Renting Or Investing in A Home? A Look At The Pros And Cons

If you are willing to venture into the real estate sector, you might be wondering whether you should invest in a property or simply get one on rent. With the real estate industry booming in India, your investments can yield decent returns. So, if you are confused whether to purchase a house or rent it, here are a few aspects that should help you out.

Benefits of purchasing a house

·   On average residential properties in India enjoy around 8% to 10% value appreciation each year. This implies that once you invest in a property, you can grow your asset value consistently.

·    In case you get your property financed through a bank loan, you are eligible for getting tax deductions.

·    Banks and financial organizations offer property loans are low interest rates to finance these purchases.

·    A tangible asset like a home delivers value in the form of equity.

Cons of purchasing a house

·    Purchasing a property involves a high upfront cost. Most banks would expect you to pay at least a 20% down payment.

·    When you own a house, you need to maintain it. This involves a significant expense over the years.

·     As an asset, a house is illiquid in nature. Selling off the property may take considerable time.

Benefits of renting a house

·     Renting a house requires little upfront cost. At most, you need to shell out the rent for three months in advance.

·     When you need to move around the country for professional purposes, renting a house brings you more flexibility.

·     Compared to the EMIs involved in repaying a home loan debt, your monthly cash outflow on rent may be lower.

Cons of renting a house

·      Each year, the landlord might increase the rent, making it an expensive affair for you.

·      Renting a home is a lifetime liability as you never get to own the property.

·      Since you don’t own the property, you miss out on the value appreciation.

Depending on your financial stature, you need to decide whether you should purchase a home or get it on rent. This ensures that you can remain financially at ease while investing in a property.