For generations, real estate has brought a sense of security in terms of investments. The millennials however think very differently. Practically living out of their suitcases they prefer to go wherever work takes them. From property to furniture, life on rent brings a lot of connivance to their preferred pace.

However the question is, living on rent or owning a house which is a better option in terms of saving some bucks?

As per some financial experts, while comparing in terms of capital appreciation, the yield from rental accommodation is only between 1% to 4%. And in case, you plan to sell the property after few years, it could give returns up to 9% (on an average) by considering you have to pay for EMI and maintenance. But if same money gets invested in any financial assets, it can give 6% -12 % returns. Therefore, if someone is thinking of buying a house is it a bad idea?

Other side of coin?

Buying a home is always not a wrong decision. From many years, owning or investing in a home considered as a smart move. Also, due to recent changes and market conditions many people prefer to rent over buying. But there is still a lot of grey zone exist between both the options. Rather than jumping straight on the conclusion, it’s better to understand advantages and disadvantages of both the options with few important factors.

Advantages of staying on rent

1. If you are paying  rent you are paying to live there. Possibly, it’s lower than the EMI you need to pay for owning a house.
2. It gives freedom to become more mobile. Moving from one place to another and shifting process becomes hassle free.
3. No property tax.
4. No maintenance or repair cost.
5. Requires less paperwork.
6. No need to worry about the falling prices/down market.
7. Tax benefit for rent payment.
8. You can divert the savings and earn more returns in financial assets with liquidity than capital appreciation from property ownership.

Advantages of owning a house

1. A home brings a sense of security and stability with it.
2. You can customized or upgrade the house as per your preferences and trends to add value.
3. An EMI payment will remain fixed whereas rent amount increases by 10 % every year.
4. If a substantial amount can be paid as a down payment, EMI rates can be really low.
5. If planned properly and a house is in a good area where the rates are appreciating then you can earn decent profit.
6. Additional/passive income can be generated from the house. Like it can be leased out or can be turned into PG accommodation.
7. Tax benefits.

Despite all such pro and cons while weighing such decisions, it is more important to introspect other factors – like how much you can afford? How long you plan to stay? And how much flexibility you want in life?

Buying a home can turn into a worst decision for one but for the other it can be a great financial success. Its unfair to say either option is better option as there is no simple answer. The most important aspects with this decision can be entirely different and personal with each individual. Better do the math, consider your requirements, take calculated risk and make your final decision.