In the current market the real estate prices are becoming stable and the retail customer is not able to make much money out of the investment he makes.
If a retail customer buys in a pre launch and If he would like to exit after 1.5 to 2 years, he will not be making much profit or any profit in the transaction. The calculation for the same will be as given below
* Say the pre launch price is Rs.5000 / sqft at the pre launch.
* In this current market the appreciation after 1.5 years would be maximum Rs.500 to Rs.750 / sqft and for the calculation we can consider the best scenario i.e.Rs.750 / sqft
* If a customer wants to sell after 1.5 years obviously the buyer will ask at least Rs.100 per sqft less than the going price.
* The transfer charges would be Rs.100 per sqft
* By this time the owner would have paid 60% of the apartment cost and the cumulative interest for the same will work out to around Rs.200000.
* The overall profit would be Rs.750 – Rs.100 (discount) – Rs.100 (transfer charge)-Rs.150 (Cumulative interest) =Rs.400 / sqft.
* But many a times the price will not increase at all and it will be in the similar range even after 1 to 2 years.
Therefore If you are looking to make money out of investment its always better to choose the project after analysing all pros and cons.
Just going by brand will not fetch any return when you really want to sell and make some money out of this.
Landowner Stock
In Bangalore or in most of the cities in India the project that are being constructed by major builders are all joint venture property. 90 % of the projects that are being developed are Joint venture property.
There are two categories in the joint venture development
1. Revenue Sharing
2. Apartment Sharing
In revenue sharing the builder will sell all the stocks and he will share the revenue with the landowner. In this the landowner will not have any apartment to sell from his side.
In Apartment sharing, the landowner will get his share of apartment – between 30% to 50% depending upon the understanding. The landowner will be selling these apartments when the project is nearing completion or when the builder has sold his share of apartments and nothing is left for the builder to sell.
As customer, you can get benefit of these units many times in terms of price or the availability of unit.
Price : Customer can get the landowner apartments in a very competitive price or some time the same price as builder is selling. But since the project is ready to move in your Pre emi will not be applicable many times.
Availability : Most of the good apartments will be sold by the builder in the initial days of sale and the left out apartments may not be very good if you are looking to buy an apartment from builder at the fag end of the project.
By buying from the landowner, who would have started the sales at the ned , you will get a very good choice of units.
Investor Stock
When a project is pre launched many a times the builder will give few units to the investor at a very competitive price to get the cash flow for construction. The investor will pay the entire money initially and get the unit with a very good price.
The investor will sell the units when the project is getting completed at the market price and there by making good profit. For customers the advantage will be in price as well as the units that the investor will be holding will be premium units.
The price with which the investor wants to dispose will always be slightly lesser than the going price in the market for that unit.
Advantage of buying ready to move in flat
As you are aware by buying an apartment in pre launch phase, you have to wait minimum of 3.5 to 4 years. By having the waiting period you may get the time for payment but at the same time you need to pay the pre emi for the loan released.
And going by the current payment schedule of builders they will take 80% to 90% of the payment in 2 years. They will take another 1 year for the hand over and for that 1 year you need to pay maximum interest as your 80% to 90% of the loan would have been released by that time.
By going for a ready to move in apartment, your EMI will start immediately and you can occupy the flat immediately
– Guest article
