{"id":83,"date":"2023-04-06T15:00:14","date_gmt":"2023-04-06T09:30:14","guid":{"rendered":"https:\/\/www.sudeepaudio.com\/blog\/?p=83"},"modified":"2023-04-20T09:22:24","modified_gmt":"2023-04-20T03:52:24","slug":"to-rent-or-to-buy-a-property","status":"publish","type":"post","link":"https:\/\/www.sudeepaudio.com\/saundcheck\/to-rent-or-to-buy-a-property\/","title":{"rendered":"To Rent or To Buy a property for your studio? A financial take."},"content":{"rendered":"
<\/div>

Several factors, including your financial stability, long-term ambitions, and personal preferences, will determine whether you should buy or rent a property to run a sound recording studio.<\/p>\n

This article will outline the advantages and disadvantages of buying versus renting. In the same way that your VU metres show, the statistics speak for themselves. Moreover, there is no “Undo” function for real estate investments.<\/p>\n

Here is an illustration, using figures from market sources, for December 2022:<\/strong><\/span>
\nLocation of commercial property: Off Link Road, Andheri West, Mumbai.
\n800 square feet of super-built-up bare shell studio (or office) at Rs. 20,000 per square foot would cost around Rs. 1.6 Crore.<\/p>\n\n\n\n\n\n\n\n
OPTION 1 (BUY)<\/strong><\/span><\/td>\n<\/td>\nOPTION 2 (RENT)<\/strong><\/span><\/td>\n<\/tr>\n
EMI (@ 9% loan for 10 years)<\/td>\n2,00,000<\/td>\nMonthly<\/em> rent<\/td>\n75,000<\/td>\n<\/tr>\n
Maitenance\/month @ Rs. 7 psf<\/td>\n5,600<\/td>\nMaintenance\/month<\/td>\nusually included in the rent<\/span><\/td>\n<\/tr>\n
Total Monthly<\/em> Outgo<\/td>\n2,05,000<\/td>\nBalance available for investment<\/em> (instead of no EMI)<\/td>\n1,30,000<\/td>\n<\/tr>\n
Total Amount paid in 10 years<\/em><\/td>\nRs. 2.5 Crore<\/td>\nTotal Amount paid as rent\u00a0in 10 years<\/em>
\n(with a 15% increase every 3 years)<\/span><\/td>\n		Rs. 1 Crore<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n


\nAt the end of 10 years, what is the scenario?<\/span><\/strong><\/span><\/p>\n\n\n\n\n
Property value at 10 yrs @5% increase per year<\/span><\/td>\nRs. 2.6 Crore<\/span><\/td>\n<\/td>\nMonthly<\/em> investment of\u00a0Rs. 1,30,000 done for 10 yrs. becomes\u2026<\/span><\/span><\/p>\n

(investment returns calculated @ 15%)<\/em><\/span><\/td>\n

Rs. 3.6 Crore<\/strong><\/span><\/td>\n<\/tr>\n
Property value at 10 yrs @7.5% increase per year<\/span><\/td>\nRs. 3.3 Crore<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Let me give you an actual instance:<\/span><\/strong>
\nIn 2010, it costed Rs. 52 Lacs to buy a 500-square-foot super-built-up commercial office in Malad West, Mumbai.<\/p>\n

In December 2022, the same property was available for Rs. 1.20 crores. It might be argued that the price doubled in ten years. Superb, isn’t it? When we calculate, this is just 7%! You obtain the same through a simple fixed deposit with your bank, without any real estate-related hassles!<\/p>\n

Property investment does not look to provide a respectable appreciation over time given the state of the Indian real estate market, and due to the government’s efforts to control prices nationwide in order to make them affordable to all. We can only hope for an annual growth of 5% to 7.5% in real estate for now. The table above also shows the ROI for these growth rates.<\/p>\n

Your peace of mind is the most crucial element in this type of financial planning which is a “must-have” criterion for the smooth operation of a creative mind.<\/p>\n

With Option 1 (BUY<\/strong>), you are rigidly bound by a sizable EMI payment. You might choose to have some flexibility from month to month depending on your cash flow, given the irregular, or delayed, payments in the music\/audio industry.<\/p>\n

Option 2 (RENT<\/strong>) offers a great deal of flexibility, because you can alter your monthly investments by your financial flow. And you have full control over the amount.<\/p>\n

God forbid, if you require money for an emergency<\/a>, selling the property would be a mammoth process in itself which would include finding a reliable buyer, negotiating a fair price, receiving payment on schedule, etc. In contrast, you can withdraw any tiny (or large) portions of your investment in financial instruments, as and when you need them!<\/p>\n


\nAdvantages of renting and making investments continuously: <\/span><\/u><\/strong><\/span><\/p>\n