Turning A Liability Into An Asset

WFH days were over when we were called to office. I had got an extension of 6 months since we were expecting a child. In the meantime, I had to come to Bengaluru for office visits. During these visits, I checked about rents in Bengaluru. They had significantly shot up. Even a 1BHK would have been fine for me, but it did not come with car parking. So, I had to search for 2BHK. In a decent society it shot up to anywhere Rs 40k - Rs 50k.

I was ok for rent upto 30k but giving 50k for someone else’s flat just didn’t feel right. Rather than paying a rent of 50k I would have preferred paying an EMI of same amount. That would translate to a loan of about Rs 60L.

So, first I started searching 1BHK under Rs 50L. There weren’t many good options. Most were old or in constricted spaces. I didn’t have lavish expectations but at least I can ask for a covered parking. That is not aspirational.

I searched for options on MagicBricks and other sites. I was surprised to see options around Rs 1cr in Prestige giving a rental yield of more than 5%. But after further investigations, I came to know that they were trap or bogus posts. Actual price was around Rs 2cr.

Then in Jan 2025, after my baby was born we were about to leave Pune. I got a call for a Shapoorji Pallonji project in Pune. It also had a 1BHK option. It would cost me around Rs 52L (all inclusive) for a ready to move in flat. It was an aspirational flat with all the amenities and parking located near an IT park. So, it was a no brainer for me. And I booked it.

Fast forward two months, I have got the possession of the flat. I did some electrical fitting, kitchen trolley and cupboard which costed around Rs 1.5L

I have now rented the flat for Rs 16k / month with a security deposit of Rs 34k. I would have got Rs 17k but didn’t want to let the flat vacant for long. I had taken a loan of Rs 40L for the flat. Its EMI of 35k has started. While buying I felt like stretching as it was my 3rd flat. But now I have breathing space. Repo rate has also decreased and government has increased tax exemptions. The same flat would cost Rs 60L in few months time.

After few months, when I shift to a 2BHK apartment around Rs 40k, I would still be paying an EMI of Rs 35k and getting back rent of Rs 16k. So essentially I would be shelling 40+35-16 = 59k . But I would have an asset to show for it. That’s how you turn a Rs 50k liability into a Rs 50k asset.

Given the nature of my job where I may need to shift to any metro city or at different location in the same city, I always looked at flat as an interchangeable commodity. If my flat is 20km from my office location, I would rather prefer to rent it to someone and stay on rent in some place near my office.