bajamit

This question has occurred to me many times. Doesn't an NRI feel restricted in investing in Indian property and the way he wants to execute the whole thing just because he is far from the place where property exists. I mean not only restricted to just the process of buying but also taking look at the property from time to time, taking care of the possession when it's ready for the same, getting good rental value if possession retained or even selling it off at an appropriate price. Of course historically, relatives/friends have been of some help but might be limited now with everyone being busy in their own and some might not even have relatives in a place where they are investing (metropolitans, urban space where an NRI wants to invest). So...

How difficult is it for an NRI to do all of the above sitting so far from the place where he is investing?

fortune2012

Hi BajAmit,

You should go through this funny post originally posted by Gharondabhai on this forum....related to your question and gets across few very good points for an NRI to consider when investing...

A real life experience of an IREF Buyer

thanks!

bajamit

Thanks fortune2012. That was a cool read. In general sincerity and honesty is so scarce in this part of the world that believe me you don't have to be an NRI(far from NCR) to experience this

stinaikar

Whatever it is, don't ever go for these "property management companies". They will take 3000-4000 from you per month and give you no or bad service. You should visit that place once and create your own contacts for repairing, painting, plumbing work. Also try not to let your contacts know you live abroad - they will double the rates they charge you. They think just because we are NRI's, we have a lot of money.

bajamit

Thanks Stinaikar, your reply is really helpful. But I have seen when you want someone to manage your property, it can't happen without paying him some price. Even with relatives and friends, they will loose momentum after some time. So unless someone has a motivation to manage your property, no one would do it consistently and with the best of intent.

Let me pose another question on the forum. How much fee per month do you think is worth paying for the property management per unit of property (assume priced around 1Cr and also assuming that property management firm will do the best possible job).

stinaikar

My guess is about 3-5K per month. When I asked around, they initially said 6-7K. but I think they would settle for 3-4k per month. Because the work for them is very little. They're charging you not for the amount of work they would do but to extract from you, the price of your inconvenience.

houstonvijai

If you work with a reputed broker or an agent, sometimes they will also manage your property for reasonable amount because you used them to buy the property. Same like here, when someone buys a property using a realtor for investment, many realtors help to fix and put in the market and also try to manage the property for a nominal fee. Check with your realtor/agent you are planning to use to buy the property

Jhashank RCA

Dear bajamit,

A very useful post that im sure will be of benefit to all NRIs and i can go a step further and mention that its not just NRIs that can benefit from associating with the right real estate consultant/adviser but also Resident Indians can benefit tremendously.

Firstly, id like to declare that im with South India's leading real estate consultancy firm and hence this post may sound more in favor of hiring a adviser (and i dont use "broker" here, as iss no longer a respected word unfortunately).

Investors can in most cases benefit by taking help of a seasoned and experienced real estate adviser as we (advisers) LIVE and BREATHE real estate day in and day out. Its our primary line of activity and our bread and butter and hence, we will be in the best position to decide what is best for an investor.

Agreed that a lot of us have had bad experiences with "brokers" who are fly by night operators interested in only making a quick buck for themselves. Often these "brokers" end up closing just 1 deal a month and hence they desperately try to push only what they have (irrespective of whether it suits the client or not). I have personally had such experiences which made me decide Id never trust a real estate broker ever again.

But if you come across an organized broker or agent (which is very rare in such an unorganized market) who operates across key cities and across all asset segments and with all the top builders, you can be assured that their advice is in the interest of the customer. Such players will often give unbiased advice to clients and will not have any hidden agenda in promoting a particular project.

If a broker/adviser can give you a basket of options from across builders, across a variety of asset classes, spread out across number of key markets, suiting a range of investor budgets and do all of this with total transparency, you can never get into trouble with such an adviser and in most cases, actually end up benefiting tremendously from such an advice.

As some of the members have said, NRIs can no longer depend on their relatives and friends as
i) they too have no time on hand to go about and do the research on behalf of their NRIs friends/relatives and
ii) their idea of local markets is also limited to what they see and read in newspapers and general market gossip which will not be necessarily true.

To sum it up, it ultimately depends on how carefully you pick and choose the right adviser. It is often the deciding factor that can make or break your investment. Ofcourse you can still be able to make good investments without any assistance from a real estate agent, but chances of making better investments are higher when you play as a team with your agent.

Cheers.

bajamit

Thanks Jhashank RCA. Your response is indeed comprehensive. A few question...

How do you package this service? Is it the fine time fee that you would charge someone or a monthly fee? Because if I want this service which gives me a one time benefit (at the time of buying or selling), I can't be paying a monthly fee.

Secondly, if you tie-up with a few builders (even if they are top notch), you'll end up selling me those options rather than what's best for me. The ideal adviser for me would be the one who doesn't tie-up with any particular project and is open. But again he would only make money through me so might prove to be an expensive bet for me.

Jhashank RCA

Dear bajamit,

A real estate buyer is essentially of 2 types :
i) One who purchases for self occupation - Plans to move in with his family or for his parents to stay incase he is an NRI etc.
ii) One who purchase as an INVESTMENT - to make money by selling off once property appreciates.

As real estate advisers, we focus more on the INVESTOR rather than one who purchases for end use.

To put it in layman terms, an unfortunate (& increasing) trend we are witnessing for the last few years is that young couples and families (in 26 to 40) bracket are in a hurry to purchase homes for their end use. What they dont realize is that by purchasing a property for end use at such an early stage in life, they are permanently blocking their present and future savings into a property that will NEVER MAKE ANY MONEY for them.

People think : Hey if i buy this home today, it will be worth 2 times in the next 10 years." But what they dont realize is that they are going to STAY IN THAT HOME and hence they will never SELL AND ENCASH the profits. The profit is only on paper. In most such cases, they spend entire savings to make the downpayment (which means using up all current savings) and then take a bank loan which has to be repaid for the next 15 to 20 years (thus blocking.eating up future savings as well). At the end of this 20 years, you would have made no other major investments (as major chunk of savings would have gone into EMIs and maybe part prepayments of loans etc), and all you have is a house (which you cannot sell as it is meant for your family to sty).

A smart investor would rather stay in a rented accomodation and INVEST HIS MONEY into projects that can give you between 50 to 200% returns in 18 to 24 months. At the end of the lock in period, he would exit and encash his profits, which will get reinvested in another project. And this way his money keeps compounding and before you realize, you end up with a MASSIVE ASSET base (with which you can purchase a much better home than what you could have afforded if you had invested in a hurry in the beginning of your career itself, like explained above.)

Hence coming back to your questions, if you are the INVESTOR and buying real estate to make money, then our services are the best (as only top builders can consistently deliver assets that will appreciate well).

But if you are purchasing for SELF OCCUPATION, what you say is possible - that we may not always be able to give you what best suits your needs - as your requirement may not be met by top builders all the time and there may be projects from medium to small builders which is more suitable to you.

Hope this answers your question.