Buying a House — Exploration & Fear

Date: 16-Jan-2022

Photo by Binyamin Mellish: https://www.pexels.com/photo/house-lights-turned-on-106399/

Background

I live in South Bangalore, specifically in JP Nagar. In recent months the real estate rates have sky rocketed and while career wise I have grown as well, the good properties that I am seeing seems unaffordable and to someone who has spent 8 years in Bangalore seems high price for the value we are getting. And then the recent news of job losses in IT sector and also the realization of the real estate prices cooling off in some areas is making me think if buying a house in this area even make sense if resale is not going to be there or what if I loose my job and have such huge debt.

How I think on Real Estate

For me affordability, access to roads, hospitals and shopping areas and convenience of travel and key services is more important than amenities. When I search for a house I look for the strength of construction, vehicle parking, some usable gap between buildings and regulatory compliance. The legality of land parcel where the house is being built and the risks in that is also another thing I look at while doing my house search. But things like Vaastu, amenities, acreage of land, how much non built-up area, is it premium or not and green features, some how means to me marketing material and things I doubt I will use. Also any such feature adds to the cost and to the running cost that I will have to may as monthly maintenance. So for me a house has to be a risk free, cheaper to maintain, hassle free and accessible accommodation.

How my partner thinks on Real Estate

For my wife, the most important feature is openness and liveability of the house itself. The doors, windows, is sunlight reaching each room, are the rooms big enough, the aesthetics of the house, kitchen, drawing room, the concept, approach of the corridor, open spaces, amenities and possibly the USP of the property from green spaces and facilities matters along the builder. For me what is marketing, for her those are the key things she looks for to decide if the place is liveable to the standards we aspire. It may be ok if it costs but having a good and balanced life is a priority.

Where We Differ

In some ways there have been some major fault lines overall in our approach how we buy a house. While for me location is a priority and even built up apartments or medium scale builders will do for me, but based on the requirements of my wife the only projects that qualified were mostly Category A builders like Prestige, Shobha, Purvankara etc. And that somehow shot our budget. This also was a contentious point as I showed my wife the projects which were more aligned with my view and took me time to align to the importance of her view. Almost we spent close to last 3 years searching projects in some cases revisiting projects at different stages of its development with increase in cost.

While in last 3 years my financial situation improved, but my time to align with my wife’s approach made us miss many opportunities which we could have used to initiate our home ownership journey. While I finally aligned with her views it was clearer that for my wife to see some of the benefits of my approach to home buying will take time and on some key points especially where we can adjust we have some significant gaps.

Our Shared Priorities

After years of searching I got a better idea of what we were searching for and that settled me onto some key points of our search criteria.

• At least 1500 sq ft. of space and a 3 BHK for us as a home.
• A house that at least has 2 balconies so that we can put our plants which my wife likes
• Housing Projects in South Bangalore as my son currently studies in here and want to do a long term planning (Approx 10 years)
• Ideally an Apartment complex but open to gated villa projects though was very difficult to get. Had deferred buying a land as that would be more of an investment than ready to move in
• A project that at least was more than 3–10 Acre with at least 50% open spaces and decent amenities minimum being a Club House and a Super Market
• Well lit house where through out the day the sunlight can come and where option of new projects blocking sunlight is less.
• Bigger rooms with master bedroom at least greater than 15x12 inch and option to keep a king size bed and options for wardrobe and solid construction quality and large open windows
• Looking for projects which are either under construction or ready to move in so that the tax benefit on EMI can be realized quicker and pre-emi is less
• Was looking for RERA registered projects from premium builders so that the hassle of legal checks and issues can be decreased. There have been cases of even known builders failing in recent years great example being Mantri. There were some known builders who built bigger apartments but flouted norms and adjusted later, having seen many of their projects and issues, I wanted to avoided them.
• The most important recently was after seeing Bangalore floods was to see if the building was on higher ground or was the area a flood affected zone. This was one of the reasons why though my wife was keen on Sarjapur or Whitefield, I was more tentative as in these areas first there is over construction, many marsh lands and lakes have been encroached and low lying areas have seen some really bad floods. The passage of water and even traffic is in bad shape as the number of connecting roads and storm water drains are limited or in a bad shape.

How we converged

Finally despite my wish for getting a ready to move or under construction properties the only approach worked was where we chose the properties all being from known and good builders, physically seeing them and finally me depending on my wife’s 6th sense to decipher if she liked a property or not. Between her and me we have seen most (hundreds) of the new development properties that have been coming in JP Nagar, Bannerghatta & Banashankari area but were never able to agree on a project, it may be because of cost, house or the location and where we liked everything the property had some issues like building work stuck up, high tension wire going through the property or the lack or support from the executives.

Key Takeaways

From our house search few things we learnt:

• There is a time limit to making a purchase decision in a project, if you miss it the first time it will be costly in later stages
• If you do not like a project the first time, revisiting the project for different perspectives will not change it
• Location matters so do amenities and open spaces and the size of rooms in the house itself, there have been cases where the amenities and open spaces were very good in a project but the rooms in the house were very small and hence were not good ROI
• Avoid the builders when in doubt, once you see multiple projects of a builder old and new you will realize that there some structural issues with some builders and that repeats itself
• To be future proof better buy under construction property, ready to move in projects have not so good inventories and build in designs of few years old.
• If you are not moving ready to move in or quicker possession and projects which are just starting then its more of an investment than really immediate house to live, be clear why you want to buy a property
• Be flexible in your house search but to the points that you have defined, once we put some constrains and put in writing what we wanted it was much easier to reject houses that were not meeting out needs
• Your family needs that extra space, so stretch your budget and get that extra 1/2 room or room that can be used by your kids or you.
• Visit every project and if possible visit the earlier projects by the developer, you will quickly see some positives and negatives
• Always try to visualize the units you need in a model if building is not ready and check for directions and sun light and watch out for shadows. In big apartments especially in budget one even when you do not have shared walls you may have balconies or entire blocks facing your window, balcony blocking sunlight and view and that soon become a life long pain.
• Facilities can be a trap also, better see how well the facilities have been delivered in earlier projects and have realistic expectations
• Always bother about the resale value, I had seen the phase 2 or the new block that is being constructed having the chance to compare rentals or the resale price which gives you a tentative idea how the prices of the project will go in future.
• If a project is sold out immediately then definitely there is something good about that project and where crowd goes, it not always bad. We found some great gems when we saw projects and they were sold out.
• Make sure you ask and check for RERA, this is a blessing in disguise, I built a script to extract the RERA data and did my house search on my own. Its a treasure I will say and saves you are great deal in filtering out projects, though watch out that recently news reports have come in regarding the alleged nexus between developers and RERA officials, also the news of income tax and ED raids are a bit concerning. End of the day RERA is just a barometer and judging by the record number of projects that are being approved there I new a days smell rat.

My Fears

I am almost in the last stages of buying my house, thought we widened our search in December 2022, in Jan 2023 I have zeroed in on few projects but as I start on my home ownership journey, the biggest fear I have is that of the current market situation and so many people loosing jobs. I have seen some people being conservative in their home buying decisions and saving their cash than taking extra debt load. The other one is the sheer exploitation of natural resources of Bangalore be it lakes, ground water or greenery, I myself am thinking about my priorities and even evaluating if I even should buy a home or just go for a residential/farm land.

Recently I saw a social media post where it said make asset than liability. In that aspect if we live in a house it’s a liability but if its rented out and gives us cash flows it’s an asset. In all these conflicting thoughts I strongly feel I am too late in my house buying journey and this is an asset I will have to make even if its one of the biggest debt I will ever take in my life.

Finally

My grand father said when I was young and newly started job to buy a land or a house as he was a big believer in building investments and assets. The issue with monetary assets like bank deposits or NPS is that they are liquid and easily be broken when need comes. There have been many times when my entire savings were cleaned up and I has to start again.

When I did not have money it was a different matter but after pandemic the need to save and invest has become a major aspect of how I see finance and to be honest any financial investment like equity or mutual funds are market linked and have substantial risks. Real Estate has its own risks biggest being debt but in a long run its a very good investment and has the biggest multiplier effect. Hope to own a home soon even if its mortgaged and debt driven and the fear of current market conditions.