Interest rate goes up and down associated with the economic development circle.

Question

Interest rate goes up and down associated with the economic development circle. To people who intend to purchase real estate properties, whether be able to obtain an ideal interest rate makes a significant difference. However, even with a relatively low-interest rate, purchasing a real estate property is still the biggest spending output during one's life (generally speaking), in order words, it is expensive. Therefore, most people need to borrow money from financial institutions in order to finish the transaction. On the other hand, due to the stressful long-term mortgage payback and uncertainty of future life direction, there are also a lot of people choose to rent a property as a residential place. Save time and move-in easily.

So if you are the one who needs to figure out this buy/rent situation, what kind of factors would you consider the decision? and what are your opinions about owning a property with mortgage vs. renting?

Explanation / Answer

If I am in a position of buying or renting a property the following factors need to be considered

a)Price-to-Rent Ratio - If this ratio is above 20 means that buying a property a property is much more costly then renting it

b) Expected change in the price of the property - If property is in a neighborhood that is rapidly changing and improving then the preferred option is considering buying taking into account other factors

c) What you want to do with the property also plays an important role in buying an property. For example, if the property is far away from your residence and you want to rent it you need to take into account the extra costs of property managers to take care of the property.

According to me the decision of buying or renting a property depends on your financial condition and what do you need the property for. The neighborhood also plays the very important role while buying a property. If you have extra money and are thinking of investment than buying real estate is a great option. And in a country like India where the area to population ration is very high and still increasing real estate mostly gives more and stable returns than other investments

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