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investing in 7yr old apt in thiruvanmyur

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investing in 7yr old apt in thiruvanmyur

Last updated: December 4 2014
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  • investing in 7yr old apt in thiruvanmyur

    Hi,

    I'm an NRI would like to get your opinion on the following investment option.

    We found an apartment in thiruvanmyur - 1100 sq ft - near marundeeswarar temple, bus stand and in a central area - 7 yrs old, wood work done for 1C. I want to to buy it just for investment reasons and look forward to sell it in another 7 years or so once we come back to india. Till then just rent it out. The current owner said it rents for about 25 - 30k, but i do not know if that is the case.

    Will there be any growth in price in the next 7 years?
    would it be even more difficult to sell a 15 yr old flat then??
    would it just be a waste of the taxes and all that and instead put the money in FDs.

    I would like to invest in plots - but I've not visited many and we don't have any relatives to search for us.so i've dropped this idea for now and focusing on flats. Please do not suggest areas in GST or OMR, as my widowed mother alone has to go search and doesnt seem like a wise idea to me.

    we have about 80L in cash and rest is like wiping out all my widowed mothers' FD and other retirement savings. I feel bad to pull that extra 20L, but I've not come across anything so far in the area we want in 80L (my mom resides in thiruvanmyur).

    Please suggest if this is a investment worth all that trouble. I have no idea on real estate and just going by what the owner says. Will we be able to negotiate it, since we have cash - if so how much and how can we negotiate. Please guide.

    Thanks
  • #2

    #2

    Re : investing in 7yr old apt in thiruvanmyur

    7 year old flat and you will sell after 7 years-that makes it minimum 14 years old.
    Price may not be that attractive at that stage.
    Who knows whether RE will be in boom or bear phase.
    Secondly touching mothers FD will be highly inappropriate.
    If you cannot make 1CR without using mothers money,drop the idea.
    Your mother may agree out of love and affection,but it will a bad idea.
    What is the condition of flat-stability,electrical fittings/wiring(internal),cracks etc?
    Legal due diligence and equally what will be the inflow on income??
    What is the opportunity cost?
    Can you think of alternate investment of your savings-other than flat.
    Who will look after flat when it is on rent?
    Tenant problems,repairs and so on.
    Deeper thought is required.
    Last edited November 28 2014, 03:49 PM.

    Comment

    • #3

      #3

      Re : investing in 7yr old apt in thiruvanmyur

      Originally posted by jugj1984 View Post
      Hi,

      I'm an NRI would like to get your opinion on the following investment option.

      We found an apartment in thiruvanmyur - 1100 sq ft - near marundeeswarar temple, bus stand and in a central area - 7 yrs old, wood work done for 1C. I want to to buy it just for investment reasons and look forward to sell it in another 7 years or so once we come back to india. Till then just rent it out. The current owner said it rents for about 25 - 30k, but i do not know if that is the case.

      Will there be any growth in price in the next 7 years?
      would it be even more difficult to sell a 15 yr old flat then??
      would it just be a waste of the taxes and all that and instead put the money in FDs.

      I would like to invest in plots - but I've not visited many and we don't have any relatives to search for us.so i've dropped this idea for now and focusing on flats. Please do not suggest areas in GST or OMR, as my widowed mother alone has to go search and doesnt seem like a wise idea to me.

      we have about 80L in cash and rest is like wiping out all my widowed mothers' FD and other retirement savings. I feel bad to pull that extra 20L, but I've not come across anything so far in the area we want in 80L (my mom resides in thiruvanmyur).

      Please suggest if this is a investment worth all that trouble. I have no idea on real estate and just going by what the owner says. Will we be able to negotiate it, since we have cash - if so how much and how can we negotiate. Please guide.

      Thanks
      Just based on the rent 25k to 30k I would not pay in excess of 90 lakhs including registration commission etc however for a two Bhk rent looks steep IMO Also make sure u get all the blue print sanction plan copy NOC etc. this way u r sure ur apartment is legal also when u r selling u will not have any problem 4% net rental yield atleast is the cut off point IMO....in tax term the return is 5.70% approx given the 30% tax rebate. also if u consider DSR then ur DSR is below 2

      Plus if 1 cr is advertised price u can negotiate at least 15%
      RE overpriced still fancy then 4% yield is must anything less is overpriced

      Comment

      • #4

        #4

        Re : investing in 7yr old apt in thiruvanmyur

        9000 psqft for 7 year resale. Not a great deal. If you look deeper and are doing a immediate settlement without loan, you can get better deals. Negotiate for 80L 1 week settlement if all papers are clear and see if it materialises.
        Negotiate.. negotiate. You will get a better deal in the same locality. Just keep looking and be patient.

        Comment

        • #5

          #5

          Re : investing in 7yr old apt in thiruvanmyur

          Also the question you need to ask is, after 7 years can you sell it atleast for 2C? 2C for 2bhk after 7 years looks doubtful for me.
          You need to know the UDS to know what you are pricing in for land and for the flat to arrive at a fair estimate. Is it N or S mada ? How many flats overall ? Lift available or not ? Possibility of redevelopment ?
          What will you do after selling this after 7 years ? Go for another unit or invest somewhere else ?

          Please explore all of this and then decide on the offer price. There is always demand for immediate deal closure.

          Comment

          • #6

            #6

            Re : investing in 7yr old apt in thiruvanmyur

            Originally posted by vaibav123 View Post
            7 year old flat and you will sell after 7 years-that makes it minimum 14 years old.
            Price may not be that attractive at that stage.
            Who knows whether RE will be in boom or bear phase.
            Secondly touching mothers FD will be highly inappropriate.
            If you cannot make 1CR without using mothers money,drop the idea.
            Your mother may agree out of love and affection,but it will a bad idea.
            What is the condition of flat-stability,electrical fittings/wiring(internal),cracks etc?
            Legal due diligence and equally what will be the inflow on income??
            What is the opportunity cost?
            Can you think of alternate investment of your savings-other than flat.
            Who will look after flat when it is on rent?
            Tenant problems,repairs and so on.
            Deeper thought is required.
            Hi,

            I was hoping if negotiating was possible i can buy it with the cash we have currently.
            How do i evaluate the stability, electrical fittings, cracks etc.. Should i find a civil engr to go check. Do they even do this kind of errands?

            legal checks - i was hoping i can take the docs to a lawyer and verify. I have no clue about knick knacks.

            I should also pool some money for any repairs and white wash before renting out.

            I'm checking some rentals in sulekha to see how much is the rental cost in the area.

            Can some one tell as to who pays the maintenance for the flat? Is it us from the rent or the tenants separately? We are hoping ask them to deal with any issues themselves. We do not have the resources to go help them in any case. Would that work?

            Thanks for your response. I'm just trying to evaluate if it can be worked out. As for other investment options - we just use FDs and are new to the stock/share market - so even that will take considerable effort.

            Comment

            • #7

              #7

              Re : investing in 7yr old apt in thiruvanmyur

              Originally posted by Septaa View Post
              Just based on the rent 25k to 30k I would not pay in excess of 90 lakhs including registration commission etc however for a two Bhk rent looks steep IMO Also make sure u get all the blue print sanction plan copy NOC etc. this way u r sure ur apartment is legal also when u r selling u will not have any problem 4% net rental yield atleast is the cut off point IMO....in tax term the return is 5.70% approx given the 30% tax rebate. also if u consider DSR then ur DSR is below 2

              Plus if 1 cr is advertised price u can negotiate at least 15%
              Septaa - apologies in advance.

              4% net rental yield for the entire life of the flat? so if i assume its 25 yrs then the monthly rent comes very less? is that what you were trying to convey or have i misunderstood.

              What is DSR and I'm an NRI - i dont pay any taxes. Should i buy it in both me and my mom's name so she gets the tax rebate. She is still working.

              Comment

              • #8

                #8

                Re : investing in 7yr old apt in thiruvanmyur

                Originally posted by eshwaran View Post
                Also the question you need to ask is, after 7 years can you sell it atleast for 2C? 2C for 2bhk after 7 years looks doubtful for me.
                You need to know the UDS to know what you are pricing in for land and for the flat to arrive at a fair estimate. Is it N or S mada ? How many flats overall ? Lift available or not ? Possibility of redevelopment ?
                What will you do after selling this after 7 years ? Go for another unit or invest somewhere else ?

                Please explore all of this and then decide on the offer price. There is always demand for immediate deal closure.
                Hi -

                Its in 2nd flr in N mada st. No Lift - It has stilt + 2 flrs. so 4 houses in one block and another block like that. UDS is around 600 (i'm sorry i'll get the exact number tomorrow).

                What do u mean by redevelopment - its quite new - so i donno if thats going to happen. After 7 yrs, its uncertain, maybe use it or sell and buy a flat to stay elsewhere.

                what points can i negotiate on - one is immediate sale and immediate cash.. what else do i have? We tried buying in medavakkam but it seemed hard to get tenants. so we thought we will go with thiruvanmyur. atleast there won't be any shortage of tenants.

                Comment

                • #9

                  #9

                  Re : investing in 7yr old apt in thiruvanmyur

                  Originally posted by jugj1984 View Post
                  Hi,

                  I'm an NRI would like to get your opinion on the following investment option.

                  We found an apartment in thiruvanmyur - 1100 sq ft - near marundeeswarar temple, bus stand and in a central area - 7 yrs old, wood work done for 1C. I want to to buy it just for investment reasons and look forward to sell it in another 7 years or so once we come back to india. Till then just rent it out. The current owner said it rents for about 25 - 30k, but i do not know if that is the case.

                  Will there be any growth in price in the next 7 years?
                  would it be even more difficult to sell a 15 yr old flat then??
                  would it just be a waste of the taxes and all that and instead put the money in FDs.

                  I would like to invest in plots - but I've not visited many and we don't have any relatives to search for us.so i've dropped this idea for now and focusing on flats. Please do not suggest areas in GST or OMR, as my widowed mother alone has to go search and doesnt seem like a wise idea to me.

                  we have about 80L in cash and rest is like wiping out all my widowed mothers' FD and other retirement savings. I feel bad to pull that extra 20L, but I've not come across anything so far in the area we want in 80L (my mom resides in thiruvanmyur).

                  Please suggest if this is a investment worth all that trouble. I have no idea on real estate and just going by what the owner says. Will we be able to negotiate it, since we have cash - if so how much and how can we negotiate. Please guide.

                  Thanks
                  Using ypur Mom money is not a good idea. Locking your entire 80 lac in apartment may also not a better idea, because from your post i undrstand you want to park 80 lacs for 7 years for appreciation and in future you will use for other purposes. In that case it would bebetter to split it in two lots, part in rentable flat and balance in MFs . MFs may give you good return over 5 years. Your mom money may continue to be in FDs Diversification would always better. All the best.

                  Comment

                  • #10

                    #10

                    Re : investing in 7yr old apt in thiruvanmyur

                    From your replies I see that you dont have the full picture and you dont have people who have done this before to do the legwork. In this case, I would say keep accumulating the money and invest when you get a chance to come down here. For this particular offer, 2nd floor no lift for 1C doesnt look interesting to me. In my view, I will not pursue it further.

                    Comment

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