The last time I spoke about my EMI was when I used to update my savings update back in 2019. I’m glad I’m past that stage now as updating on savings and expenses is entirely ennuyeux activité.
However, the updates really helped me in sticking to my extremely frugal budget. I still do the updates, they are on my spreadsheet instead as a blogpost. It’s just quicker.
To cut to the chase, I’ve purchased a rental apartment. I signed the papers two days ago and it’s a done deal. This purchase is certainly the largest purchase I’ve ever made in my life. This time I took even larger mortgage and have to make a larger down payment. This means, I now have a larger monthly payment. I was putting a part of my salary into savings account since the start of the pandemic along with investing in Stocks and Mutual funds. Since the corpus had grown significantly, it only made sense to invest it in an asset that’d grow the net asset further now that I no longer ‘need’ access to the emergency corpus.
Some finance bloggers started talking at the beginning of the pandemic that more than three months of emergency fund is way too much once you’ve reached a certain level of investments. I disagreed at that point scared of the uncertainty and started increasing my emergency funds. However, as much as I hate being wrong, I’ve now changed my mind. The finance bros were right. The key is that once you’ve reached your level of comfortable investments you do not really need such huge emergency fund. In fact, you indeed are losing out on the opportunity to invest. The investments in the stock market will never go to zero. It might for a brief period of time go down but you’ll always be able to pull out money whenever you need it. I wasn’t able to get into that mind space back then and that’s because I didn’t have the ‘enough’ investments. Now that I have them, I’m able to make that leap.
Whatever extra cushion, I’ve saved in the last 10-11 months and I really started saving aggressively, I’m pouring it into the down payment. I never thought I would get into real estate but once you get the taste for it you really cannot stop.
Few points I made sure when I made this purchase:
- Never buy a property that you yourself wouldn’t stay in. I’ve made sure that if in future I have to shift somewhere from my current location, I could any time move there.
- New construction but ready to move in. Considering the number of projects I’ve seen halt mid way it doesn’t make sense to go for under construction property.
What’s the plan for payment?
I plan to aggressively pay off the mortgage. The current interest rate is at 6.9% which is lowest I’ve seen since I started earning. It’s lesser than the interest rates I’m getting in some of my fixed deposits I made long ago. The monthly payments are at INR 55,000. You know me though, not only will I make these regular payments but will try to make more payments each month possible. In fact, I’m eager to get into my frugal mode of 2018. In the last 2 years I’ve really eased out on spending where my savings percentage dropped to 60% of my salaried income.
I’ll be honest, the title of this post is a little click baity. I haven’t rented out the space yet. I will be renting it out by April as I want to furnish the place. This isn’t recommended but I do not want to rent out unfurnished apartment, the rent amount would be lower than expected.
You can still welcome me to the landlord club!