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How The Buy vs. Rent Scores Help You Take a Logical Decision

The Buy vs. Rent Scores Help You Take a Logical Decision

One of the most complicated decisions is the one which concerns buying or renting of flat. Should we rent a property? Should we buy a property? These are the two basic questions that linger in our minds when we talk about buying or renting a property.On one hand, the rates of properties are ever increasing which makes buying unrealistic whereas ever increasing monthly rents are not something we look forward. Thus we are stuck in the middle.

The basic ideology to get out of this dilemma is to tighten up the expenditure. Save a lot of money and then apply for Home Loan. There are various banks and Non-Banking Financial Companies which are providing attractive Home Loan offers at a low rate of interest. Thus, housing EMI is the best way to end up with a capital asset in some years.

An ownership of the house comes with a social prestige while a tight economic conditions force us to stay on rent. But that’s not the case with every individual. Everybody has their own reasons to prefer buying or renting over one another. Even though decision for an ideal home is a tough one to make, there is a way through which you can take logical decision of whether to buy or rent a property?

A rational decision is essential with regards to buying a home. Regardless of the city you want to invest in, you must study and research deeply about the same. A financial advisory firm has compiled statistics of India’s top 12 cities and the buying or renting factors there. It is based on a scoring system from 0 to 100. The score helps you to understand about the property valuations and recommendations.

The cities covered under the scores are Ahmadabad, Bengaluru, Chennai, Delhi-NCR, Hyderabad, Mumbai, Pune, Lucknow, Kolkata, Indore, Jaipur and Kochi. Apart from these major cities of India there’s a ranking based system which rates the real estate market based on affordability in the index and an annual income. The ranking is divided into seven categories:

  • Buy: When on the scale of 100, the score is 90+; it is advisable to purchase the property. The property over the score of 90 is a must buy as it will be beneficial. If your annual income is over INR 25 lakhs you can buy property in most of the cities except Mumbai, Chennai, Pune and Kochi.
  • Recommended to buy: The score of 85+ puts the property on the recommendation to buy. Thus investment in such property would be favorable. If your income is above INR 10 lakh the most favorable place for you to invest in is Hyderabad.
  • Can’t afford to buy yet recommendation to rent: At the score of 80 renting of a property is recommended.
  • Neutral: At the score of 77.5 it is neutral. Neither one is hyped nor discouraged.
  • Rent: At the score of 75, the property must be rented rather than being bought.
  • Recommended to rent: Under the score of 67.5, it is favorable if you rent a property rather than buying it.
  • Cannot afford to buy or rent: Under the score of 55 both renting and buying of the property is not under your budget.

If we focus on these scores to arrive at a logical decision as to buy or rent a property it is easily understandable that in cities such as Mumbai, Pune, Chennai buying is not a viable option at all, be it an income of INR 8 lakhs or INR 25 lakhs. Thus various cities have been analyzed on the same basis. These are the essential things that you need to know before buying or renting of a house. This scores will help you understand that which area is favorable or unfavorable for your investment.