amit_2009

btw, in actual market the fraud rate is very high as the builder uses specific loopholes to end the assured return deal when it comes the time to actual make payments back to you...

Fraud method 1:
They sign EOI's with you (expression of intent document), which have no significant legal enforceability. And after the construction is completed they just exit from the project after giving you possession.. no monthly returns.. since it was only an intent document..

Fraud Method 2:
The builders sign EOI's with a few pvt retailing/hospitality companies. They show you the EOI document and sign MOU's with you. But the specific pvt ltd company that they may have floated just for constructing/marketing the property has its own clauses in its formation documents. When the construction is completed, they would just say that the retailing companies who had signed EOIs with them 5 years back (at the time of starting the project) are not interested anymore... hence the MOU's stand cancelled. OR if all else fails, they just declare that specific pvt ltd company bankrupt or dissolved and there is not much you can do....

Please read up on Force Majeure, that is the legal defence generally used:
Force Majeure, is a common clause in contracts which essentially frees both parties from liability or obligation when an extraordinary event or circumstance beyond the control of the parties or an event described by the legal terms in the contract...

Hope this was helpful... Just keep your hard earned money safe... always keep an upper hand in real estate transactions...

Venkytalks

Thanks Amit for some excellent insight.

Which commercial property purchase would you recommend (ignoring market conditions)

anubhav186

Hello All,

This is my first post. I really like the quality of discussion here.

I would like to ask you all of your views/insights on investing in Office Space (1000-1500 Sq. Ft.) in the following projects in Noida/Greater-Noida -

1. Amrapali IT Park (Greater Noida)
2. Wegmans Business Park (Greater Noida)
3. Jaypee (Somewhere in Sector 133?)
4. Avant Navis Business Park (Noida Expressway) (Initial Quote I recd. - Rs 4750 / Sq. Ft. - Initial Discount of Rs 250 = Rs. 4500 / Sq. Ft. - for their "Tower B" (under construction))
5. ..(Please add more if any)


Please rate the above projects on the basis of -

1. Builders Background/Reputation
2. Growth Potential (and/or ability of Builder to promote)
3. Probability that Big Corporates would have their Offices leased there
4. Location
5. Etc. (You guys are smarter than I am....make your parameters)


Also, I would appreciate if you could let me know good negotiation points for installment payment plans (I am really cautious of Down Payment Stuff).

I look forward to honest, straightforward comments.

Regards,

Anubhav
Outside India (hence Parents get to deal with Agents/Sales Folks )

warhound

'

Dear Amit,

Sorry for bumping a 2 year old post but can you please show the math behind your results ?

Im not getting the same numbers you use.

Secondly, there should be a difference in numbers reached if the builder pays 1 lakh/ month or 12 lakh end of each year as those numbers incur different amounts of interest yearly and should effect the current value slightly if not a lot.

I think you have to find the present value of 12 lakhs at the end of every year for 8 years separately and add them up. Secondly, the builder is giving a return higher than market rate. Lets assume that FD is 10% of which 2% goes in tax so we get a return of 8%. So in other words we have to find the present vaue of 12 lakhs at the end of each year 8% interest and add them up.

If you can show the math behind the numbers you reached it would be of great help.

Edit : This is what I came to,

Present Value of 12 lakh 8th year = 12/(1.08^8)
Present Value of 12 lakh 7th year = 12/(1.08^7)
Present Value of 12 lakh 6th year = 12/(1.08^6)
Present Value of 12 lakh 5th year = 12/(1.08^5)
Present Value of 12 lakh 4th year = 12/(1.08^4)
Present Value of 12 lakh 3rd year = 12/(1.08^3)
Present Value of 12 lakh 2nd year = 12/(1.08^2)
Present Value of 12 lakh 1st year = 12/(1.08^1)

Adding all these up gives us 68.96 lakh (amount builder returns)

So cost to us in present terms is 31.04 lakh.

Please correct if wrong.