Ever since I read about the true cost of owning a car, I’ve generally thought about the true all-in costs of things – a phone plan, a housing loan, running a hypothetical chai shop, etc.. While I pursue this train of thought for purely intellectual purposes, it sometimes leads to conclusions that I find surprising.
The most recent one for me was the true cost of renting an apartment in Bangalore – given the many (6-10) months deposit required, the post-lease maintenance clauses, and the prevalent brokerage charges. However, unlike the case of a car, there is no viable alternative to renting. Still, it makes for an interesting calculation.
Anyhow, the point is the actual rent paid (and received by the owner in some form or the other) is very different from the “advertised rent” due to the above factors. Here’s a calculator I built to calculate the true cost of rent. I’ve set default values that I think are representative of what I have personally observed and heard about. In my current case for instance, the true cost of renting comes to 18% more than advertised:
Of course, given the sky high rental demand, the inherent power asymmetry, and the need for a roof over our heads, this is merely an intellectual exercise for most of us.