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Should I buy a Flat in Sec 7578 after 2 years

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Should I buy a Flat in Sec 7578 after 2 years

Last updated: August 9 2010
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  • #11

    #11

    Re : Should I buy a Flat in Sec 7578 after 2 years

    Suppose you planned to purchase at Yr2012 end/
    Assume Rs30Lac flat is available at Rs45lacs after 3 years. You loose Rs 4-5Lacs approx( not 15lacs) factoring time value for money( bank interest on loan/FD interest etc).
    Gains if u buy later: U can get best apartment, best builder, best quality after seeing every bldr's performance. are you ready to pay extra to get best deal??

    Assume Rs30lacs flat is still available at Rs30lacs after 3 years.
    Gains and gains and gains for you...U will get best deal in every respect.

    I think probability of steep price hike after 3 years is less as compared to probability of normal price increase. So, you will not loose even if you wait....There's more than 40% investers in Noida RE. Before registration there would also be a panic selling...U can take advantage of that too.

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    • #12

      #12

      Re : Should I buy a Flat in Sec 7578 after 2 years

      Trend in NOIDA RE is visible right now. People who bought in Lotus LB reporting that can not sell at even at 3200 BSP but builder is quoting rate of 3600 BSP.

      What I think, Current time is for better judgement means keep you eye/mind open and wait for opportunity when a reputated builder launches new project at resonable price at comparatively good location.

      Example if Assotech launches their Sec 78 project with Flexi price of 2500-2600 all inclusive. Buy it because if Metro station comes at Sec 78 then it will be best sector in 74-78 because rest of things will automatically come up.

      But if XYZ builders who keep competiting each other in new launch, even 2500 is big price for them.

      But in current market one thing is for sure, if you buy LB at 3600 BSP then you are gone.
      It's not always best location which works, it should be combination of location,builder, price, plan which make a project success.

      Personnely I feel, risk is more for Lotus Panachee buyers as 80% of project will be deliver after 4 years because tower height is 30 floors and price tag all inclusive comes to be approx 3400-3500.

      Assume Panachee after possession will be available at 3500 all inclusive. (I love to be a Panachee resident).
      Possible hai... Did you imagine in 2008 that builder will launch project at 2500 all inclusive in 2010 ?? I did not...because I bought in PAN Oasis in Nov 09 first floor flat with all inclusive price tag of 3475 in Flexi. And still rate is almost same or 100-200 increased.

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      • #13

        #13

        Re : Should I buy a Flat in Sec 7578 after 2 years

        Mritunjay, anuj , kamal, and All these new projects owners(including myself) will make profit after 5 years. 2 yrs is too less a tenure to judge a projects' profitability. Only brilliant RE projects give you profit within 2 years...... its like your long term business where u break even after atleast 5 years, yes there are businesses which get you into profits within 3 years but those are brilliantly rare start-ups.

        So for all recent flat owners since the plunge is taken just chill and wait for 5 years (minimum) and you will be happy.
        MM

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        • #14

          #14

          Re : Should I buy a Flat in Sec 7578 after 2 years

          Lucky ji, Chandra ji and Munish ji, thank you for the balanced views.

          I am being a bit skeptical mainly because I am looking for buying the flat for residing rather than investing (my salary is peas and nuts to even consider investment). Thats why the apartment's final completed state and flat location is so important to me.

          Others who have done the same for investment purpose, definitely WONT be at any loss.
          I am just holding my guns till the final picture is out and willing to shell out some extra for that sweet sweet home.

          Also, are we sure about Metro in Sec 78? One of my RE expert friends told that its not even in the 2021 Authority Master Plan Blueprint!!! Can someone with Noida Authority links confirm this?
          Also, one of the plots (opp Mahagun) is said to be registered to Ansal group...! Any confirmations?

          Comment

          • #15

            #15

            Re : Should I buy a Flat in Sec 7578 after 2 years

            Originally posted by buzzz View Post
            Lucky ji, Chandra ji and Munish ji, thank you for the balanced views.

            I am being a bit skeptical mainly because I am looking for buying the flat for residing rather than investing (my salary is peas and nuts to even consider investment). Thats why the apartment's final completed state and flat location is so important to me.

            Others who have done the same for investment purpose, definitely WONT be at any loss.
            I am just holding my guns till the final picture is out and willing to shell out some extra for that sweet sweet home.

            Also, are we sure about Metro in Sec 78? One of my RE expert friends told that its not even in the 2021 Authority Master Plan Blueprint!!! Can someone with Noida Authority links confirm this?
            Also, one of the plots (opp Mahagun) is said to be registered to Ansal group...! Any confirmations?
            Hi buzz
            agree and appreciate your opinion. as i said it makes sense to continue staying on rent and keep money with yourself till the right opportunity comes in RE the issue is that you are normally not sure abt the right opportunity unless u opt for a livable aptt. I just have another query, 3 yrs down it will be no different to what u can get today.if u want to stay u can go for ready to move aptt now itselfu have good options avl today.yes if u hope (and i wish that) that you will become your boss's boss in 3 yrs then hold on
            MM

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            • #16

              #16

              Re : Should I buy a Flat in Sec 7578 after 2 years

              Originally posted by Munish Malhautra View Post
              Guys you all are correct. I have a slight change in thinking which is a result of logic, self experience and wisdom from the forum.

              Let consider the following standard -
              Current price is 2800 psf.
              Basic Price of flat is 25 Lacs. Cash in Hand is 5 Lacs.
              Possession in 2 years, stretch upto 2.5 years considering standard(acceptable) project delay.

              Scenario 1 Continue to stay on rent for 2.5 years-
              Rent is 3 Lacs for 2.5 years at 10K pm.
              Thats it no further charges.
              Earn 1 Lac ROI on 5 Lacs cash in hand on Bank FD



              Scenario 2 Buy flat today
              Take loan of 20 Lacs,
              EMI of 2.5 Lacs(principal + interest) per annum amount to 6 Lacs in 30 months.(looks like you are earning for the bank and builder)
              Lose 1 Lac on Bank FD
              Continue to pay rent 3 Lacs
              Pay Service tax and other charges to govt 50K
              Pay registration charges-2 Lacs(u do not get loan on this)

              Total cost is now 6+1+3+.5+2=12.5 Lacs

              The cost of 25 Lacs flat today is around 38 Lacs after 2.5 years.

              Now assuming historical figures, land appreciates to 4300-4500 after 2.5 years(this is based on pure speculation and risk but should be possible), intrinsic value of flat becomes ~40 Lacs.

              Conclusion -what do u earn or lose after 2.5 years is just bank interest on your FD. yes in addition you get a house as well but you can always get that after 2.5 years without loosing much
              Brother why do u want to live next 10 years of your life in bank loan misery . enjoy your life keep cash with yourself and leave headaches to builder and bank.

              Another scenario-If u have Cash in hand, buy on Flexi/Tranche payment by taking 10% discount on BSP, u get at a price of ~2520 psf and pay as construction goes. (No loan from bank).
              Here u make a saving/profit of ~35%(price benefit + appreciation) in 2.5 years which is substantial.

              I like the way Buzz is thinking
              Hi Munish,

              nice to see your points. Just let me correct you on calculation of difference in cost of booking an under-construction flat and ready-to-move-in flat. I'm taking all the parameters same.

              Scenario 2 Buy flat today
              Total Additional cost = 6 Lakhs Only (not 12.5 Lakhs)

              [ = 1 (Loss on Bank FD) + 3 (Rent Paid) + 0.5 (Tax to Govt.) + 1.5 (Max avg tax amount which could have been saved on 6 lakh principle+interest under Section 24b and 80C) ]

              other costs written by you will be anyways paid by the buyer only.

              Conclusion
              Under-construction flat purchased for Rs 25L is equivalent to ready-to-move-in flat of 31L as of today.
              So if rate of flat appreciates to 40L, that means one need to pay 29% extra to get it.

              Well this is just a calculative monetary illustration, there are other pros and cons as mentioned by other members.

              Raj

              Comment

              • #17

                #17

                Re : Should I buy a Flat in Sec 7578 after 2 years

                Originally posted by rdwasnik_2009 View Post
                Hi Munish,

                nice to see your points. Just let me correct you on calculation of difference in cost of booking an under-construction flat and ready-to-move-in flat. I'm taking all the parameters same.

                Scenario 2 Buy flat today
                Total Additional cost = 6 Lakhs Only (not 12.5 Lakhs)

                [ = 1 (Loss on Bank FD) + 3 (Rent Paid) + 0.5 (Tax to Govt.) + 1.5 (Max avg tax amount which could have been saved on 6 lakh principle+interest under Section 24b and 80C) ]

                other costs written by you will be anyways paid by the buyer only.

                Conclusion
                Under-construction flat purchased for Rs 25L is equivalent to ready-to-move-in flat of 31L as of today.
                So if rate of flat appreciates to 40L, that means one need to pay 29% extra to get it.

                Well this is just a calculative monetary illustration, there are other pros and cons as mentioned by other members.

                Raj
                I had taken a hypothetical figure, actually it will come to 7.5 lacs.
                6L lacs Loan Interest+ principle in 2.5 years on 20Lacs loan. The interest component is maximum at the start.
                1 lac for FD interest
                50K as taxes
                Rent will be common so no need of adding into cost. Regn charges can also be removed.
                Hence hit is 6+1+.5=7.5 Lacs.
                The difference is 24%. now this is only if the flat appreciates to 4000.
                In 30 months paying 24% is also still not worthwhile for someone who has limited resources and is looking to stay .
                Last edited by Munish Malhautra; August 4 2010, 12:23 AM.
                MM

                Comment

                • #18

                  #18

                  Re : Should I buy a Flat in Sec 7578 after 2 years

                  Delaying your flat purchase by two years is a good idea, following points shall be considered

                  1) If end users are staying in rented accommodations and if they move to their booked flats then also there will be many previously rented accommodations available.

                  2) Projects can be evaluated better after the construction and lay out is finalized.

                  3) This strategy keeps the risk of builder default out.

                  4) Huge supply will hit the market, but if economy grows much of it might be absorbed.

                  5) Prices are not flying away in two years at least in Noida.

                  6) One should be prepared to pay around 20 percent extra in case he chooses to delay the purchase.

                  7) He may loose the advantage of location/floor.

                  8) One should remember demand for urban housing is increasing and will continue to do so even if there are some downturns in economy.

                  9) Interest rates will be almost at peak after two years.

                  10) Rewards are generally associated with the risks taken. Hence percent appreciation after two years will be less than otherwise.
                  Digvijay

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                  • #19

                    #19

                    Re : Should I buy a Flat in Sec 7578 after 2 years

                    Originally posted by Munish Malhautra View Post
                    I had taken a hypothetical figure, actually it will come to 7.5 lacs.
                    6L lacs Loan Interest+ principle in 2.5 years on 20Lacs loan. The interest component is maximum at the start.
                    1 lac for FD interest
                    50K as taxes
                    Rent will be common so no need of adding into cost. Regn charges can also be removed.
                    Hence hit is 6+1+.5=7.5 Lacs.
                    The difference is 24%. now this is only if the flat appreciates to 4000.
                    In 30 months paying 24% is also still not worthwhile for someone who has limited resources and is looking to stay .
                    No no Munish, I guess you did not understand my point. When I calculated difference in costs, my assumption is that the 'home buyer' condition is same in both the cases. e.g. if a person who takes a loan today for under-cons flat, I am assuming that the person who will buy flat after 2.5 years will also take loan.
                    So this 6L of interest will never get into consideration of difference calculation. Because this interest component is anyways to be paid in any case.

                    But as per your post it seems like you wanna say that a person will take 20L loan for 25L flat but if he'll buy after 2.5 years he'll become rich and earn enough to pay cash of 35 to 40L in this period.
                    or
                    I guess you are calculating the total burden on the person not the difference of cost.

                    Raj

                    Comment

                    • #20

                      #20

                      Re : Should I buy a Flat in Sec 7578 after 2 years

                      Originally posted by Digvijay View Post
                      Delaying your flat purchase by two years is a good idea, following points shall be considered

                      1) If end users are staying in rented accommodations and if they move to their booked flats then also there will be many previously rented accommodations available.

                      2) Projects can be evaluated better after the construction and lay out is finalized.

                      3) This strategy keeps the risk of builder default out.

                      4) Huge supply will hit the market, but if economy grows much of it might be absorbed.

                      5) Prices are not flying away in two years at least in Noida.

                      6) One should be prepared to pay around 20 percent extra in case he chooses to delay the purchase.

                      7) He may loose the advantage of location/floor.

                      8) One should remember demand for urban housing is increasing and will continue to do so even if there are some downturns in economy.

                      9) Interest rates will be almost at peak after two years.

                      10) Rewards are generally associated with the risks taken. Hence percent appreciation after two years will be less than otherwise.
                      I agree to Digvijay here. If one is having enough money, he should always go for ready-to-move in flats, mainly because of peace of mind and satisfaction.
                      But only reason people go for under-const flat is lack of enough money.

                      Raj

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