7 Ways Real Estate Will Benefit From Demonetization

7 Ways Real Estate Will Benefit From Demonetization

real-estate-positive-trendLife changed irrevocably for millions of Indians on the evening of November 8th with the announcement of demonetization by the Prime Minister.

While we are still coming to terms with the long term repercussions of this move, one of the areas that will see medium to long term benefits is real estate.

Here’s how.

16344771. Lower Interest Rates

In the move to adopt a cashless economy, millions of Indians have rushed to deposit their money in their accounts. As a result, the banking system has seen a huge upsurge in funds.

This in turn will lead to lower interest rates on deposits as well as loans.What’s even more significant is that home loan interests are expected to come down to as low as 7 to 8%.

For real estate, this is actually a huge boost because at such low rates, most people start looking at property as a viable investment opportunity and it becomes attractive to not just buyers and investors but also the invisible category of businessmen and professionals.

13285152. Lower EMIs

Property becomes accessible to more buyers because of the chain reaction of lower interest rate leading to lower EMIs on loans.

For buyers, this could be a dream scenario even if property prices remain the same, as it has become more affordable for them.

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3. More Lucrative Investment

In times of demonetization, investors are looking for opportunities that will create more wealth for them and they have realized that investing in property is a much more lucrative investment than earning the mere 5-6% interest on bank deposits as buying and renting out property gives much more return.

What’s more important is that a property is an asset that will appreciate over time and even result in income tax deductions in future.

12447834. New Wave of Buyers

The sharp spike in bank deposits post demonetization has also come from the unorganized and small scale sector. Crores of working people who relied on cash transactions until now have entered the banking system.

People like farmers, traders, tailors, hoteliers, beauty shop owners, tuition classes, small contractors, house maids, drivers, security guards are some of the new wave of bank account holders. What this also means that now, many of these people will eventually be eligible for bank loans and they can fulfill their dream of owning a home.

18055745. Government Investments

One of the direct effects of demonetization is that government will have money to invest in infrastructure because banks will need to deploy lakhs of crores in Government Securities.

With all this money at its disposal, the government can boost funding for infrastructure schemes such as Smart City Mission, Swacchh Bharat Mission and Housing for All etc, which will affect the real estate market positively.

15036276. Better Connectivity

As part of these infrastructure building activities, smaller towns will soon get airports, leading to better connectivity.

Real estate value will go up once this happens and there will be demand for property.

 

Icon_BuildingsNeighbourhoods_300x3007. Improved Infrastructure Improves Rates

In developed countries like USA, UK and Japan etc, where infrastructure is already top notch, real estate prices seems to show a slow rise whereas developing countries like India have seen a vast price difference in a city’s real estate before and after development of infrastructure.

 

Conclusion:

Demonetization did not sound the death knell for real estate as most people might have believed. There are benefits in the long run which should not be ignored. This could either be directly through lowered interest rates or indirectly, through better infrastructure and connectivity.

 

 

 

A 10 Point Checklist before you go for Registration.

A 10 Point Checklist before you go for Registration.

1408604Registration of your home is probably one of the biggest personal events in your life, after marriage and the birth of your children probably.

The registration process ties up everything and it’s one of the most crucial aspects of buying a home.

Naturally, people tend to get excited on the day of registration. Entire families are known to come along to view and save this life-changing moment for posterity.

But most often, people are not prepared for what the day will bring. It is no wonder that they often come back exhausted and fervently have no wish of repeating it.

But to ensure that the day is memorable as it is meant to be, here’s a 10 point checklist for you to refer to, before you register your home.

1. Do you have all the documents?

The most important documents to be carried  for the registration is the Sale Deed, 2 Passport Size Photograph, Pan Card and DDs for Stamp Duty and Registration Fee. Out of these documents check with the builder regarding the documents you are supposed to bring. Do a double or triple check of these documents and ideally, do this before the registration day. 

2. Have you checked the amounts on the DD?

The demand draft that you need for registration fee is 1% of property value whereas the stamp duty is 5.65% of property value. Ensure that the correct amounts are mentioned on the DD.

3. Don’t forget your PANCARD copy!

Most people remember the importance of carrying important documents like your PANCARD etc but it’s easy enough to forget. Remember to carry a both original and copy of your PAN card before registration. 

4. Carry some refreshments 

It’s going to be a long day. Apart from waiting for your turn, it can get quite tiring if you don’t have some light snacks and water with you. Remember to carry these along as you may not have time to stop somewhere for lunch if you get hungry. Also, it’s vital for people who are on medication for diabetes or heart disease that they stay hydrated throughout the day.

5. Avoid weekends

There is perpetual rush during weekends so it’s best to go on a weekday when there will be significantly less crowd. You’ll get the job done faster and the officials will be less harried as well.

6. Avoid taking kids along

Children get bored easily and they get cranky after that. Avoid taking your kids along because they will just make things difficult for you. Leave them with your parents or in-laws. It’s the best way to remain stress-free on such an important day.

7. Don’t be time bound

Constantly looking at your watch is not going to make things work faster. At the registration office, they will follow a set of processes and protocols. You have to stop thinking about how much time the whole thing is taking because it won’t help you.

8. Stay sharp and alert

Nowadays it’s common for people to spend time on their phone while waiting for anything. Whether it’s checking business emails or playing a game to make the time move faster, don’t do it. At least not during the registration process. Remember to stay sharp and alert and be completely involved in the process.

9. Keep your day free

Avoid keeping any appointments and meetings on the day of registration. If registration takes time (which it inevitably will), you will feel jittery and nervous and you will not be able to focus.

10. Be thorough

If you have doubts, now is the time to ask questions. Don’t remain ignorant. It is your property and you should know all aspects of it. Another important thing to remember is to check all documents carefully before you sign.

With these pointers in mind, you should have a painless and easy registration process. Remember, it is a life changing day and even if it takes time, it is worth it. At the end of the day, after all the effort, you are a property owner! The pre-registration checklist just makes your life easier.    

6 Reasons Why Affordable Properties Make Better Investments

6 Reasons Why Affordable Properties Make Better Investments

1359508Fear of missing out on a good deal sometimes drives people to invest in real estate. However, these are often unwise decisions, not backed by proper thought and planning.

But, investors who have done their homework well, and who have been observing the real estate industry for a while know something that newbie investors don’t.

Affordable properties make better investments than high end properties. Yes, that’s right.

As an investor, if want to ensure that you get good returns, read on to discover why investing in lower priced properties could be the best investment decision you’ve ever made.

1. Faster appreciation

Properties that cost less are known to appreciate relatively faster and after all, this is what every investor wants. It’s a win-win situation, compounded by the fact that most properties are on the fast developing outskirts of the cities. Here, larger properties are available at a much less investment. With the development of the Metro and Ring Roads, these properties are also becoming more accessible. They become more attractive to prospective buyers or renters, making them hot properties.

2. Easier to rent

Lower priced properties often have good rental prospects because of their affordability. Most often, these properties come up in areas which are self sufficient especially when it comes to amenities. Combined with lower rents, they are attractive to prospective renters. Even if the rent is marginally low, you can be assured that there will be someone willing to rent your property, ensuring a constant cash flow.

3. Lower Risk

Every investor’s biggest concern is the risk factor. It is unfortunately present in whatever they choose to invest. But unlike stocks and other such investment options, affordable properties come with a lower capital risk. With a smaller outlay, you are still assured of getting returns. Or sometimes there is just a good cash flow in the form of rent. It makes complete sense for even the most cautious of investors.

4. Easier to exit with a profit

If you decide to resell, there are definitely more buyers for an affordable property than for a higher end property, simply because of the lower price range. The probability of getting a better resale price is also very high. So for an investor, an affordable property is surely a better option than higher priced ones.

5. Good return on capital

There are not many investment options that can give you a good return on capital. But with an affordable property, you can either rent it out or ensure a regular cash flow, or you can resell the property and get your money back, with profit to boot.

6. Saturation in High End Market

The high end market with luxury apartments have come to a point where no one is buying them anymore. Several branded builders are also rushing into the affordable property market because they are keen to cater to mid level buyers. Today, with the saturation in the high end market, it definitely makes more sense to opt for a lower and affordable property when considering an investment.

Key Takeaway

Investing in a property is not easy because you’re constantly barraged with advice from well meaning people.Also, it’s easy to start second guessing yourself. If you feel that you need to invest but are also concerned about the risks involved, investing in an affordable property is your best bet.

5 Options To Ease The Pain of Funding Your Down Payment

5 Options To Ease The Pain of Funding Your Down Payment

how-to-buy-down-paymentIf you have been filing away the plan to purchase your dream home for ‘later’ or when you are ‘more settled’, stop and reconsider right now.

The real estate scenario today is indeed a buyer’s market and you would gain tremendously from investing in it, particularly if you’re looking to buy your own home.

Even if you feel you need to have saved money for several years before you can even consider buying a home, we think the right time is now. What’s more, there are several housing loans that make it easier for you to go down this path, with some careful planning and thinking.

1409098But…what about down payment?

Well, yes, you would have to shell out money for down payment because the housing loan will not cover the entire cost of your home.

But before you balk at the huge amount of money you would need to funnel into this, let us quickly assure you that making the down payment too has become relatively easier today.

Firstly, the percentage of initial down payment has come down to 10% and even as low as 5% in some cases.

Yes, you read that right! Today, prospective owners can buy their dream home by paying as little as 5% of the cost of the home as down payment.

But do you still feel that arranging for even that much is beyond your means? Do you think that you just don’t have enough money to get into this right now?

Read on to discover how you can arrange for down payment and lock down your dream home right away.

1. Ask your employer for a loan

Most employers offer loans to employees at low interest rates. It would be a great idea to check at your workplace if this is available because it would allow you to take that step forward towards your goals, while still maintaining your self respect.

Often, the paperwork and documentation for such a loan is straightforward and simple, making it an easy process.

12689342. Availing finance against securities

Many people have financial assets such as bonds, shares, securities and insurance policies. But did you know that you can avail for loans against these?

Most banks are willing to extend loans against bonds and shares which means you don’t even have to sell them. Your securities remain as part of your assets.  

3. Liquidate your assets

If you’re unable to secure a loan against your assets such as gold, shares or mutual funds, or if the loan is not enough to cover your down payment, the best option would be to sell them.

Sure these are your plans for a rainy day but owning a home should definitely take bigger priority over investments right?

4. Your EPF comes in handy

The Employee Provident Fund is most often relegated as a retirement option and anyway you cannot withdraw it while you’re still employed.

However, if you have an EPF account for the past five years, you can take a loan from that account to make your down payment. The best part about this is that it’s your own money that is helping you out.

5. Turn to family for help

1244392As an absolute last resort, you might want to turn to your family – parents, in laws or relatives for financial help.

Traditionally, elders consider it their duty to help the younger generation in setting up their homes.

So, most often, relatives will pitch an amount towards your down payment willingly too.

Although this might be an option where you cannot be self-reliant, sometimes you might have no other choice.

Key Takeaway

Arranging for down payment today is not that much of a steep climb as it used to be, even a few years ago.

Apart from a lower down payment in the first place, there are certainly many ways in which you can arrange for it, if you only open your eyes and look in the right places.

Don’t let the fear of not having enough money for down payment deter you from your dream of owning your own home. After all, the right opportunities don’t come knocking on your door every single day.

5 Financial Schemes You Should Know About Before Investing In Your Home!

5 Financial Schemes You Should Know About Before Investing In Your Home!

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It would seem that the prospective home buyer today is spoiled for choice, at least when it comes to numerous financial schemes that developers are offering.

You might have seen many hoardings of real estate builders with the famous lines like “ Just pay 20% now and 80% at possession” or “No EMI for 24 months”

These are some popular finance schemes that are being used by the developers, we have listed out the benefits of the scheme along with the flip side that you need to be careful about

The 20:80 scheme or 10:80:10 scheme

This is one of the most popular financial schemes offered by developers, and is also known as the 20:80 scheme. Here, the buyer invests 20% of the total cost and the EMI on loan for the balance 80% is paid by the developer for a period of time or till possession of the home (as per the scheme).

Since the buyer is paying interest only after a period of time, and the developer is bearing the interest costs, it appears to be an attractive scheme and there are a number of variations on this scheme such as 10:80:10 and 6:88:6 but the end game is largely the same.

In yet another variation of the subvention scheme offered by developers, there is no home loan to consider. Buyers have to pay 20% of the total cost and the balance 80% has to be paid only on possession.

Book your Home for only 8% interest

One of the reasons why people are often reluctant to buy homes is because the idea of paying hefty interest rates is intimidating. There are many builders who sell in the low interest scheme , where the buyer is not burdened with high interest that prevails in the market.

The interest rate the builder offers is as low as 8 % for some certain duration sometimes for 12 to 24 months.

The scheme looks pretty tempting in the beginning but it is important that you analyze the interest rate after the lower interest rate scheme gets over . Ascertain that the bank is not charging you more after the initial period, and make sure you don’t end up paying more EMI than expected.

No EMI for 24 months

Some schemes waive interest for a period of time subject to the loan tenure, giving buyers a breather. Here, the buyer pays only the principal amount while the developer pays the interest component to the bank/financial institution.

At the outset, this seems like an innovative offering with a lot of benefits for the home buyer but on deeper inspection, it could reveal as being risky for the buyer.

For instance, if the builder defaults the interest payment, the buyer will be held responsible. There is also the possibility that the developers could inflate the property price to include the interest in it.    

Own a semi or fully furnished house.

Tapping into the consumer need to having the latest furnishings or appliances, some developers are offering semi to fully furnished flats as part of their schemes.

This could include modular kitchens as well, a must in every home today, or come with furniture, making it an overall attractive package. By opting for these schemes, buyers can save a significant amount of money on interior decoration. Also, it’s relatively easier to rent out a furnished flat, so buyers stand to gain either way.

Get assured rentals for 2 to 3 years

For those who are looking to increase their income and not particularly concerned about living in the apartments themselves, this scheme sounds attractive. This isn’t a common scheme and not many builders offer it.

The interesting aspect of this scheme is that developers offer guaranteed rentals for two to three years, either until possession or post-possession. This is perfect for those who are not looking at occupying the apartment themselves but using it more as an income generating asset.

However, the lump sum rental amount for two to three years might seem like an attractive proposition for many buyers but it’s actually the discount that developers typically offer their customers. Hence this scheme is a bit like old wine in new bottles.

So, where are the downsides?

Before investing your hard earned money into such a scheme, it is a good idea to fully understand what you’re getting into.

  • Investigate the property prices and compare it what the developer is offering through the schemes. This is because sometimes the buyer ends up paying the difference through an increased property price.
  • If developers delay in construction, then the burden of the EMIs could fall upon the buyers.
  • Your credit score could be affected if the developer defaults or delays payment to the bank because the loan would be in your name.
  • Tax benefits are not applicable as these are often under construction projects.

Key Takeaway

Financial schemes that builders offer might be tempting and also seem like a good deal. The truth is that they may actually work in your favor and push you to make that property purchase you have been dallying for a while.

But our advice is to buy property based on the value you are receiving on the property and not just because the scheme offered by the builder seemed perfect.

 

5 Ways the Real Estate Bill will Offer Confidence & Safety to Home Buyers

5 Ways the Real Estate Bill will Offer Confidence & Safety to Home Buyers

Auction.

Many times Home buyers get the short end of the stick when it comes to dealing with builders and real estate agents.

The unfortunate truth is that many buyers have faced similar numerous problems and this has given the entire transaction a bad name.

 

Whether it is delayed projects, poor construction quality, delayed possession, diversion of funds or even arbitrary change in layout plans, most buyers have faced this and accepted this as the grim reality, in silence.

This was because there was no regulation in place for builders and no standardization as such. If any buyer wanted to take up cudgels against a builder, they had to opt for legal recourse, which is expensive, time consuming and definitely not easy.

But times are changing.

With the passing of the Real Estate (Regulation and Development) Bill in the parliament, home buyers will find a much more positive atmosphere.

Here’s a quick look at how buyers can benefit from this bill and what it means to the real estate industry.

1407822No more shady projects where buyers lose money and peace of mind

Builders will no longer be able to launch projects at their whim. Before they can launch a new project, the Bill will ensure that they have to get clearance from the relevant regulatory and Planning Authorities and only then, they can go ahead.

This means that buyers will invest their hard-earned money into legitimate projects only. Also, the pre-launch discount option, which is mostly a marketing strategy to get more buyers will also have to make way for reliability. Fly-by-night operators will not be able to survive this stringent clearance policy.

1408990Buyers are secured because their money cannot be diverted to other projects

One of the biggest grouses that buyers have, is that builders divert the money they receive from them towards newer projects. However, once this Bill becomes a law, then this will not be possible.

The Bill states that money from buyers has to be deposited in a separate bank account, and 70% of that money has to be utilized in developing and completing the project in question. This will definitely reduce delays in the project.

1511274No more surprises as builders have to ensure final project matches advertisements

Often, buyers are tempted into investing into real estate, because they see the wonderful ‘artist’s depiction’ of the project that is being planned.

Also, most builders release snazzy advertisements and their marketing plans are enough to floor even the most hardened buyers.

But what happens when expectations don’t meet reality? When the advertised home doesn’t match what the buyer finally gets? Crushing disappointment and a sense of being taken for a ride.

However, once the new Bill is in place, builders will have to return the amount to the buyer, with interest, if the final project doesn’t match what was depicted. This will definitely put a stop to reckless promises from builders as they have to tread carefully.


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Buyers can verify prior construction projects to check quality claims

At times buyers are unable to verify the claims of the builders regarding their quality. This will no longer be the case once this bill becomes a law.

Home buyers will be able to verify the quality of the builder’s prior constructions because the bill makes it mandatory for developers to provide details of projects launched in the past five years.

This includes a brief detail of the projects launched by the promoter,in the past five years, whether already completed or being developed, including current status of projects, delays in completion, details of cases pending, details of type of land and payments pending etc.

This means that buyers can now make an informed and wise decision before choosing the builder for their dream home.

 

1566391An extended repair period to ensure continued support from builders

Face it. This has happened with most buyers who take possession of their home and a couple of years later, find that paint is peeling or there are leaks in the pipes. The honeymoon period is over because buyers were liable for repairs for 1 to 2 years.

But with the new Bill, this will also change. Builders will be held liable for any structural defects up to five years now, to ensure that they will make the necessary repairs.

So far, so good. This pro-buyer bill doesn’t spell a death knell for builders. It just streamlines processes that have been all over the place until now and ensures that both parties are satisfied.

In the bigger picture, regulation for builders makes housing more affordable for everyone and that is certainly a good thing.