mba 9 real estate 9820408795
TRANSCRIPT
Real estate
What is real estate ? Flat you reside Property which is generating steady
rentals Property which is appreciating in
value Second home Vacation home
Why people invest in Real estate
Rise in employment Rising incomes World-class construction projects Easier access to loans Overall economic growth in the
country
Real estate investment It is very attractive in terms of
returns It is very complex Requires hands-on experience
Real estate investment concept Real estate is the investment which no one
can physically steal from you. It takes lot of time & analysis for correct
investment. It involves big amount of money. A decision can affect lots of people eg. Family
in case of house, business partners/staff in case of office building/office .
Its unique eg 2 flats in the same building can have different rates.
Attention is reqd towards all the factors. Not a very liquid asset.
How real estate investing works To be a successful investor , you have to 1. Be able to evaluate the value of a location *2. Inspect the property for its positives &
negatives3. Negotiate a good deal4. Arrange finanaces for the purchase5. Close the deal with all the documentations.
The only way to learn the above is to do one deal yourself.
Factors that affect real estate prices
Demand – Supply equation Overall economic secnario Quality of the land / building In booming economy , the rates will ??? The reverse is also true. Other factors are : Changes in loan rates Govt policies on tax Govt incentives to builders & home buyers General speculation
Types of real estate investment strategies
Buy, hold, sell. Property improvement : Structural &
cosmetic changes. Eg Buy at RS 10L, + Rs 1 L, Sell at Rs 15 L. Requires expertise to spot .
Rent it out : Rent depends on location , size, accessibility. Property also appreciates.
Buy at a sale, sell at a premium : Distress sale , leisure sell.
Buying a home Get a pre-approved loan for better bargain.
Banks allow 6 months. Get a trusted agent. Inspect the house minutely. Get it inspected
by family. Check surroundings & locality. Get it checked by architect if you are not
sure about the structural changes made by owner.
Set a budget. Keep EMI in mind. Don’t wait for perfect home or else the
rates will move beyond reach.
Buying a home ….. Price as per which area ? Carpet : Area in which you can lay the carpet.
Area occupied by walls not measured. Built-up : Carpet + Walls Super built-up : Built-up + common area
( passage , lifts, staircase, lobby & sometimes area for the garden & swimming pool etc).
Difference betn carpet & built-up= 10-15% Difference betn carpet & super built-up= 15-
40% Compare similar rates as given above.
Carpet – Build-up Rs 2k psft for 1k sft flat carpet RS 1.8k psft for 1k sft flat super built-
up Which option is cheaper ? First Assuming 20% diff betn carpet & s
bulit-up, u get 800 sft area in 2nd option, cost per sft of carpet ?
Rs 2250/-
Real estate Make the list of all the documents seller should have
, inspect them & then sign the deal & make DP. Take professional help for documentation. If buying a home in registered CHS, check the share
certificate issued by the society in the name of seller.
Check seller has no O/S dues to society & so that society gives NOC to seller.
If buying from builder directly Check the approved layout plan, approved building
plan along with the number of floors approved, the land ownership documents , NOC from the municipality, water authority, electricity board, the brochure that lists all the facilities.
REIT
Real Estate Investment Trust Similar to Gold ETF which invests in Gold w/o investing in
actual gold Investor can invest in property w/o actually buying physical
property. Similar to MF where the amount you pay is invested in buying
a real estate yielding high returns ( residential ,commercial, shopping malls, hotels, office buildings etc) .
All these invested assets are complete & trading. Based on the rents generated or profits made on sale , you
will receive dividends on REIT units u have. Can buy/sell REITs anytime. Generally flats give _____ rental. 3% REITs give 1% more than bank FDs ie about 10%
Reverse mortgage Opposite of HL process, here bank pays EMIs
after mortgaging the property with them. 1 L to 1 Cr 10 yrs to 20 yrs For people above 60 yrs only Bank cannot take possession of the flat till the
time the owner & co-owner (spouse) survive. Afterwards, the loan is paid by nominee &
possession taken back or bank sells the property & pays the balance, if any ,to nominee.
loans for under construction homes Banks make partial disbursements to
builder based on the stages of construction.
Customer pays pre-EMI as he is only paying the interest on the amount disbursed till that stage.
Actual EMI starts after the possession of the house when all the loan amount is paid by bank to builder.
short & long term capital gains If house is sold within 3 yrs, the STCG
is added to income & tax paid as per slab.
After 3 yrs LTCG tax is paid. 15% after indexation.
How to avail exemption on LTCG tax : Invest the profit in new house Invest in bonds u/s 54EC, NHAI &
REC. Max 50L per financial year.
How to invest ? Don’t believe all you hear. Inspect the place, locality, surroundings. Ask for documentation. Short-cut will cut-short. Don’t let heart overtake head. Have budget in mind. Get the pre-approved loan. Check all legal documents. Take professional & trusted help form
multiple sources.
Points to consider before investing Does the property you are buying serves your
objective ? Check whether all family members agree with
your decision ? How you are going to manage EMIs ? All documents in place & valid ? Have you factored in extra expenses like
agents commission, cost of documentation, legal fees etc
In case of rental , do the background check on the tenants.
Advantages
Buying a real estate is easier with loan availability.
Tax benefits Investment does not vanish. Still can
be used.
Disadvantages
Lot of groundwork required. Not a one time activity. Need to
spend on maintenance to ensure it retains its value.
Investment can get tied down for a long time if there is a crash or u will have to sell at a loss.
Investment meter
Safety ??? Liquidity ??? Returns ???
Tax impact
80c & 24(b) (1.5L &2 L) Joint HL : Both can claim eg 50%
each.
Terms & conditions for tax benefit: 80c : The house can not be sold for 5
yrs from the end of the financial year in which you bought it.
Thank you.
Prashant Sawant 9820408795 www.prashantsawant.com [email protected] Global training group