Real Estate

REAL ESTATE INVESTING

 

Investing in Real Estate in India is becoming painful despite the RERA act. 

Buying or selling property is fraught with documentation requirement, encumbrances, registration and still someone can file a court case and it can go on for years.

Further, particularly 2nd hand transactions, involve black money.

Add to it if property is prime, the political angle and goondaism.

In the west, the property dealer being a legal person takes care of all the documentation and there is no scope of being cheated or issues cropping up in courts that take a long long time.

Further, RE investment and sale is now  becoming tedious with the diminishing of joint family and couples  having one or two kids and staying separately away from the joint family. This means that a large house is empty and difficult to dispose off if the parents are 75-80 years old and the children do not stay in that place or stay abroad.

My advice/recommendation (not binding or marketing it-just a thought) for investment in RE is as follows:

1) If you can rent it, all the better as there are more properties available on rent than demand as in last few years people invested heavily in gated and high rise apartments in the hope of selling at huge profit which didn't/hasn't materialized.

2) Advantage of renting is if you are going to invest, say, 2 crs, the FD int @ say conservative of 6% will fetch you 12 Lakhs per year or 1 lakh per month. For that you can get a decent 2,3,4 bedroom flat for 50,000 Rs per month. This saves you 50,000 per month which you can invest and earn better.

3) Flat owners living in a different place than their ownership, prefer a decent couple who pay rent and if required, by giving 6 months reasonable period, may vacate. They are ready to lower the rent for them to avoid litigation or abusive tenants staying.

4) Rental yield is just 2-3% and while you can get better rents by giving out to group of  bachelors (girls or boys), or as AIRBNB, but many gated communities object to it. 

5) With a small family, running around during old age to sell a house or flat is tedious, particularly if kids are abroad. (Western countries just give 2 weeks off in a year and it takes at least 5-6 months staying in that property to sell a property in India, else agents take you for a ride.

6) Lot of unscrupulous builders who take the money and not complete. Eg Unitech and a whole of companies in Delhi- Noida belt. People have taken EMIs and paid the builders hoping to repay the loan by self occupation. But work is not completed and EMIs are on making a big cash flow impact.

7) Preferable to buy with a very well reputed builder or ready to move in property will at least ensure you have the property

8) Maintenance of the property is another big headache. If house, there are recurring costs, if gated community, costs keep increasing and the maintenance cost goes up. If kept locked, maintenance is still to be paid.

9) It does not mean you should not invest in RE. If you are planning to settle in one city, you can buy a flat and live in comfort and one typical Indian concern is of landlord asking you to vacate and you are not able to find another flat to live in. Living in own flat has the advantage of modifying, redoing to meet your needs. But disadvantage is slow accumulation of things that may not be needed later.

RE DESPITE RERA (OUR COURTS TAKE AN INORDINATE LONG TIME- MAYBE 20-30 YEARS TO DECIDE CASES) IS FRAUGHT WITH UNDERHAND DEALINGS (ALWAYS THROUGH AGENTS TO EASE PAYMENT UNDER TABLE) AND INNUMERABLE DOCUMENTS - SALE DEED, ENCUMBERANCE DEED, ELECTRICITY APPROVAL, RERA APPROVAL, MUNCIPALITY APPROVAL ETC, ETC WHICH A NORMAL PERSON CANNOT VERIFY.

THUS POINT 7 IS ONE OF THE BEST OPTION.

WILL -ESSENTIAL NEEDS

 

Note: There is something called a living will. It means that you want your near ones to pull the plug once it is determined you do not want your life to be sustained by tubes or being in a comma etc. This makes it easier for near and dear ones than paying a huge amount to keep you in ICU or in a vegetative state for years by the hospital.

ANOTHER SUGGESTION I HAVE IS FOR EMBASSIES OF INDIA (FOREIGN OFFICE) THAT THEY SHOULD AS PART OF LABOR CONTRACT (USEFUL PARTICULARLY FOR ILLITERATE LABORERS WORKING IN MIDDLE EAST OR ELSEWHERE) SHOULD ALSO PREPARE A WILL AND TRANSLATED AND ATTESTED BY MINISTRY OF JUSTICE IN THEIR COUNTRY OF WORK. THIS WOULD HELP IN SETTLEMENT OF THE LABORER GOING TO HIS FAMILY AND NOT BE LEFT IN THE COUNTRY OF WORK AS DOCUMENTATION IS NOT COMPLETE. THESE POOR FAMILIES DO NOT HAVE MEANS TO CHASE THE FINAL SETTLEMENTS. 

TOP UP and SUPER TOP UP - DIFFERENCE

 

Please note that you should have a basic plan before going in for Top up (excess paid) or Super top up (cumulative).

Most importantly you should have an agent who will help in CLAIMS and not just sell the policies.

It is noted that many insurance companies sell the policy promising everything and when it comes to claim go through fine tooth comb to avoid paying any claims. 

A small scratch during your school days could become a preexisting for a heart attack.

MY ADVICE TO POLICY MAKERS IS AT TIME OF INSURANCE LIST OUT PRE EXISTING AS PER CLIENT AND AS PER THE FINDINGS OF MEDICAL TESTS. REST ANYTHING SHOULD BE CLEARED AND NOT GO THROUGH NON EXISTING LINKS TO DISEASE AND REFUSE CLAIMS.

Fixed Interest Rate Options

Please note the interest rates keep changing depending on govt. policy. Above is a guideline. Check the correct interest rates prevailing at the time of your investment. Each banks have their own rules for minimum and maximum amounts. Check all that before investing.
 

Type of Cash flow

 

Sector PE

 

Quotes

Memorable Quotes

Never measure your worth with the size of your office or the grandness of your title. Your worth is measured by the value you create for your employer, society and the world- Shunu Sen, Marketing Director Unilever ltd.

Don't wrestle with pigs. You both get dirty and the pig likes it. - Mark Twain

Risk is a combination of danger and opportunity. You cannot have one without the other - Ashwath Damodaran.

Unhappiness is caused more by looking at other's achievement than one's own.-Subramanian

Happiness is what you do with what you have, Unhappiness is what you do with What you don't have - Subramanian

A bull market is when you check your stocks every day to see how much they went up. A bear market is when you don't bother to look anymore." - John Hammerslough

The %age of income you are able to save is more important than the %age of return you get. Particularly true when young and beginning of the career. 

Stomach grumbles when empty and sends a signal. The Brain doesn't. So decision making in investment has to be done carefully with full brain and not empty- Subramanian

Yesterday I was clever, so I wanted to change the world. Today I am wise, so I am changing myself- Rumi

You can do everything right and still lose. That's not weakness, that's life. Reverse is also true.You can do everything wrong and still win. That's not strength, that's luck.- Quote from StarTrek.

A cynic is a man who knows the cost of everything, but the value of nothing.- Oscar Wilde

 If people weren't so often wrong, we wouldn't be so rich Warren!- Charles munger

Strong minds discuss ideas, average mind discuss events and weak minds discuss people -Socrates

It is better to be roughly right than be precisely wrong-John Maynard Keynes

 Einstein said, everything that can be counted, does not necessarily count; everything that counts cannot necessarily be counted.

Everybody wants to go to heaven, but nobody wants to die. In Investments, it is the same. Everyone wants a high return, but nobody wants to take the risk. 

I bend with respect but not so much as to allow people to walk over me.

Stock Market is an art where traders take large amount of your money as SIP and give small amounts of profit now and then as incentives to make you stay in the Market. Investors are those who look at the huge hanging golden pot and lose whatever is there in the pot

Theodore Rossevelt, US president 1910 speech

Titled: Man in the Arena

It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly.

Every Job looks easy when you are not the one doing it. Jeff Imelt - ex CEO of GE.

Festinger's Law states that 10% of life’s troubles are caused by events themselves, while 90% are determined by how we react to them.