Am I trying to be really smart? or I am just another wannabe around? I don't know!


Well, I am really new here, and I am in to get some suggestions/ideas about my 'dream home' plans. To brief about me and my earning power, I am 25, living in Chennai with my parents, working for an IT major and, earning around 50-55K rupees pm.

I want/wishfully think :) to buy a property in Chennai, not as an R2I but for my own residential usage. After seeing, analyzing the property rates, cost of living, proximity to places, I have decided to stick to the southern part of Chennai, particularly Madipakkam (Northern part - Sadhasivam nagar, Ram nagar north etc). The reasons are - The locality is quite good, close proximity to Velachery MRTS and Vijayanagar bus depot, closer to OMR, rates are kind of affordable*.

*Affordable - Here is my plan / definition
- There are CMDA approved lands available for approximately 55L to 60L per ground whose guideline value stands upto 45L to 46L per ground.
- I along with 3 friends of mine are planning to buy around 2700 sqft of land, register it sharing equally (SBI gives out 80% loan for the total land + construction)
and the repayment would be approximately 22 to 25K pm for my salary
- The plan is to build two 3BHKs in the first floor, and car parking + 2 2BHKs in the ground floor

I am in the process of seeing lands now. I checked with a legal advisor of a builder about how this is workable and got some very high level inputs from him - the abstract is that this is doable legally. From the perspective of the banker, also this is doable, and I might get a loan for 80% of the total cost involved. I am yet to check with the architect/designer on this.

I thought it would be nice to get some advice from experts, advaced RE investor people around - Kindly advice me on
1. Is this plan totally workable? Are there any major, legal or other vital points that I have missed out?
2. Is this the right period to do this? Since this is for my (same with the case of other friends involved) own usage, should I wait in to see the speculated downfall of the RE market?
3. Market rate for a flat in those areas is 3800 to 4000 Rs per sq. ft.
If I work out this way, I will have to spend 16L (64L land price + registration / 4) + 15L for construction (lets keep 1100 sqft for 1300 rs per sq ft) - total 31L Rupees for a 1100 sqft flat with 700 sqft of land in my name.
By this way, I will end up saving approximately 10L rupees with a larger land share.
4. Am I overlooking things anywhere?
5. What could be the potential problems in doing so - at this stage, or in the future?
5. Any suggestions / advice on how, what to do and what not do do is appreciated.

*Cheers*
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  • Originally Posted by ALICIA21
    great tips. I enjoyed reading this


    SPAMMER or a BOT! Advertising some stupid soapstone link? get outta here! Mod, kick her out.
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  • Originally Posted by Natarajg007
    If you are so wishful i thinking why not say it will drop to 50K in a couple of years! ROTFL


    I too wish so. But, don't even see a minute hint of prices going that cheap!
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  • Originally Posted by gone_mad
    I too wish so. But, don't even see a minute hint of prices going that cheap!


    It may not be that much.

    But 20% drop is expected in Nanganallur in 2009
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  • I personally feel chennai prices will go down by 70-80% when the economy melts ......but thats me...
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  • Originally Posted by jinga31
    I personally feel chennai prices will go down by 70-80% when the economy melts ......but thats me...


    What a dream? Prices going down by 70-80%?
    Is this closing down of a cloth shop under loss who will dispose of whatever is left out at hefty discounts? This is real estate and the downtrend is bound to be there and not liike the percentages you dream off.

    ks2071746
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  • Originally Posted by ks2071746
    What a dream? Prices going down by 70-80%?
    Is this closing down of a cloth shop under loss who will dispose of whatever is left out at hefty discounts? This is real estate and the downtrend is bound to be there and not liike the percentages you dream off.

    ks2071746


    i concur KS.
    like i have been saying far away places like sripermbundur,orgadam,OMR beyond sholinganallur, will definitely see a big correction and that may not be more than 40%.but within CMDA limits i dont see a correction beyond 10-20% depending on locality.
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  • Originally Posted by jinga31
    I personally feel chennai prices will go down by 70-80% when the economy melts ......but thats me...


    Agree with you ... But its difficult to predict the bottom.

    Many developed countries have endorsed the recession and India is still 'defiant' to say its not .The Singapore Korea Japan US and UK have announced to the recession and started taking corrective measures.

    Seeing

    1.The economic conditions and the job losses among the IT-ITES Employees
    2. Automobile Industry getting into recession
    3. Our textile industry losing competitiveness due to minimum support price for cotton by Govt announcement (CII came with 25% job loss in India in the next 10 years and Govt asked to take back the report)
    4. Fear of job loss is worser than job loss
    5. Many potential people have lost their money in stocks and not able to invest in RE rather divest from RE ...

    Looks like RE would come down by 40-60 % from its ridiculously peak prices.

    I would expect the prices to correct to 2004 Price + 10-20 CAGR based on location.

    Am 100 % sure that the interest rate coming down by 1-3 percent cant even attact 1-3 percent buyers in this situation.
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  • Originally Posted by jinga31
    I personally feel chennai prices will go down by 70-80% when the economy melts ......but thats me...


    Agree with you to some extent... But its difficult to predict the bottom.

    Many developed countries have endorsed the recession and India is still 'defiant' to say its not .The Singapore Korea Japan US and UK have announced to the recession and started taking corrective measures.

    Seeing

    1.The economic conditions and the job losses among the IT-ITES Employees
    2. Automobile Industry getting into recession
    3. Our textile industry losing competitiveness due to minimum support price for cotton by Govt announcement (CII came with 25% job loss in India in the next 10 years and Govt asked to take back the report)
    4. Fear of job loss is worser than job loss
    5. Many potential people have lost their money in stocks and not able to invest in RE rather divest from RE ... etc

    Looks like RE would come down by 40-60 % from its ridiculously peak prices.

    I would expect the prices to correct to 2004 Price + 10-20 % CAGR based on location.

    Am 100 % sure that the interest rate coming down by 1-3 percent cant even attract 1-3 percent buyers in this situation.

    Jinga , You will see few people would be in denial phase and the job scenario will play a vital role of RE Boom or Bane.
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  • I completely agree with you. Now its getting to the wire and IT industry is started seeing some lay offs and more to come in near future...
    who knows..in the next couple of years ppl might be worried for locking their money in RE with out liquid cash in hand
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  • Originally Posted by sethugm
    Agree with you to some extent... But its difficult to predict the bottom.


    Looks like RE would come down by 40-60 % from its ridiculously peak prices.

    (quote)

    I don't think the prices can come down so much,. There can be corrections to the tune of 10 to 15%. The interest rates may come down to 7.5% levels in anoher 12 months time and this will be a booster to the RE. New projects may not start much till then. Please do not forget, people have quite a good money saved here in India and still there are a large number of Indians not having their own place to live. They will go in for their own places to live when the interest rates come down.Agree with you to some extent... But its difficult to predict the bottom.


    Looks like RE would come down by 40-60 % from its ridiculously peak prices.

    (quote)

    I don't think the prices can come down so much,. There can be corrections to the tune of 10 to 15%. The interest rates may come down to 7.5% levels in anoher 12 months time and this will be a booster to the RE. New projects may not start much till then. Please do not forget, people have quite a good money saved here in India and still there are a large number of Indians not having their own place to live. They will go in for their own places to live when the interest rates come down.
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  • Originally Posted by ks2071746
    Originally Posted by sethugm
    Agree with you to some extent... But its difficult to predict the bottom.


    Looks like RE would come down by 40-60 % from its ridiculously peak prices.

    (quote)

    I don't think the prices can come down so much,. There can be corrections to the tune of 10 to 15%. The interest rates may come down to 7.5% levels in anoher 12 months time and this will be a booster to the RE. New projects may not start much till then. Please do not forget, people have quite a good money saved here in India and still there are a large number of Indians not having their own place to live. They will go in for their own places to live when the interest rates come down.


    KS,

    Am 100 % sure that the interest rate coming down by 1-3 percent cant even attract 1-3 percent buyers in this situation.

    Pls keep in mind that the basic issue for the RE Slump is the exorbitant prices . Interest rate may come down or go up due to the macro economic conditions perceived by the Govt/RBI.

    Mine is from a buyers point of view . Whats of yours ?

    KS,

    Am 100 % sure that the interest rate coming down by 1-3 percent cant even attract 1-3 percent buyers in this situation.

    Pls keep in mind that the basic issue for the RE Slump is the exorbitant prices . Interest rate may come down or go up due to the macro economic conditions perceived by the Govt/RBI.

    Mine is from a buyers point of view . Whats of yours ?
    CommentQuote
  • Originally Posted by ks2071746
    I don't think the prices can come down so much,. There can be corrections to the tune of 10 to 15%. The interest rates may come down to 7.5% levels in anoher 12 months time and this will be a booster to the RE. New projects may not start much till then. Please do not forget, people have quite a good money saved here in India and still there are a large number of Indians not having their own place to live. They will go in for their own places to live when the interest rates come down.


    KS,

    Am 100 % sure that the interest rate coming down by 1-3 percent cant even attract 1-3 percent buyers in this situation.

    Pls keep in mind that the basic issue for the RE Slump is the exorbitant prices . Interest rate may come down or go up due to the macro economic conditions perceived by the Govt/RBI.

    Mine is from a buyers point of view . Whats of yours ?

    Cheers.
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  • Originally Posted by sethugm
    KS,

    Am 100 % sure that the interest rate coming down by 1-3 percent cant even attract 1-3 percent buyers in this situation.

    Pls keep in mind that the basic issue for the RE Slump is the exorbitant prices . Interest rate may come down or go up due to the macro economic conditions perceived by the Govt/RBI.

    Mine is from a buyers point of view . Whats of yours ?

    Cheers.


    Dear Friend,

    Mine is also from the point of view of buyers. I never look from the angle of a seller as I cannot be one in this - not full of ethics - RE field with so much of nontruths to be told to the poor buyers to sell properties.

    ks2071746
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  • It is amusing to see someone talk of 70% correction. And another (Sethu) talking of India, Malaya, Singapore (matrum pala nadugalil) as if it is GOpal Palpodi advt. I bet Sethu would not have travelled even to the next city!
    In US, price of a house I know of and am tracking has fallen from about 680K USD to 520K USD in the past 2 years and I am talking of LA suburb. THat is hardly 25% in a terribly recessionary market.
    In India that number will be the maximum fall of LAND PRICES in prime localities, read cities. SO in Mylapore if price in 2008 April was X, it will atbest fall to .75X. Infact I think it might actually only go to .9X. OFcourse unlike in US there are no genuine evaluators in India so prices can be extremely different in the same street.
    Now if you want to genuinely buy property then you can use above thumb rule. If you want to genuinely sell property again use the above rule. If you want to just hope that Maligai (Palace) will be made available to PItchakaran (Beggar) then believe Sethugm!
    IN the outskirts prices will stabilise and will probably go to -30% for land. NOw for flats prices can fall much more as the builders have TOO MUCH PROFIT In India. So a fall of 50% is not ruled out.
    NOW DID IT SAY IT WILL FALL? NOT AT ALL. I said if it falls these will be the highest values. As far as I know land value in MYlapore or prime places h as not fallen one bit, rather has been increasing slowly. In developing places like Saligramam or KOttivakkam they are shooting up. In URapakkam and Tiruvallur they are stabiising. Even this Sunday I saw someone quoting 580psft for land almost somewhere in Chengalpet. PRices fallen is a myth, falling is a want. However if it does fall then my limits might be the test.
    Finally dont forget. If prices fall then your salary will also CRASH. So dont pray for the fall as you will not h ave a salary to pay for it even then, if you cant do it today. Dont aspire for what you aint worth! LEave that to jokers like WIseman and Sethugm. Cheers.
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  • Originally Posted by ks2071746
    Originally Posted by sethugm
    Agree with you to some extent... But its difficult to predict the bottom.


    Looks like RE would come down by 40-60 % from its ridiculously peak prices.

    (quote)

    I don't think the prices can come down so much,. There can be corrections to the tune of 10 to 15%. The interest rates may come down to 7.5% levels in anoher 12 months time and this will be a booster to the RE. New projects may not start much till then. Please do not forget, people have quite a good money saved here in India and still there are a large number of Indians not having their own place to live. They will go in for their own places to live when the interest rates come down.


    When the interest rates were keep increasing for the past few years, real estate prices and sales volume did not come down... then how can you expect the reduction of interest rate will be a booster to RE... Issue is not the interest rate ... Price reduction due to economic slowdown, unreasonably inflated RE prices, affordability and repaying capacity... All the layoff announcements are being executed now. Actual recession starts now only...People have money for another few months to spend.. if they don't get another job to pay their EMI, those properties will come back to the market thro auction.

    When the interest rates were keep increasing for the past few years, real estate prices and sales volume did not come down... then how can you expect the reduction of interest rate will be a booster to RE... Issue is not the interest rate ... Price reduction due to economic slowdown, unreasonably inflated RE prices, affordability and repaying capacity... All the layoff announcements are being executed now. Actual recession starts now only...People have money for another few months to spend.. if they don't get another job to pay their EMI, those properties will come back to the market thro auction.
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