Should I buy a flat in Bangalore with a salary of 3L p.m + investment advice

[robo23]

36 m (recently married )

My take home is around 2 L p.m and wife's around 1 L ( No liability or loan ) but yes I keep helping both the families whenever needed and will keep doing so.

We stay in a flat with rent of around 50k p.m

Combined savings of 60L till date ( including liquid cash + SIP + Mutual funds + Nps)

Wifey is pushing to buy a Flat and a new car.

My queries are

• is it advisable to buy a Flat in Bangalore now and pay the rent as EMI?
• what investment can we look at making in order to safeguard our futures with the savings mentioned above.

 

[anne411]

@robo23 A thumb rule that is generally followed is that total EMIs should not exceed 35% of your total income. So the EMI would be approximately 1.1L per month. Hence, you can safely afford a 1.2-1.3cr home, and you should be able to get a decent apartment in Bangalore.

Are you from Bangalore, and do you plan on staying here permanently? If so, then buy the house; otherwise, consider buying a home or land in your hometown. The Bangalore real estate market is bloated very badly, and apartments have a very poor rate of return.

I doubt the value of your apartment will grow at 10-12% year on year. You're much better off putting that money into an index fund and buying a more affordable home in a tier 2/3 city.

 

[robo23]

@anne411 I am not from blore but might stay here for another 4-5-6-7 yrs.
Depends on the job actually.

Hence I thought, rather than paying 50-70 k rent per month it's better to pay that amount in EMI's. At least I will have my own house.
Also if I ever leave blore, can put it on rent and use the rental.income for emis

 

[wilddaisy]

@robo23 Don't do back of the hand calculations while deciding if its a good move financially. Your emis will be 3-4 times more than the rent which will include a lot of interest. Also consider loss of income from your down-payment, annual taxes, registration fees and repairs.

 

[ofundude32]

@robo23 If you're paying rent of 50K per month, then it makes sense to buy a flat of your own. But be mindful of the location so that even if you relocate to another city, the apartment should easily be given on rent

 

[voladol]

@robo23 How much rent do you pay?

 

[robo23]

@voladol Around 50k

 

[kosherinchrist]

@robo23 Wealth manager here. A flat is not a great investment decision when you compare with other alternatives like equity MF. Also, as you are not sure of where you are going to settle, buying a flat will make you inflexible.

Best idea is to wait till you have kids and decide on their schools. Once that is settled, you may stay in that place for atleast a decade. Then purchasing a flat makes some sense.

For calculation, please consider this. Whether you put money from your investments or take a loan both is going to cost you some where between 8-10%. Current rental as % of property value will be 1.5-3%. It doesn’t make much sense

 

[archangel330]

@kosherinchrist since you're a wealth manager, how to find a good personal wealth manager for young couple? Any direction would help. Thanks

 

[wolves]

@archangel330 Wealth management is a big joke in India. You get pretty much shitty schemes recommended for a hefty fee. Nowadays you can learn about personal finance easily.

 

[kosherinchrist]

@archangel330 It’s a tricky one. It’s more like finding a good doctor. You got to try one for sometime before you can trust.

For beginner, look for areas where your incentive and your wealth manager incentive are aligned. Generally, there is a conflict of interest between you and someone trying to sell you something. That will lead to mis selling and disappointments

 

[teresa]

@archangel330 Look for fee only sebi registered investment advisers.

 

[robo23]

@kosherinchrist But considering blore as a city, don't you think the property rate appreciates at a higher rate plus even the rent. So even if I move out of the city I will keep earning passive income.

Also maybe a few years down the line a place of my own.

 

[kosherinchrist]

@robo23 Flats don’t appreciate much. Check for the prices of 15+ year old flats and see how much they appreciated. Moreover properties are pain to manage if you are going to let it out.

It’s just my opinion. Please do what will make you happy.

 

[kosherinchrist]

Regarding rent, it’s very clear FD rates are much higher than the rental yield today.

 

[ngocthanh2015]

@robo23 50K rental flat will easily cost 3Cr I am guessing. Can you manage that EMI. If yes go for it

 

[pell]

@ngocthanh2015 No. Rents are pretty high in Bangalore now.

 

[ngocthanh2015]

@pell But cost of the flat is less ?

 

[robo23]

@ngocthanh2015 Decent flat for around 1-1.5 cr.

Nothing luxurious would do.

 

[bachjazz]

@robo23 Where bhai? Even I am looking but can’t fine anything good for that price.