Top 5 Costly Mistakes Villa Buyers Make – and how you can avoid them.

Top 5 Costly Mistakes Villa Buyers Make – and how you can avoid them.

vec_view27Owning a villa is every home buyer’s cherished dream.

And that’s why most times it becomes an emotional decision, rather than a decision backed by sound planning.

While a real estate investment is one of the largest financial transactions one makes, we have found that many home buyers are poorly prepared to ensure that they make a good purchase decision.

Don’t worry it’s not all your fault.

The prospect of owning a big, fabulous villa can render the best of us emotional and naïve, leading to cloudy and hasty decisions.

To help you avoid making any faulty decisions, we have put together a report of the top 5 mistakes people make when buying a villa.

Read on, to learn how to avoid these mistakes.

1. You don’t fix your spending limit and end up overstretching your budget:

When you are dealing with large financial figures, we there are a lot of things that we forget to factor in. Analyzing your budget and planning your finances is very important.  More features and amenities might excite you, but it would make sense if you stick to your budget. Ensure you have budgeted for all the hidden costs as well.

Tips for good financial management:

  • Get a pre-approval for a loan before beginning your property search. This way you have a limit to observe and can avoid taking on too much debt.
  • Determine your down payment and all the closing costs and save enough to meet them.
  • Clear all your existing loans and debts with a satisfactory credit score.
  • List out the liabilities of the next six months, like kids tuition fees or Insurance Premiums and keep reserve to fulfill them
  • In life you don’t know when things go awry, so always keep 3 months of your EMI payment as reserve.
  • Maintain a separate budget for home furnishings and interiors.
  • A regular source of income is mandatory when you are buying a home. In case you are unsure of job stability, postpone your home buy.

2. You don’t double check the legalities:

 Unlike most apartment projects, villa projects are set over large land formats. And when it comes to large townships covering many acres of land, you have to be double check the legal paper work like the parent deeds and the history of the land. The land should not be subject to any property /ownership dispute and have clear titles with all the necessary approvals.

Handy Checklist of documents you need to double check on:

Sale deed, Khata certificate, Tax paid receipt, Joint development agreement, Loans from bank, Encumbrance certificate, Sanctioned building plan, Electricity/ water bill receipt, Maintenance no dues, NOC, Sale and construction agreement, Registered previous agreements.

Most importantly check on:

  • Approvals by at least one leading bank of the country
  • Approval by the government authorities
  • Delivery of past projects
  • Feedback of existing buyers of the quality of the product.

3. You don’t check on the construction quality:

Again unlike apartment complexes that are built as one complete unit, a villa construction is different. You need to be constantly checking with the builder on the progress of your villa and the quality of construction materials used at every stage.

Tips for checking quality:

Fix dates for construction inspection and talk to the architect and project management team of your builder regarding the materials used. Also look out for any electrical and plumbing issues that could arise in the future.

4. You ignore the reputation of the builder:

Most people tend to chose unknown builders as they sometimes offer cheaper products. However this is a grave mistake when it comes to home buying. There have been instances when the builder has constructed poor quality home and or swindled people of their money without even completing the home.

Qualities to look out for in a builder:

Do your background research on the builder to ensure you are not buying from a builder of dubious reputation. In order to earn trust in a heavy duty industry like the real estate, a builder needs to have established himself through formidable years of service in the industry, had a host of successful and completed projects to his name, should have timely delivered quality projects, received positive testimonials from his clients as well as the media.

5. You get too optimistic about the development/ location

Since villa townships are located on large sects of land, they generally tend to be located very far from the city. Most people invest their villa buy thinking the development would take place in a matter of months, and by the time they move in it would be a bustling locality. This unfortunately is not the case.

How to save yourself from disappointment:

To begin with, look for areas with potential for development. Track the potential for connectivity like development of metro or flyover. Also look for news of upcoming schools and hospitals in the vicinity. Most importantly be patient. Bangalore is a growing rapidly, so in a couple of years you would definitely witness the development in your area.

If you have made some to these home buying mistakes, or know of someone who has, please comment down below and share your experience with us.

7 Important Questions to Ask Your Home Sales Representative

7 Important Questions to Ask Your Home Sales Representative

home salesBuying a home can be a tedious affair. At every level you are faced with several questions that need to be asked. Often, with first time home buyers, the right questions to be asked can remain elusive.

The answers to all these questions will help you make an informed decision. It will also prevent any complicated legal and financial hassles in the long run.

If you are planning to invest in a home, here are some of the questions you must ask your sales representative:

  1. Ask which banks have lent their approval: It is important that you check with the sales person on which banks have come on board in terms of approvals. This will make approaching financial institutions for a loan easier for you in terms of paperwork. It also stands testimony to the quality of the project as banks will have done their due diligence.
  2. Ask for legal title clarity: Ask for the license of the project which will tell you whether the land has been rightly converted for a specific kind of use. It is also important to know whether the land acquisition is complete before you actually invest in a property that is under construction. Often builders acquire 80% of the land and end up with legal issues when trying to acquire the last 20%.
  3. Ask for a detailed breakup of the price of the property: The price breakup should include the cost of utilities such as water and electricity as well as lift services and parking spaces, besides, of course the registration costs. All taxes applicable must be included. Some legal charges may also be necessary. With this in hand you can be sure that the builder does not spring any surprises in terms of costs at a later stage.
  4. Ask for the actual size of the house: You must have a clear understanding of what constitute the built-up area, the carpet area and the super built up area. Carpet area is the actual habitable portion of the space without the thickness of the walls included. Built-up area takes into consideration the walls and the balcony as well. The super built-up area includes all of this as well as the area of the common spaces.
  5. Ask about the construction agreement terms: Ideally stick to a format where you have a strictly construction linked payment plan. This ensures that you pay a bulk of the money closer to possession or after it. This places the onus on the builder to complete the project on time.
  6. Ask about the tentative date of completion of the project: This will help you ascertain when the project will be ready for you to move in. It will also help you plan your finances. An important aspect to check is what kind of penalties may be in place should the builder not be able to complete the project in time.
  7. Ask about the remedial measures if the plan of the project changes: There are times when a builder may change a plan to suit a particular need at the point during construction. This may increase your apartment size or even decrease it. Amenities you may have been assured of may change in terms of positioning and quantity. You have to ask on the remedial measures and how the builder will handle the change in financial obligations in such cases.

You may also want to ask your sales person questions related to:

  • Extra charges that may be levied for preferential location, development charges and the like
  • What are the penalties involved should you not be able to pay on time
  • Escalation clauses if any and the means the builder will use to assure you that the rise in cost was a legitimate one.

Of course during the course of your interaction you will also find several additional questions that may spring to mind. Do remember that no question is trivial and that you should have all your doubts cleared in one go.

Take-aways

  • It is important to have all your questions listed down to ask the sales person
  • Your questions should cover land, size of home, finances, clauses among other subjects
  • No question is trivial, clear all your doubts during your interaction session
Jigani- An Independent Home is now a possibility

Jigani- An Independent Home is now a possibility

Jigani Road ViewA close friend of mine, based in the CBD area for the past several years, recently got the job opportunity of a lifetime. The only hitch, in his opinion, was that his new office would be in the Jigani Industrial area. Seeing as it is situated close to 40kms away from the CBD, he was unsure of whether the move would be a logical one to make. His best recourse, as far as I saw it, was to plan on investing in property at Jigani and moving base there. This led to both of us looking into the potential of the area in depth.

Jigani lies between Bannerghatta National Park and Electronic City, making it an important location in South Bangalore. Close to a decade ago, the approach roads to the Bannerghatta National Park and beyond were close to non-existent. However now, the connectivity has improved immensely. The major plus point of the area is the fact that it is located very close to Electronic City and the Jigani Industrial Area.

Jigani may be approached by the Bannerghatta Main Road or what is also known as the Jigani-Anekal Road. This goes on to become the SH-87 and connects to large segments of South Bangalore. Since it also connects to the NICE corridor, the approach to several surrounding areas such as HSR Layout, Electronic City and Bommasandra is easy. The main bus-stops of Otis and APS Circles as well as Harapanahalli help commuters get to different parts of the city.

Major features of the area:

Presence of several lakes in the area

  • Hennagara Lake
  • Bidre Kere Lake
  • Jigani Lake

Schools in the area

  • Achiever’s Academy
  • Ebenezer International School
  • Treamis World School

Medical facilities in the area

  • Narayana Hrudyalaya
  • Sparsh Hospital
  • Narayana Health City
  • Narayana Netralaya

Shopping Options in the area

  • D-Mart
  • Metro
  • Hosa Road Markets

Potential in the Jigani Area

The good thing about the Jigani area is the fact that it has been neatly segregated into residential and commercial areas. Since it is still in the nascent stage of realty development, there is a significant amount of residential plots that are available. Being largely in demand by a burgeoning IT crowd, there are multistoried apartments and independent villas that are coming up all around.

What may perhaps be considered a drawback is the presence of granite factories in the vicinity and the amount of dust they throw up. Interior roads and sewage lines in the area also need to be developed.

 

Price points

  • Residential plots for purchase: Approximately Rs 950/sqft.
  • Price range of 2-3BHK apartments: Rs 23 to Rs 75 lakh depending on the brand value of the builder.
  • Rentals are not too many right now considering the place is still under development by owners who want to use the place themselves. However, apartments are in the range of Rs 7000 to Rs 13,000 a month and independent homes are around Rs 8000 to Rs 18,000 per month.
  • The scope for purchase of homes will continue to rise in the coming years. With independent homes being an option for purchase, the demand is likely to be high here in Jigani.

Takeaways

  • Jigani is placed close to Electronics City and Jigani Industrial area, making it an ideal residential option.
  • Jigani is still in the nascent stage of realty development and so land and independent homes are available for purchase in plenty.
  • Connectivity to South Bangalore via the NICE road and Bannerghatta main road ensure that the CBD is not too far away.
  • The scope of purchasing property is higher than rental opportunities right now.
Earn Well from Your Property – Play Your Cards Wisely

Earn Well from Your Property – Play Your Cards Wisely

Annual-Value-of-House-PropertyFor those of us with a remote understanding of investment in real estate, one thing is very clear – there will be steady appreciation over the years and it is a rock solid investment.

Based on these two facts, you may be under the impression that property will get you instant returns. Unrealistic expectations are a common mistake made by most investors. Real estate, just like any other asset form has its ups and downs. You have to make certain smart decisions to make the investment work well for you.

Here are a few common mistakes committed by novice real estate investors

Not understanding the market

If you are looking to invest in real estate purely to sell or to earn rentals, then you should have a clear understanding of the market. Look for places where the demand lies and see if you can find a property to leverage this demand.

Being unrealistic

What many real estate investors fail to understand is that real estate is not an overnight money spinner. If you are renting out the space, your gains will increase over the years, with the annual increase in rents. You will also earn interest on capital based on the deposit amount with you.

As far as sales go, a home will not show you a substantial appreciation for at least 5 years after it is bought. If you are looking for instant high returns, then banking solely on real estate may not be the way to go.

Now if you have investment in residential real estate, here are a few ways to earn on your investment:

1.Rentals

Of course renting out your home will be the first means of earning from real estate. Be sure to have competitive prices that are in keeping in the prevalent rates in the locality. Also keep in mind the rentals will vary based on location and proximity to amenities. You may use the rent to pay your home loan EMIs each month or avail of the 5% to 6% returns you get on it, each year, exclusive of taxes.

2.Leases

You may consider a company or an individual lease. Handing over your property to a corporate is a good way of ensuring a fixed income and having your space looked after by responsible entities. The paperwork is always in order as are all legal requirements. You may also consider the same with an individual tenant. It ensures that you have a long term tenant and are prepared to look for another when the time comes.

3.Short term guest house

If you plan to use the house on occasion, then you may consider renting it out as a guest house, perhaps with domestic help included, to short term tourists. Alternately, you may also consider the popular option of running a paying guest establishment.

4.Service apartment

If you plan to use the house on occasion, then you may consider renting it out as a guest house, perhaps with domestic help included, to short term tourists. Alternately, you may also consider the popular option of running a paying guest establishment.

There are several ways to earn a profit from your real estate asset. The key is to remain realistic about your expectations and give your asset time to grow and appreciate in value. Diversifying your investment portfolio into other assets helps.

Main take-aways

 

 

Channel Partners for your Premium Home Purchase

Channel Partners for your Premium Home Purchase

Buying-in-PartnershipAayush Prabhu recently made it to the big leagues as far as his job was concerned. After a reasonable amount of time in this new position, Aayush was now ready to invest in a premium property and make another one of his dreams come true.

However, finding the right property seemed to be a mind-boggling affair. While there were quite a few interesting possibilities around, there were several aspects that lacked in clarity. That is when someone suggested he consider buying property through a channel partner. Now here was an option he was willing to explore.

Of course, Aayush could have tried finding a property through a broker or an agent. But, in most cases, a broker is trying to sell you a property that gives him the larger commission. Whether the property matches your personality or your financial standing is not going to matter much to him. If you are an NRI, then the chances of you getting a bad deal are higher.

Channel partners are basically agencies that work along with builders to help them sell a property. This agency works with a large portfolio of homes across varying premium budgets. Their primary goal is to match the right kind of home to a potential buying. They are also responsible for the entire process of purchase and will ensure transparency in the deal.

Difference in services between channel partners and brokers

  • Channel partners charge builders for the properties they handle and not the buyer. Therefore, the focus is on selling the right kind of apartment to you. As a client of a channel partner, you are also offered exclusive prices on the homes.
  • Channel partners tend to deal with a niche set of apartments and so you have an ideal database to look through. These partners have an upper hand as far as range and quality of premium homes go.
  • These agencies completely research the builders that they partner with. This means that the research you should be doing, is taken care of by them. You will not have to worry about the credibility of the builders.
  • An added benefit is that channel partners walk the whole stretch with you. They take care of all paperwork related to purchasing a property and this is a major burden off your shoulders.
  • Convenience characterizes every aspect of dealing with a channel partner. A single such service will ensure that you do not have visit multiple developer offices and share your details and requirements several times over.

The possible flipside though:

  • Channel partners often come up with lucrative schemes such as discounts off prices, in a bid to make you book an apartment. It is important that all such deals be taken down in writing to ensure that you get what you are promised.
  • Channel partners are often given a quota of apartments to sell. There may be a chance that what is available may not be to your liking. That being said, channel partners may attempt to pass of a home as something that it is not. It is important that you verify all the information you are getting and double check at every level.

There are several channel partners functioning across the city that Aayush can choose from. While he is making the most of the service, perhaps you should consider doing so as well.

Some examples of channel partners are:

The services give you a curated list of homes to look through. The benefits of having documents whetted and brands with a good standing in this list adds to the list of benefits when going through a channel partner.