a normally anti real estate guy saying this?

was your first reaction, right?

Well I have always said that opportunities come in all markets. You need to decide which market suits you, what you are comfortable with and whether you have the brains and strength to straddle all markets.

Here I have a deal – buy 10,000 sft  of property…at a rate of 1300 psf payable in instalments. Payable over 18 months, the builder is saying  by the time he completes the project (35 months) HE WILL BE BOOKING at 3000.

At that stage he will happily buy all the lenders out…to ensure a 2% p.m. interest or keep the property…your choice…

I was told by somebody at the site…cost of construction is really about Rs. 1150…so there is no risk.

I am an equity guy…..and will not budge..but such deals are worth…and worth quite a lot i guess

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  1. Subra,

    Are the numbers right in this deal?

    Considering the price of Rs 1300/sq ft and construction cost of Rs 1150/sq ft, the land cost works out to Rs 150/ sq ft. This is with reasonable assumption of FSI of 1.

    We are also assuming that the builder will make initial bookings at cost price without making any profit.
    In which place in India we can get land at such dirt cheap rate? Forget about large cities, even at district places, you can’t get land at this price. Such prices may be available in remote places but there property can’t be sold at Rs 3000/ aq ft.

  2. Under construction property has its own merrits and de merrits. Off late with slow down in R.E, projects are not getting completed in time.

    I would stay away from such deals unless i am sure and know the builder well.

  3. “A Promise is a Promise ” is a Phrase Practised by Only One corporate House i know .I do not know wheather any builder also follows it with its customers as a principal? If the answer to this question is YES ,only then its worth trying ,provided asset allocation is done with Zero presence of Real Estate in Portfolio and real BIG and Deep Pockets …10000 sq ft at rs 1300 to be given in installments over 18 Months ….equals 7.22 Lacks per Month…. Subramoney is favourite of all income brackets .This offer Only High CTC Group can think ,for rest of us Renting and Equity ,other 2 Pillars Learned here should continue..Amin

  4. Weaalth you create

    i compliment Milind. Unless you have good enough cash reserves, it is risky call if it is purely on bank loan. Here is little story. The intent is convey how rise in interest rate impacts. Again here the impact is high as most of the funding for house was bank loan.

    Be very practical when you make call on buying home/real estate.

  5. such deals are not meant for people who borrow money and buy…what do you think you are? Bankers or what????

    I just said such a deal is available. Project is in Gujarat, I KNOW THE BUILDER (does not mean I am hawking the project) ..and bluntly, DEAL IS OVER. Prices are already at 1500 within 4 days of closing.

    Builder is rich enough to do a few such big deals…and much bigger projects too…:-)

  6. No doubt that the sweep upfront discount is something that makes everyone stop & think. What I don’t like about such deals is, the buyer is literally at the mercy of the builder. At any point of time, Builder do not respect our equity and at slightest opportunity wants to pinch you. If the property appreciates verymuch, he would force you to takeback your capital with minimum interest. If it run into trouble, he demands more equity to complete the project. The Builder always gives the look that we snatched his profit. This investment in my diary is similar to gambling, lottery, leverage and betting.

  7. Hi,
    Can you please mention where in gujarat?
    and yep such dirty cheap rate land is availabel arround the most real estate favourable city SURAT.
    well i dont like to invest where some body asking me 80% in cash .
    but i came across a project now who is accepting 100 % cheque and cost for 1300 built up area is 21 lac plus govt charges.
    Should we invest in this if i have cash in hand?

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