Few facts from my life that shape my opinion on a home purchase

• My parents maintain a comfortable, secure lifestyle with rental income being 60% of their passive monthly income.

• My dad has been without a job for few instances in his career and I witnessed the importance of passive money.

• My father worked in a lot of companies across India and few countries, I have lived in apartments / independent homes   in Bombay now Mumbai, Goa, Baroda, Jodhpur, Nairobi, Jaipur, Bengaluru, Pune, Dubai.   Lived in suburbs, downtown/main market area, govt subsidized housing, an 8000 square feet multi-level villa and a   480 square feet apartment in Mumbai.

• My Parents have brought multiple apartments in Mumbai. Dad would visualize how their neighbourhood, the community will evolve over a 10-25 year horizon. Parents would gather and converse over data points like distance to schools, hospitals, bus stands, railway stations etc. They kept weekends first half for visiting under construction apartments, over a span of 18-20 months before buying. I did the same along with my dad for the one we just brought in Bengaluru. This time we took 28 months before buying.

Here are data points on what I consider constitute a good purchase

• Good sunlight in all rooms till 4.00 P.M to 5.00 PM
• Broad roads and access to major public transport modes within walking distance e.g. a kilometre,
• Buying at a reasonable market price,
• Decent sized homes that are easy to maintain and keep clean with minimal help (space/size is a personal opinion and depends on family size. )
• Roadside noise shouldn’t spill over into the home,
• Rental value of the adjacent buildings and in the neighbourhood ( factoring in society charges etc ),
• Clean legal deed and no litigation,
• Privacy from others in adjacent apartments/homes and possible new construction in future.

Point no 3) makes it incredibly difficult to find homes that meet all criteria. One can rightly argue that only by paying a premium / incredible luck can one get all 8 above.

I would argue that if you are willing to

• Research online on upcoming projects and new neighbourhoods
• Visit promising ones for sales over the weekend and visit the neighbourhood to get a sense of the location
• Make notes if it ticks points 1 to 8 above and which one it does not but will by the passage of time

Do the above three for months at end, one day you will walk into an apartment that ticks all the boxes and you can’t believe your dumb luck.

Homeownership over the long term in metro cities is a great way to build generational wealth.

1) Say X brought an apartment for 100k in a prominent well-established neighbourhood and Y brought 2 for 50k and 65k in upcoming neighbourhoods. Say 15 years have passed and X’s house can sell for 300k and Y can sell 150k + 200k respectively. The reality is that only Y has passive income and can cash in when real estate pricing is in a bubble or wants to put both houses on rent and move elsewhere to retire. X will not be as flexible as Y. You might say that X can also put it on rental and move. Most likely his rental from the single apartment will be less than that of two owned by Y.

2) It’s always easy to sell and rent affordable apartments than expensive ones.

3) Proximity to entertainment hub and rapid public transport plays a huge factor in real estate rentals, price appreciation, ability to sell and purchase.

4) Apartments unlike independent villas aren’t lifelong and at some point have to be reconstructed. This is where you should try selling them off at the 40% - 50% mark of their lifespan and buying a new one by adding a little bit more cash. This is a task you can hand over to the next generation who would easily and eagerly do it as they understand how secure it makes them financially for their lifespan. It only occurred to me a few months ago that this is why my parents insisted on taking my sister and me to visit every apartment they saw.