Indian Housing Simulator and why first timers should invest in atleast one house for living.

Hi Friends,
This is Case study is for people in age group of 25-30 years.
There goes a saying "cut  one's suit according to one's cloth"
Mean is simple don't over leverage our stretch to much beyond your budget.
These banks gives loan for everything and when it's disbursed you are made to feel like King.
It's only when EMI starts making dent one realises the reality.
EMI for your first house is an Assset and at any cost shouldn't be delayed.
Buying house also should be within reasonable means. One needs to save for rainy days.
Let's say one should have atleast  5 lakhs as emergency fund.
This is keeping in mind your average salary is 10 lakhs plus per annum.
Don't invest in new townships unless you plan to stay there in person. India too has ghost townships were people are finding it hard to move in.
Study the Location of your Investments.
EMI should be not more than 40% of your monthly salary.
If both partners are working still better to keep buffer as these days there is no Job surety.
 As stated earlier there is loan for everything but Loan Installment shouldn't exceed 50% of your monthly income.
Credit cards gives us feeling that we haven't spend much especially if auto payment is linked with your credit card it's even worst as you lose track of your Investments.
Life Insurance coverage should be just sufficient to cover your mortgages payment if any.

Let's see how House Investment creates value for Individual
Case Study 1 is positive scenario.
We can get Tax benefit on HRA, We can save on Rental Income.
We can keep up with pace of rising Inflation.
We need not worry about promoters n their cunning and innovative Interventions.

If we need just 20% steady return Housing can be one of smart investments if carefully betted.
Housing will be cheaper in next 2 years once Indian housing bubble bursts (corrects by 25%) do invest and keep your fingers crossed that it does happen so Housing market comes to some sanity.
As we see a Positive NPV for all our Cash outflows we can invest with margin of safety.
Here i'm consider what if ur Intial Investment was kept in FD,
What if Rentals after paying maintaince is kept in FD
What if Rental deposits are kept in FD
What if you Repay home loan by 20 years & sell of your House by 20years at 265% higher than purchase price.
First timers can see Rental yield as savings if they Invest and they neednot pay rent as they would do if they don't own a house.
Investors can see Rental Yield as returns on their Investment

Case Study 2 is worst scenario.
Assume house is sold after 20 years. Keeping Inflation of  3.5%.
Due to depreciation assume we can only get 100% return on Arithmetic mean basis.
Assuming Fixed Deposit Yield after tax is 6% will slow down & Rental yields will be hard to come by.
If it's your first home and NPV is positive given below anticipated scenario it's worth a buy.
In India there is nothing free and not much social security.
Even if Banks fail we can say House is our Asset ( Ignoring nature and man made calamities)