Home is an emotional subject. One wishes to have a perfect home. Client after client, this is one pain point: to have the ‘Perfect home’. Where all needs will be taken care of, there is space for everyone in the house and everything with little garden and ample light and amenities.
Getting a home, building one…is that difficult? Have the money and house can be yours! Does it really work that way in life practically. These are the thoughts that come to mind often.
In my experience, home goal is a prominent one. Everyone wants to save for it and acquire one. It is the way people invest in a home that is debatable. When you are young and start earning, as Indian or as per our predominant values of elders or thinking – one should invest in real estate. This is the usual plan of action.
This kind of investment is normally done in a 2 BHK house, a small house, in a distant area, to match with available resources and match EMIs with salary income. This could be for self-use or as an investment to give it on rent.
If it’s for self use, the house space and utility becomes a problem with increase in size of the family, adolescent kids demand separate places, you can’t accommodate guests. Aging parents comes back to your place to stay. Kids become unwilling to share their bedrooms. All these practical problems are not thought through when you acquire a first home. Most people make the mistake of buying a small home in the initial years of their career.
If it is for investment purpose, whether real estate cycle will work in favour is the question. When you buy a house in a suburban area, you always bet on improving the area, infrastructure projects nearby etc., which will bring appreciation. This may or may not happen as per your assumption. So, in effect expected returns may or may not realise from the property investment. When you invest, there are a lot of ifs and conditions for the area to appreciate in value in certain time period.
Both courses of action should be considered carefully before making that investment in real estate.
I am able to write this as we meet many clients facing hardships in such situation. It becomes difficult to acquire new bigger property when you are in your forties which will suit your family needs – area wise, amenities, the type of home you want within the budget you have. If you are lucky to be able to sell an old one, there is little cushion to buy new one. We have seen families in some emotional turmoil of to have bigger home or not to have.
We helped a few clients to make home buying decision (if they can afford – considering funds availability and their ability to provide for all other goals). Many cases we gave options to let out or not to buy as well. Buying a home becomes a puzzle at times, funds will be there, but you are indecisive of area, place, career etc. So having money alone doesn’t solve your quest of perfect home.
With rise in income and changing aspirations, our taste of home and things change. Once luxury becomes necessity. Providing for the home and wants is stress on finance at all times. I have found hardly anyone who didn’t feel the pinch acquiring the home. Having said this, people create beautiful spaces of their own which every one desires and wants to have. But for many it becomes elusive. Whether to upgrade home or stay in is decision that needs a lot of thinking and we help people make that decision.
To conclude, one should save funds as much as possible in the initial days. Build a sizeable home corpus. Invest in a home only when you gain certain stability in your professional life and family life. When you are certain of your place of work, opportunity etc. When your relation with spouse evolves over time, you get to know the needs of family better, you can visualise things better with experience.
This requires a lot of understanding from our family and extended family too.
Else you invest in multiple properties and wonder about the decisions. It happens often. Buying a home has to do with life transitions. Investing in a home is a major decision. Do it with care and consideration. Plan well. Choose wisely. Live better.