'I Pay Rs 1.5 Lakh Rent', Bombay Shaving Co Founder Explains The Math Behind Not Owning A House
Bombay Shaving Company founder Shantanu Deshpande recently appeared in a podcast, in which he shared the reason why he doesn¡¯t own a house.?Deshpande, who lives in a prime location in Gurgaon, Haryana, spoke to real-estate entrepreneur Ajitesh Korupulu. He revealed that he pays a monthly rent of Rs 1.5 lakh.
Building Assets: Comparing Rent And EMI Payments
Korupulu said: ¡°As an entrepreneur what's happening is your asset is being built by a company. For somebody who's a working professional, the real estate becomes the asset. Let's say you're paying a rent of maybe you know Rs 1 lakh. You pay another Rs 50,000-60,000 more you get a home. Even if you pay this rent for 10 years, you're not creating any asset. Whereas you pay the EMI, you're going to create an asset.¡±
Bombay Shaving Co. Founder Shared His Logic Behind Preferring To Rent Over Buying A House On Loan
Deshpande responded: ¡°The math doesn't work for me that way. For example, and maybe this is a very Gurgaon thing, so maybe Hyderabad is different. Gurgaon, I'm paying Rs 1.5 lakh in rent including maintenance [Rs] 1.6,1.65 [lakh] on Golf Course, premium place etc. The apartment I live in is roughly worth Rs 7.5-8 crore. If I were to buy that apartment and I have to leverage let's say 70% of it, Rs 6 crore loan would be Rs 6-7 lakh per month of EMI, which is like four times my rental cost. So, I'm living in a house which is like at 1/4th the EMI cost. So it makes no sense to buy.¡±
Deshpande Said That He Prefers To Invest Money In The Public Market Instead Of Assets
He further emphasized that he¡¯d rather invest the money in public market where the liquidity is better. ¡°I would rather take that six lakh if I have it, if I'm earning it, I might as well put it into public markets and kind of build asset there as opposed to building a fixed asset where liquidity is very difficult. That's the way I think about it unless I want to live there with my children and my parents are there and it's a nice five bedroom, etc. and then you're like okay fine now this is not an asset building activity, it is a cost.¡±
He Feels That Renting A House Brings A Certain Kind Of Freedom
Deshpande also mentioned that there was a certain degree of freedom renting the house and not owning it. ¡°I always feel like the rental freedom is much higher. It takes 15 days to move into a home even if you're upsizing. Let's say you have kids, two bedrooms to three bedrooms, three bedrooms to four bedrooms, it takes 15 days to move. Moving is so easy. You are asset light, which is probably not your preference, but I don't have interest to pay. I have rent. But that's my thinking.¡±?
