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The three basic rules of buying a house

​Real estate: Times have changed
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​Real estate: Times have changed

(By Dhirendra Kumar)

Among the most major decisions that are driven by a investor’s psychology rather than financial factors, perhaps the biggest is buying a house, the space we occupy seems to play a big role in our view of self. Developers too do their best to exploit this aspect of human psychology. In that sense, much has changed when it comes to selling and buying property, but caution is still key.

No matter how distressed developers are and no matter how reasonably priced apartments look in 2019 compared to 2008 or 2013, these three basic rules of buying a house are just as relevant as back then.

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Rule #1
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Rule #1

Buy just one house in which you will live. Do not think of buying any more for investment. The first house is a need. When you take into account the fact you can stop paying rent and get a tax break on EMIs, you will realize that it is a big financial advantage.

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Rule #2
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Rule #2

Don’t stretch yourself or your budget. No matter how much you would love a fancy house, the EMI should not be more than one third of your family income. That’s the maximum. Try getting by with less and ignore the lure of real estate marketing. If you’re much richer at a later date, you can always trade up to a better house.

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​Rule #3
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​Rule #3

Buy the house, not the promise. With the operationalising of RERA, this should not be a problem. The biggest source of sorrow for people has not been houses that cost too much but houses that have not been delivered. Going by history and the kind of distress developers are finding themselves in, do not get led on by any promises.

Be practical and buy a house that actually exists, instead of being led astray either by one’s own dreams or developers’ promises. As long as savers keep these points in mind, they’ll be fine.


(The writer is CEO, Value Research)

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