanderson1985 thanks for detailed answer and very helpful suggestions
i am not from NCR, but have lived in many cities. not sure about delhi, but living in Gurgaon i haven't had too many issues. in fact better than many other metro cities in terms of convenience
but yeah, you never know what happens down the line. my fallback option was that even I have to move out, the rents are good here, so i can live anywhere and give it out for rent
(ps, plan to buy postponed for now)
i am not from NCR, but have lived in many cities. not sure about delhi, but living in Gurgaon i haven't had too many issues. in fact better than many other metro cities in terms of convenience
but yeah, you never know what happens down the line. my fallback option was that even I have to move out, the rents are good here, so i can live anywhere and give it out for rent
(ps, plan to buy postponed for now)
davidanderson1985
New member
@hallie4
The thumb rule for rents is that you should get 1% rent every month. Meaning, if you are paying 2.5CR, you should get 2.5 lacs every month as rent. That's the global thumb rule - and yes, there is leeway there because of market conditions.
But in India, people pay 50k rent which is 5x lower than 2.5 lacs. In short, the rental will get you nowhere, and 25 years later, you will be the owner of a good flat, yes, but you will also be the owner of a 25 year old flat. That is going to depreciate because a premium buyer who can afford 2.5 CR will always prefer new construction instead of a 25 year old flat. At least at that price point.
The thumb rule for rents is that you should get 1% rent every month. Meaning, if you are paying 2.5CR, you should get 2.5 lacs every month as rent. That's the global thumb rule - and yes, there is leeway there because of market conditions.
But in India, people pay 50k rent which is 5x lower than 2.5 lacs. In short, the rental will get you nowhere, and 25 years later, you will be the owner of a good flat, yes, but you will also be the owner of a 25 year old flat. That is going to depreciate because a premium buyer who can afford 2.5 CR will always prefer new construction instead of a 25 year old flat. At least at that price point.
xmudpuddle
New member
@hallie4 Evaluate the following - how will cash flow per month be. Do you get increments each year. Do you have any other milestone plans like having kids, taking a sabbatical, etc. How will you manage payments if one of you is not earning.
Also validate how you will manage payments if interest rates cross 10%.
Try to pre-pay as much as you can, each month - this will cut your interest payments in the long run. (a minimum of one extra EMI per year).
Also validate how you will manage payments if interest rates cross 10%.
Try to pre-pay as much as you can, each month - this will cut your interest payments in the long run. (a minimum of one extra EMI per year).
jaderain23
New member
@hallie4 I would suggest making sure you have 6 months of the expected EMI plus living expenses for the same period as an emergency fund, or 3 months at least. I’m not aware of how the NCR housing market is doing atm, but unless you expect volatility in the near future, I will surely recommend having an emergency fund.