Bombay Shaving Company CEO pays Rs 1.5 lakh rent, shares why it 'makes no sense to buy' a flat
Bombay Shaving Company CEO pays Rs 1.5 lakh rent, shares why it ‘makes no sense to buy’ a flat
Bombay Shaving Company founder and CEO Shantanu Deshpande recently shared in a podcast that he pays Rs 1.5 lakh rent for his apartment in a prime location in Gurugram and why it does not make sense for him to buy a flat instead.
Deshpande made the remark after Hyderabad-based real estate entrepreneur and CEO of ASBL, Ajitesh Korupolu, stated that paying EMI instead of rent eventually leads to asset creation.
“As an entrepreneur what’s happening is your asset is being built by a company. For somebody who’s a working professional, the real estate becomes the asset,” he said. “Let’s say you’re paying a rent of maybe you know Rs 1 lakh. You pay another Rs 50,000-60,000 more you get a home. Even if you pay this rent for 10 years, you’re not creating any assets. Whereas you pay the EMI, you’re going to create an asset.”
Responding to this, the Bombay Shaving Company head said the math doesn’t work for him that way. “For example, and maybe this is a very Gurgaon thing, so maybe Hyderabad is different. In Gurgaon, I’m paying Rs 1.5 lakh in rent including maintenance Rs 1.6 lakh on Golf Course, premium place, etc. The apartment I live in is roughly worth Rs 7.5-8 crore. If I were to buy that apartment and I had to leverage, let’s say, 70 percent of it, Rs 6 crore loan would be Rs 6-7 lakh per month of EMI, which is like four times my rental cost. So, I’m living in a house which is one-fourth the EMI cost. So it makes no sense to buy.”
Moreover, Deshpande said that he always wanted to live close to his office; Bombay Shaving Company has changed its offices multiple times and staying in rented homes gave him the freedom to move and continue to stay close to his workplace
“I always feel like the rental freedom is much higher. It takes 15 days to move into a home even if you’re upsizing,” he said. “Let’s say you have kids, two bedrooms to three bedrooms, three bedrooms to four bedrooms, it takes 15 days to move. Moving is so easy. You are asset light, which is probably not your preference, but I don’t have interest to pay. I have rent. But that’s my thinking.”