The biggest question one should answer even before setting out to buy a home is: What drives you to buy?

What is your driving force that makes you think you are ready to buy a home of your own?

Emotional or financial?

A. The emotional drive:

If you feel that you are driven by the emotional urge to own a home, you need to map & define the dominant people driving your emotions to buy own home. The emotional drive can be a culmination of yours, your spouse’s, your relatives, your spouse’s relatives, friends, colleagues, work life or other social life influencers.

Work life & Social life analysis & relevance to buying

Its’ important to map your projected work & social life indicators during the timeline of holding/owning the property so see where we are now & where we plan to be during this period

Let us do a simple exercise.
This is just indicative & can be designed in the way you choose.

– Exercise – Excel sheet – Work & Social Indicator 

From the above chart, you can discover the various social & professional parameters that urge you to buy an own home – You need to add weight age to each parameter to determine which factor influences the most.
For Example, Your professional standing/position may urge you to buy an independent villa in a community that provides status symbol as well as neighborhood with similar economic strata families.

Or if your family mobility – Nearness to your relatives, children’s school, nearness to social infrastructure like shopping malls, accessibility to transport hubs like railway station/airport etc. may also be a dominant factor in driving the urge to own a home of a particular type in a particular location.

 Affordability Vs Needs

The urge to own a home can also be driven by your affordability or needs. What is the difference between affordability and what you are needs are when buying?

Affordability is simply your purchasing power. Needs are what you desire.

So is your urge to buy a own home driven by your affordability or your needs.

For Example, you can draw up a table like the below to determine your affordability & the needs you desire.

Once you are done with this chart, you can easily figure out the dominant factor driving your urge to buy a own home of a particular type.

B. Financial Drive: 

Ones urge to own a home can also be driven by your financial standing. Lets understand how it influences you to take the decision to buy.

 

What are the prime financial considerations/factors that driving you to own a home? The purpose of buying under financial consideration has to be analysed under below mentioned perspectives:

Below are some of th

 

 

e financial factors that can influence to decide on buying a home.

• Self-occupation – move out of rented home & save on HRA (House Rent Allowance) outgo.
• Initial self-occupation & Renting later for rental income.
• Only for Rental income.
• Tax savings.
• Capital Appreciation & profit making by reselling – Pure investment. Pure investment is a broader subject that involves RoIs (Return on Investment), IRRs (Internal rate of Returns), rental Yield projections etc., which are not discussed here. They are discussed separately in our blog section.

Financial urge to buy a home or property is majorly dominated by the financial gains that will

 

be accrued over the lifetime of your property holding. In such scenario, one needs to consider multiple factors before arriving at the right decision. Once such question can be, say, Will the property keep appreciating forever, say over 20years?

My answer to this question would be:

Yes – For land/plot.

No – If it is an apart

 

ment or independent constructed home/villa

Contrary to the myth that a property keeps appreciating irrespective of age, in case of multi-story apartments, the asset appreciation turns negative after around 10 years of age.

Another Question:

 

Would you buy a 15-year-old apartment at the prevailing market price of a newly built apartment offered by a builder as a primary sale? 

There are enough sources on the internet to evaluate Buying Vs Renting, Buying vs. ROI etc. Below are some resources to help out in doing the right analysis.

http://property.sulekha.com/rent-vs-buy-calculatorl

Renting Vs owning

The cost-benefit analysis – Understanding the rental costs versus ownership cost, including costs Vs ben

 

efits of selling the property at a future timeline

https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html

http://archive.indianexpress.com/news/house-buy-or-rent/746916/

https://www.magicbricks.com/advice/buy-rent-calculator-financial-advice