Renting a Flat is New Cool

From childhood, we are taught to have the goal of building our own home. But now the scenario has changed. I believe, Renting a flat is the new cool.

The investment in buying 1000 sqft space is huge. And this investment is a dead investment. You can not expect any returns from this investment. BUT, if you rent a flat instead of buying it, investment is less and the balance investment can be used to start a new business. What say?

Let me give an example,

Investment for buying 1000 sqft area
- Total investment – INR 70,00,000/-
- Down payment – INR 5,00,000/-
- Monthly EMI for 40 Years – Approx. INR 30,000/-

Investment for renting 1000 sqft area
- Brokerage – INR 12,000/-
- Monthly rent – INR 15,000/-

SO, saving of INR 15,000/- straight from EMI. + You have saved down payment which can be used for investment in many other business/investment schemes etc. where the cash would be active and profits can be generated.

One more benefit of renting is, you can always change your location based on your office location. ;) Owning a home will bind you to stick to the place because of the emotional attachment as well.

I have seen millionaires who are staying in a rented flat instead of buying one with the same philosophy of – I can use that money to start a new venture.

Same logic to be used in business as well – you do not need to invest in all machines on your own. You can outsource many things. This will avoid overheads and help you to focus on your core strength instead of other headaches. Just like, travel is mostly outsourced in all companies. Many 3rd party contracts we do. These acts help us to focus on our main business.

Even, today the business models are like this only.

*“The world’s largest taxi firm, Uber, owns no cars. The world’s most popular media company, Facebook, creates no content. The world’s most valuable retailer, Alibaba, carries no stock. And the world’s largest accommodation provider, Airbnb, owns no property. Something big is going on.”*

The theme is, while investing, we should see if the investment is giving some value add or it will be a passive asset for us. Even Robert Kiyosaki in Rich Dad Poor Dad says the same thing. Investments should be active. We should generate value addition from the investment.

It doesn’t mean that one should not buy a home in a lifetime. BUT it means that one should understand when to and how to invest in such passive investments.

I am not a financial expert to say this. It is just a common “Marwadi brain” writing this. I hope you understand the theme and like the content.