Buying a home. What should I advice my friends?

Question:We are a group of 4, one of our friends is in a big confusion.

Not a simple, a huge one including lakhs of rupees.

His present condition:
Just 20 Years old, supports his mother
His present house has been badly constructed, week foundation but his land is on road-side
They have to take a loan if they are going to buy (30 Lakhs, may be)
Hez still studying, final year engineering, but has been placed in a good company
He has no siblings


What he says:
A few years later his family wont even be able to think of buying a new flat because the rates will probably double in 4 years
Anyhow, it will take 3 years for the flat to complete, so by then probably he can manage the expense
If he doesent buy now, instead buys after say, 3 years, by the time he settles, all the good flats would have been sold out. (the area he is planning to buy is currently under lot of develoments, many)


What I think
Hez taking a huge risk. What if all doesent go as planned.

Cochin, India

Answers:
How much is a Lakh, in dollars? If your friend only put down a deposit, then if he can't make the payments, he'll only lose that much. It's a gamble, but one that many people have to take, due to the housing market (it's a buyer's market, yes, due mostly to low interest rates, which WILL go up).

Your friend is probably right that in a few years, he won't be able to afford this flat. It's always frightening to invest in something so big, especially when you're young and just starting out.

However, real estate is still one of the best investments you can make. And you said he already has a good job, so his chances are good. Even if he has to sell the flat, because he can't make payments, he will PROBABLY still make a profit.

Give him your blessing!