Buy vs Rent Analyzer

The Price-to-Rent Ratio divides a property's purchase price by its annual rent. A ratio below 15 generally favors buying; above 20 generally favors renting and investing. In India's metro cities (Mumbai, Delhi, Bengaluru), P/R ratios often exceed 30-40, which is a strong mathematical signal to rent and invest the difference in equity markets.

Owning a home is expensive beyond the EMI. Factor in: property taxes (0.1-0.5% annually), maintenance and society charges (₹2,000-₹10,000/month), home insurance, periodic renovation costs, and the opportunity cost of the down payment. Renters pay none of these, freeing capital for investments.

Indian residential real estate has delivered average appreciation of 6-9% annually over the last two decades in major cities. The NIFTY 50 index has delivered ~12-13% CAGR over the same period. If the difference in monthly outflow (EMI vs Rent + Investment) is channeled into index funds, the renter often accumulates significantly more wealth over 20+ years.

Buying is mathematically superior when: (1) You plan to stay in the property for 10+ years, (2) The P/R ratio is below 15, (3) You have a large down payment (40%+) reducing EMI burden, (4) Rental yields in the area are above 3.5%, or (5) You are buying for self-use in retirement, eliminating future rental risk and providing emotional security.