In India, buying home is an emotional decision rather than logical. Emotions are priceless, so I can only explain things logically. I personally feel that there are three kinds of assets.

1. The one that distributes cash
2. The one that has potential to distribute cash or may do so in future
3. The one that never distributes cash rather needs to be sold at a higher price

If you are buying a home from investment perspective, then it better fall under the 1^st or the 2^nd category. Unfortunately, most common investors like us buy assuming it to be in 3^rd category and ignore the first two.

The third category runs on emotions and speculations and there is no end to it. You may have a mountain of gold but If there is no one to buy it, it is worth nothing.

Last week I took upon a challenge calculate the returns, dissecting every aspect of investing in a house.

Factors I considered to assess the returns and its impact on returns are

1. The buy price of the house (- impact)
2. The actual/potential rental value (+ impact)
3. The rate of increase in the rent OR the future cash flow (+ impact)
4. The rate of increase in the house value itself (+ impact)
5. The loan interest rate (- impact)
6. Down payment and potential earning from that down payment if you have not bought the house (- impact)
7. The earning from the advance amount (+ impact)
8. The tax rebate on interest and home principal (+ impact)
9. The tax on rent (- impact)
10. The income tax bracket (+ impact)

Attached is the excel sheet that you can download and use as you need. Change only the cells highlighted in grey.

Happy Investing !!