"Rent Works"

If you are relocating to a metro like Mumbai, the first thought comes to the mind is that why I should pay such high rental values and why not buy the property? The idea sounds good, but buying property in Mumbai needs a lot of thought and a few parameters to be considered are:

Budgets - What are your budgets to buy a new home, the banks usually fund around 70% - 80% of the home cost and it is imperative for you to be ready with the down payment etc.

Before choosing a New Home, you need to consider the Golden Rules of Relocation

Kids First, Wife Second (Read family), Husband Third.

Location - Which location is best suited for your New Home.
 
Office - How far is the drive to your new office and in case you are taking public transport what is the ease of getting to a Bus, Train, Metro or Taxi to your office.
 
School - An important Criterion here but a lot of people tend to miss this one as schooling in Mumbai.


Over the past few years in Mumbai, the Capital values have gone up very high. For Example if a 2 BHK in good building in Andheri West was available for 50 Lacs and Rent was Rs.20,000/- now the Capital Value is Rs.1.20 Crore and the rental is still in the range of Rs.35000/- which typically means that the lease rent market has not gone up across the board like the property purchase market. The lease rent returns to a property investor is around 3% to max 6% in most parts of Mumbai. In locations like South Mumbai, the returns will be far lesser in B+ building where they cannot get premium lease rent values. Hence, it is imperative to understand the lease market and the property outright market in Mumbai before one takes a decision. Our advice to all Executives who typically relocate to Mumbai for a few years is that for the First 6-9 Months they should review the market and enter into a lock in period of not more than 12 Months inclusive of the notice period so that you are settled easily as it is much cheaper to settle in a lease accommodation in both financial and other respects of relocating.

Let us look at a comparison of a property to buy and incidentals so that we can evaluate ourselves what is the best option :

Incidental Expenses for Buying a 2 BHK of 1000 sq.ft in Andheri West in September 2009.
Leave and License /Lease	Outright Purchase Option
Rent - 40,000/-	Cost of Property – 130,00,000/- (a rate of 13000 PSF) for a good quality apartment
Deposit – Rs.300,000/- to Rs.500,000/-	EMI on 70% - Nearly 91.00 Lacs will be in the range of Rs.90,000/- to Rs.110,000/-
Owner Pays for you	Society Outgoings – Around Rs.7000/-
You will not have to pay more than Rs.6000/- for 3 years even if you paying the highest possible rent as your share of Stamp Duty and Registration. So	Incidental Expenses Like Stamp Duty, Registration, Car Parking, Transfer Fees etc. will cost you in the range of Rs.10 Lacs to Rs.15 Lacs
You can get a Semi – Furnished house in most of the cases and if you are willing to spend a little more, then you can get a furnished house. A lot many times you can get furnished houses as well so you do not pay any charges.	Fit outs – Options – Rs.300,000/- to Rs.500,000/- you will spend on the interiors, but yes, they are your own, but you need to be pretty sure that your job in Mumbai is for a long term before investing into the hard furnishings.

The above analysis and comparison tends to lean more towards a leasing decision, however, this can be purely attributed to the financial implications as the same are not much if you compare it with an outright purchase.

The other main benefit for leasing an apartment :

• Flexibility to choose and change the location over the next few years depending on your family needs of schooling or the distance to your office or any other priority.
• Upgrade your apartment from a 2 BHK to 3 BHK
• Exit completely from the property in a few months by giving the notice as in the agreements.

An important factor in relocation is choosing a Relocation agent who can understand your family needs, understands the real estate markets, is well net-worked and has an understanding of legal matters, processes involved in relocation and to give you the best possible options to make your decision easier. At realestatemumbai.com we are sensitive to the need of your family which is relocating to Mumbai and our Endeavour is make your relocation process as smooth as possible to Mumbai.