Rent VS Buy - RJ wealth

rent vs buy emi vs rent home loan vs sip in telugu

rent or buy calculator

full payment or loan

home loans at low rate (just below 2% equals to inflation). tax benefits.

SIP vs Home loan

buying for rental income

1-2% monthly rent or 10% yearly 10 years property free.

1 cr 50K 6 lakhs 7% better yield.depends on area.(appreciation,inflation)

70 lakhs
rent 7k
1% 1.2% (70 lakhs 7-15% 10% 7oK)
appreciation is speculation 10-20% appreciation, property depreciation,
property tax, maintenance 1% home loan 3%.

20 years buying cost 83.lacks renting 40 lakhs

home loan vs sip

interest rate 10% 10% to 15%

14 lakhs as lump sum for 20 years.
46 lakhs as sip for 20 years

Mutual fund SWP vs home rent

emi vs sip 25ol

Thumb Rule: unsecured job, no financial discipline or sudden money then go invest in house.

How do people make money by renting?

foreclosed, house under market value with cash.
Cash Flow (positive cashflow rent vs buy)
Amortization (EMI goes down rent increases)
Appreciation of property
Tax Benefits

Investment vs speculation

the investment gives actual, speculating the return is not actual value. so use rent s buy for positive or negative cash flow instead of expecting returns on long term also aware of inflation.

Buying Home for self-occupation

expected growth property

expected growth rental income

expected growth expenses:

Variable factors:

inflation rates

bank interest rates

Returns

the property cost 1%

maintenance 1%

cost of capital debt >> 80% loan 3%, equity down payment >> stocks

stocks 5.2% after inflation real estate 1.3% (1.7% inflation)

stocks 3% higher = loan 3%

take home price multiply by 5, then divide by 12

if rent is low then renting good

taxes change the rule

Buying Home/Property for Rental Purposes

for renting

2% monthly rent of home value

1%(after deducting expenses)

2000/200000

$2000 monthly

50% rule

rent 2000/2

$1000 (taxes,insurance,utilities depends on area)

1000

Loan amount:

-600

+400 Cash Flow

wholesalers/flipping house

70% after repair value- repair cost

300000

210000

-50000

160000 (lawyer fees, closing fees, commission, registration charges)

85% or

buying home or rent

5% rules

1% of property taxes

1% maintenance

3% interest rate for the mortgage

(20% down payment may yield equal to 80% debt)

Price to (rent) Earning ratio

ex: stock price yield 10% bank fds 7%.

Loan rate 10%

Property value

50 lakhs rent 5-7 in outcuts

(no one pays 7K for renting outcuts)

6000/5000000=0.12%/m

1.44% annual (cap rate) income returned //inflation rate 5%

-3.66% // appreciation of property Not a legit way 10% you bought overpriced

if the rent 10% (2%monthly =24% high profit) yearly that’s the true actual value. because investment gives the same returns

Taxes

Maintenance

Loan EMI

while fd 7%, MF, stocks 10-24%.

The cap rate helps to bank

lending decisions on property

Capitalization Rate = (rent)Net Operating Income / Current Market Value

Capitalization Rate = Net Operating Income / Purchase Price

yearly

ex:

70000/1000000 =7% (cap rate)

for new properties

another comparison

price to rent ratio

15 buy

15-20

20+ rent

risk analysis or opportunity cost

rental increase 5-10%

property: 10-25%

stocks

large 13%

mid 21%

small cap 25% in the past 5 years*

cost-benefit analysis

tax

maintenance

registration(6%), broker charges(1-2%)

tax

home loan 1.5 lakh + 2 lakh

tax 80GG 5% of income 60K

financial worth

salary 1 lakh per month

loan 40-50

term 20 years

Downpayment 20% 1o L

registration,broker: 2 lakhs

reserve money: 5 lakhs

EMI 40k/m

60K for expenses

emi should not be more than 50% of monthly income.

income stability

unstable jobs

home loan dangerous for self-employed

Selling difficult we

preferences:

mobility

changing cities

fed up renting want to feel cool peace of mind

then buy.

land rate grows but not the house.

buy land outskirts when the price & popularity increase to build a home to rent or stay

Property price
Appreciation
Rent
Monthly income

loan

Down payment
10 lac
Loan Amount 40 lac
Loan Tenure
Interest rate

tax

The deductible amount in 80C

Tax slab (10, 20,-30%)

Annual savings

Rental Property vs. Mutual Funds (EMI VS SIP)

good rental yield for rental property is generally 8% or more. Anything below that, might not be sufficient to cover running costs and mortgage payments.

Mutual funds have historically returned 7- 9 %.

80% (40 lakhs) on the loan (EMI or Rent)

20% (10 lakhs) as a downpayment or (lumpsum investment in MF /ELSS or index funds)

50 lakhs home, 6K rent

20 Years Term

Principal: Rs. 40,00,000 (46.1%)
Interest Payable: Rs. 46,68,263 (53.9%)
Total Amount Payable: Rs. 86,68,263.8

Interest rate: 9.05pa (only for govt)

EMI: 36117.17 after 20 years 86,68,263.8

Rent: 6,000 (5% increase in evey years) after 20 years = 24,44,746.70

10 Lakhs at lumsump after 20 years at 10 CAGR* = 67,27,499.95

4-6% registration charges

EMI – Rent = 8668263.8-2444746.70 = 62,23,517.1

Total savings for rent (6223517.1+6727499.95= 1,29,51,017.1

Property appreciation at 5% (10%- 5%inflation rate) CAGR for 50 lakhs for 20, years = 1,3266,488.53

Maintanence + property taxes = 1% of
Proprtery taxes (15-30% of the annual rental value)
Maintanence (0.25 to 0.25) of property value.
loan EMI interest 10%

Property depreciation + Land appreciation

Investing in land vs other (Mutual funds, FD, Stocks etc) Best place to invest in hyderabad

Value Investing In Real estate

understanding the difference between price and intrinsic value

PEGR>> Expected Growth rate based on fast & Future years.

Expecting people where the go // because of companies or jobs, facilities roads, train expansion, focus on developing area areas

Rent Vs Buy Calculator –