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POSTED BY ON April 26, 2014 3:09 pm COMMENTS (3)
hello,
I am doctor, at present i am running my own clinic in rental space cine last 3 yrs.
now i need to expand it further so need more space for this. at present i have either of 2 option first, i go for rental space in same premises or purchase it near by new devloping location.
financial scenario: present rate is 12ooo with 10% rise every yr
new rent for minimum 5 yrs contract 30000 with 10% rise every yr
i finalized two different location for purchase of place. total project cost is 85 lacs at one place and other costing me 95 lacs.
i applied for loan in bank for around 75lacs at rate of 11% for tenure of 10 yrs, i find it difficult to get such amount of loan from bank so i need to arrange money from local source at rate of 12% . it was around 20lacs in first scenario.( in place of 85 lacs – project cost)
real estate rate rise about 25% in last 2 yrs in our area.
so please tell me which is better option for me.
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Dear abhijeet, if your calculation indicates, purchasing is better, please opt it.
Thanks
Ashal
Thanks for reply,
i made calculation for both.
in tenure of 10 yrs
i am giving interest of around 49 lacs and at same time will give rent of around 65 lacs in 10 yrs
if i go for rent-
i am able to invest around 8.8 lacs for 9 yrs and so on calculated for every year for period of ten yrs
return i calculated for this amount was around 12%
also consider for depriciation factor which was higher on purchase side for initial 5 years and then on rental side for next 10 yr
at the end of 10 yrs i have a property in area if i go for purchase which was priced higher than i have capital in hand.
so i am confused which was good way?
thanking you
Dear Abhijeet, renting is better that outright purchase to keep your capital investment down.
Thanks
Ashal