Renting vs Buying a House

Whether to buy or rent a house is a common dilemma that everyone faces at some point. Home evokes emotion and a sense of accomplishment. It is a tangible asset that acts as a financial cushion for every individual.

A few years ago, frequent profession-related transfers, the uncertainty of job markets and the seemingly uphill homebuying process discouraged people from investing in a house.

However, the pandemic has brought about a significant change in this perception. With the work-from-home or a hybrid work setting becoming mainstream for many organizations, individuals are motivated to shift their base to the city outskirts, purchase apartments and settle with their families. There are a plethora of residential properties in Bangalore and other cities that can be considered for investment.

This blog will explore the benefits to help you get a clarity on the renting vs buying a house dilemma.

An Excellent Investment Choice

Buying a house allows you to build asset equity over time. Equity is the difference between the market value of your property and the remaining mortgage balance. As you make monthly mortgage payments, you gradually reduce the amount you owe, increasing the equity of your property.

The eligibility to claim up to Rs. 3.5L tax deduction under section 24 of the Income Tax Act of 1961 makes buying a new home a wise investment decision.

Flexibility to Build as Per Your Desire

The house you rent may not tick all the boxes of an abode you have always dreamt of. You do not have the liberty to override your renter's interest and modify the interior or exterior of the house.

Having a home of your own lets you have complete control over it, free from the burden of additional fees, lease agreements and restrictions. You have the liberty to undertake a simple act like repainting the walls or a more significant endeavor like a complete remodel. The flexibility associated with home ownership is undeniably alluring to many.

Increment in the Real Estate Value will Influence the Profit

The solid and consistent real estate market growth directly impacts your property's value appreciation. It lets you get more value out of your initial investment in the house.

As per the recent Mordor Intelligence report, the Indian real estate market is poised to touch a value of over USD 820 bn through 2028 at more than 25% CAGR. The growth indicates your house's high price appreciation potential in the years ahead.

The Government of India and the local authorities' relentless efforts to boost the infrastructure, such as well-planned roadways, metro lines and bus services, will continue to contribute to the real estate worth of the area where you have invested.

Act as a Source of Passive Income

The home that you own has the potential to generate income if you choose to do so. If you no longer reside in your house, you can generate passive income by renting it out on both a short- and long-term basis. Projects like Brigade Calista have initiated their second phase upon completing phase 1. The residential complex is high on the priority lists of those seeking to purchase residential properties in Bengaluru.

Thanks to the widespread availability of short-term rental platforms, homeowners can effortlessly earn revenue from their properties whenever they are vacant.

You may also decide to rent out a portion of your property while still residing in the rest. Rent is an attractive income source due to its passive nature, allowing earnings to accumulate without constant active effort.

Conclusion

While buying and renting have pros and cons, the benefits of purchasing a house as an investment vehicle often outweigh renting. Building equity, stability, potential tax advantages, property appreciation and the opportunity to leverage real estate investments are some of the potential benefits of owning a home. It paves the way for long-term financial security and personal satisfaction.

As with any significant financial decision, conducting thorough research and considering individual circumstances before committing to home ownership is essential.