Many young professionals face a significant financial decision: where to buy their first home – in their current working city (like Chennai) or in their native place. This often leads to a subsequent consideration: for those who already own property in their hometown, is it wiser to invest in a second house in the working city or in agricultural land? Let's delve into the first of these dilemmas.
The First Home Dilemma (Working City vs Native Place)
Imagine you've secured a job and reached a stage where you can consider building or buying a house or flat with your savings, taking a loan for the remaining amount (let's set aside the specific figures for now). The crucial question then becomes: Where should you buy – in Chennai or your native place? You might find yourself thinking that investing in your native place requires a smaller percentage of the total cost for the same type of construction in Chennai, offering more financial flexibility. Family discussions often bring in emotional considerations: owning a house in your native place could bring happiness to your parents, provide a personal space during important family gatherings, and strengthen your connections with your extended family. On the other hand, having a house in your working city eliminates rent, allows you to live with your immediate family, and reduces the need for accommodation during visits to your hometown for significant events. Numerous factors will influence this decision.
It's also crucial to consider the financial strategy behind your investment. I've heard of a situation where someone decided to build a house, incurring a loan of around 30 lakhs. Their plan was to sell a plot of land to cover approximately 80% of the loan. However, unforeseen reasons prevented the sale. He was around 24 when he built the house and is now 27. His current salary barely covers his monthly expenses and the loan EMI, leaving him with little to no savings. Consequently, his marriage plans are being delayed due to his inability to cover the wedding expenses. This illustrates a critical point: if you are making an investment decision based on selling a property, ensure the sale is completed before committing the funds to avoid such precarious situations.
Before making the first home purchase decision, carefully consider two key aspects: the total amount you'll spend, which should account for your monthly family expenses and your children's education (present and future), all factored in with current inflation – essentially, evaluate your financial capacity thoroughly. If you've firmly decided not to change jobs, remember that uncertainties still exist. For instance, if your employer knows about your house purchase in the working city, they might use it as leverage. Even if you plan to change jobs but intend to look only for remote work or opportunities within Chennai, there are still potential limitations. I would advise against having such a fixed mindset, as it might seem stable now but may not be adaptable in the long run. Consider a scenario where you receive a better job offer in a different location and decide to take it. You might then think, "If we had a house in our native place, at least relatives would be there for support," making you wonder if that was the better choice all along. This initial consideration assumes you are the only child in your family.
The Sibling Dynamic (Complicating the First Home Purchase)
If you have a sibling, their marital status is irrelevant, the crucial aspect is whether you both have a good relationship and are jointly contributing to building the house. If you've agreed on common terms, ensure these terms are clear and there's a shared record of them.
However, if you are the sole contributor and your sibling is not, let me share real-life scenarios involving two people I know personally. In the first case, the person contributing fully questioned whether the house should rightfully be theirs. Shockingly, during discussions, their parents indicated they were willing to give the house to the non-contributing sibling, suggesting the first child was capable enough to "do it again." Believe me, as unbelievable as it sounds, this was the reality they were told. A similar situation occurred with both individuals. Consequently, both responded that if the house was going to belong to the other sibling, they would not proceed with building. In one instance, since the contributing sibling was married, the parents reportedly said, "Okay, you can build and keep it for yourself." The second person decided to abandon their building plans and simply save. In both these situations, a common factor was that the non-contributing sibling was facing difficulties in their own life. Ultimately, this all depends on your specific family dynamics, and given the significant investment, it's wise to prioritize your own interests.
The Second Investment Decision (Second House vs Agricultural Land)
Coming from a family with a traditional agricultural background, I understand the immense hard work and inherent challenges involved. Agriculture is heavily dependent on weather and water availability, and the interplay between these two factors significantly impacts all types of crops, especially long-term ones. For instance, with sugarcane, the final weight and sucrose concentration are critically dependent on irrigation in the last 4-6 weeks before harvest. Even if the initial and middle growth phases are good, inadequate irrigation towards the end can lead to significant losses, rendering the entire period's investment futile and impacting future crops. The Return on Investment (ROI) is particularly crucial in agriculture, especially with long-term crops. Farmers often choose these because they generally require less water than short-term crops, have lower initial investment, and carry less risk. Short-term crops typically demand daily attention from the beginning and require higher overall investment, often benefiting from intercropping.
Shifting back to our topic, let's consider people's current mindset. I had a conversation with a senior person who expressed the significant stress they were experiencing and wished they had bought land in their native place when they had the opportunity. They felt that owning land there would have provided peace of mind, and they might have even returned to their native place despite a lower salary, freeing them from complete dependence on their current job.
I also know someone who invested in a house in Chennai despite owning one in their native place. He has a good relationship with his sibling, and when asked about his decision, he explained that frequent changes in rented accommodation and escalating rents (reaching 20k), coupled with the fact that he was already paying around 25k EMI for a plot, drove him to build a house with an anticipated total EMI of around 52k. Three years prior, he had bought a plot with an EMI of around 25k. Faced with these issues and encouraged by his family, he invested his savings of 16 lakhs and took a loan of 52 lakhs to build a house. The total cost (plot + construction) was approximately 75 lakhs (excluding interest & 1.26CR incl. intrest). The interest on the 52 lakh loan was about 45 lakhs over a period of approximately 15 years, resulting in an approximate EMI of 52k. He mentioned taking additional loans as well. While he anticipates career growth allowing him to close the loans within 6-7 years, the total cost will still be substantial (around 95 lakhs to 1 crore).
Investing in his native place could have cost roughly half that amount. When I directly asked if he would have considered investing in farmland instead, he raised a crucial point: "Who will give a loan to buy farmland? You can only buy it by mortgaging existing property." This reality prevents many interested individuals from investing in agriculture. Consequently, only a small percentage can afford it, and people are increasingly recognizing the value of farmland. Even within my own family, those who sold land a decade ago now regret it, acknowledging that while circumstances forced the sale, retaining it would have been highly beneficial today. However, when I asked a friend of mine whether he would invest in farmland if he had around 70-80% of the money in hand, and whether he would take a loan for the remaining 20%, he said he would definitely do it. So, it seems like the main thing stopping people is having that large initial capital once they do, they're more open to a smaller loan.
It also made me think about the practical challenges of selling, even when an asset is expected to appreciate. A friend shared an example about his father’s land—based on recent sales nearby, it should be worth around ₹2300 per sqft. But in reality, buyers are only offering ₹1800–₹1900. So, while a property like the one in Chennai might appreciate over time, actually selling it and realizing that value could involve a lot of negotiation and compromise. It’s a good reminder that appreciation on paper doesn’t always translate easily into cash in hand.
Conclusion
So, after thinking through all these different scenarios – that first big choice of where to settle down, and then whether to invest again in the city or go back to the land – it really hits you how personal these decisions are, doesn't it? It's not just about the numbers, it's about family, where you feel you belong, and what you hope for down the road. And like we saw with that friend, getting your financial house in order is absolutely key before taking any big decision.
Then you've got that other one, that idea of owning land, maybe even connecting with your roots through farming. It's tempting, but it comes with its own set of challenges, especially when it comes to getting the money together. It's a different world compared to the more straightforward path of buying another place in the city.
Ultimately, it all comes down to what feels right for you. Maybe it's about finding a way to balance your life in the city with that connection to your hometown, or maybe it's about carefully weighing the pros and cons of different kinds of investments. The most important thing is to really think it through, talk to the people who matter, and make choices that you feel good about in the long run. Consulting a financial advisor will also give you a clarity on these kind of big investments.
