Originally Posted by yeskrish

Request members to help me with identifying the documents required frm the seller.

My understanding is tto start with to get the documents and get a legal opinion first.
Then get a EC from the CMDA or Municipality for the property.

Is there anything else? I am sorry as i am new to this.

My concern is how tomake sure that the document is authetnic and / or the owner is authentic.

Originally Posted by nabishek

Friends,

I am sharing here my understanding on depreciation of resale flats from the information i have gathered.

For a resale flat one has to consider value of land, estimated life of building, age of building and facilties available.

lets take for example a 20 years flat with 1500 sqft builtup 1000 sqft UDS.

If the flat was to be constructed today assuming the market price of land is 10,000/sqft

cost of land = (UDS * current market price) = 1,000 * 10,000 = 1,00,00,000

cost of construction = (built up area * construction cost) = (1500*1200) = 18,00,000

Total = 1,18,00,000 including all other charges.

The rate of depreciation is calculated as follows

The normal age of a building is considered to be 60 years.

Depreciation is calculated such that at the end of 60 years the value of the building becomes zero.

Out of the total asset value the residual or scrap or salvage value, is normally taken at 10% and can be ignored.The remaining 90% of the building cost is spread over the 60 years.

hence, rate of depreciation is 1.5% per year.

So if a building is 20 years old then rate of depreciation is 30%. i.e. the building is 70% of its initial value.

The cost of the resale flat would work out as follows if assuming the cost of construction 20 years back was 250/sqft.

cost of land = 1,00,00,000
cost of building = (1-(30/100)) * (1500*250) = 2,60,000
Total cost of resale flat = 1,02,60,000

Because the flat would have been puchased at lower input cost,at cheaper land rate and due to poor maintainence, the owner may also be willing to offer at 30-40% lesser than the calculation above.

If a person who holds a old flat (25-30 years+) wants to reap the benefits as per the true valuation above.The most profitable option is to go in for a joint venture along with all the residents of the building by hiring a builder or their own contractor.

With the relaxation of FSI,they can get substantial amount of money in hand and possibly also retain a flat in the complex by only sharing their space with few more additional neighbours.

Over the years land value appreciates and building value depreciates.

Originally Posted by yeskrish

Thanks nabhishek.

that is useful.

rReg the flat not in mortgage or in lien, i am not clear.

Most of these 2nd hand owners have their documents with banks and they are on mortgage. I thought that was actually better beacuse original docs are with banks and less tamper proff - relatively.

when you say point above i am just curious to know what did you have in mind. Thanks.