Want to Buy a House but Don't Know How to Manage Finances? Investment Expert Shares Tips

Investment influencer Akshat Shrivastava on Sunday shared tips for homebuyers who are looking to find their nest in the country. Shrivastava shared three broad tips on planning the investment that homebuyers may make in a real estate deal. Managing your home loan EMIs is a key thing to consider before buying a house so as to make sure it does not disrupt your other finances. With the real estate market slowly recovering, people may find it the right time to buy a house, but should also consider some basic things to manage the costs post-buying.

Shrivastava in a LinkedIn post shared the three tips. “I bought 3 properties across 3 different sates in India and this is what I realised,” he said.

As per the influencer, the home loan EMI should be less than or equal to the rent one should get. He said that nowadays, such deals are rare and most people end up paying 2.5 times the rent they pay as their house loan EMI. “Such deals are quite rare these days, unless it is a distressed sale,” said Shrivastava.

He also cited an example to make it more realistic. “On a property of (Rs) 1 Cr (crore), approx EMI= 80K, the rent you will get/ pay= 25 to 30K,” he said. This means that on a property worth Rs 1 crore, your  approximate EMI is Rs 80,000 per month. However, you may get of pay Rs 25,000 rent on the property.

“This is a horrible deal (as a house buyer) and it has the potential to bankrupt you,” the influencer noted.

The second tip Shrivastava included was — buy a house only when you can afford it. The property should not be worth more than three times your family income. This means that if you are the sole breadwinner and have a salary of Rs 20 lakh per annum, the price of the house should be no more than Rs 60 lakh.

“You will naturally ask: how will I buy at 60 Lakhs? Well you can use offsetting (sic),” he said.

For his third and final tip, Akshat Shrivastava asked homebuyers to check if they could apply the 40 per cent down payment rule. “Can you sell off your old property? And make a 40 per cent down payment. If no, avoid buying right now,” he said.

The 40 per cent down payment rule says that if one cannot make a down payment of 40 per cent of the total amount of anything, then you should not buy it. For example, if your property costs Rs 1 crore, and you can sell your old property at Rs 40 lakh and use that amount as down payment for your new home, only then you should buy a property.

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