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CONFUSED ON 12% ASSURED RETURN :confused:

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CONFUSED ON 12% ASSURED RETURN :confused:

Last updated: March 22 2012
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  • CONFUSED ON 12% ASSURED RETURN :confused:

    Spiretech is giving 12% assured returns for 54 months on commercial project at yamuna expressway along with 3 years of rent assurance.

    Seems to be a good opportunity for investment ?

    I am looking to book a 100 sq. Ft. Office area for 7 lacs.

    Senior members may kindly advice on :-

    a. Will i get 12% assured returns or the company is just faking?
    B. After the 54 months + 3 years of rent, will that property will be in my possession.
    C. What is the concept behind these kind of offers.
    D. How is spiretech as builder.

    Thanks in advance

    surendra
  • #2

    #2

    Re : CONFUSED ON 12% ASSURED RETURN :confused:

    Originally posted by SUREMAN View Post
    Spiretech is giving 12% assured returns for 54 months on commercial project at yamuna expressway along with 3 years of rent assurance.

    Seems to be a good opportunity for investment ?

    I am looking to book a 100 sq. Ft. Office area for 7 lacs.

    Senior members may kindly advice on :-

    a. Will i get 12% assured returns or the company is just faking?
    B. After the 54 months + 3 years of rent, will that property will be in my possession.
    C. What is the concept behind these kind of offers.
    D. How is spiretech as builder.

    Thanks in advance

    surendra

    You always ask intellegent question which i take lot of interest while answering them.
    a. You will definately get 12% return provided they are giving you bank guarantee.
    b. property will be in your possession without any doubt unless some disruption happen or full project is not sold out.
    c. most important thing is concept. Every builder has 2 options to raise the funds. 1st is by selling the project to buyers and ask the money in installements (DP/Flexi/CLP) but in that case also they need the initial funds to invest in project to make it saleble which they generally arrange from Banks and PE firms on interest rate 18-20%. 2nd option they have to sell off their project with 12% assured return with bank guarantee so that they can save 6% interest (18%-12%) and buyer can get the 12% interest as regular income because they are giving 100% payment in advance to builder. THIS IS THE STORY WHICH THEY TELL TO FOOL PEOPLE.

    Actual reality behind this concept is different. they are giving you rate of 7000/- PSF for commercial space which is too high considering the locality which is in Jungle. where such kind of offers floted in market rates are kept atleast double so that your property prices would be same after five years because other projects are sold at very less price where such offers are not there. For example without offer rate is 4000/ PSF and with offer rate is 7000/- psf for 1000 sq feet.. Five year is construction time. In first case you are giving money in installments and kept the remaining money in bank and earn the interest and losing the opportunity cost on paid amount to builder 9% so your net interest paid would be around 8 lacs and cost would be 48 lacs after 5 years and property value would be around 80 lacs. but in second case, since you have paid all 70 lacs in advance so you are actually getting 3% because you are losing the opportunity cost (9% on FD) and getting 12% as guaranteed return. it means net 10 lac return and cost would be approx 60 lac and property value is 80 lac.

    Principally, DO NOT GIVE WHOLE MONEY TO BUILDER AS YOU ARE EARNING MERE 3% AND TAKING RISK OF WHOLE 100% HARD EARNED MONEY.

    Same principal applies on Down payment vs CLP plan. Down payment always looks cheap (100/- PSF lower charged by builder) but if you calculate the total cost despite of low BSP it will always expensive by 200-300 psf.

    d. all builders are same........you need to protect your interest yourself.

    Comment

    • #3

      #3

      Re : CONFUSED ON 12% ASSURED RETURN :confused:

      yes yamuna expressway is a jungle for next 5-7 years to come and why have the lure of 12% interest ..even banks offer 9% anyhow and if the office space does not do well then what
      Life is good.

      Comment

      • #4

        #4

        Re : CONFUSED ON 12% ASSURED RETURN :confused:

        i have seen spiretech's site, it is way behind in the techzone. why dont you check out stellar which is far better located i.e right in the front next to NIIT Tower opp gautam budh uni.

        also the price is around 4000 with 12 % assured return + 3 years lease guarantee at rs 30 per sq feet.
        not sure what spiretech is offering you but if you choose unlockable space you will not get physical possession of your space , but only get returns.

        bank guarantee only guarantees your return for a specific period, it does not guarantee if the project will ever be delivered. Example AMR, Earth. They will give a u guarantee.

        Comment

        • #5

          #5

          Re : CONFUSED ON 12% ASSURED RETURN :confused:

          No Fool gives fixed returns. Let me explain you with a small example. Property in jungle like yamuna expressway todays situation, just for example : abc builder makes offices and sells for 3000 rs psf , 30 L for 1000 sqf. No one is willing to buy. Xyz builder is more intelligent, similar office , he keeps price 4800 Rs instead of 3000 but gives you fixed 12% return for 3 years. You are naturally attracted towards fixed returns. In 3 yrs he pays you back 48000x12x3 yrs = 17,28,000 (17.8 L)

          You paid him 18 L more than market price to get 17.8 L back from him in installments. Now who is a fool ? You or him ? We as buyers are regularly befooled by such offers.

          Abc builder did not know how to sell and who wud buy office in jungle ? Xyz builder is clever, he knows many people can b befooled with fixed returns...

          Have u seen anyone selling office in conn place or karol bagh with fixed returns ? Not required...you agree i think.


          Hope the example was clear enough
          Last edited January 26 2012, 11:33 PM.
          If thou wilt make a happy man, add not unto his riches but take away from his desires

          Comment

          • #6

            #6

            Re : CONFUSED ON 12% ASSURED RETURN :confused:

            Spire did the same for their commercial project in Manesar 2-3 yrs ago. As far as I know they have paid the assured return to their investors, but I remain doubtful about their ability to get the lease amount that they promised. The drawbacks of this scheme have been highlighted pretty succinctly by the previous posters.
            I had toyed with the idea of puttingly money in their Manesar project but backed out as it was a virtual unit. In hindsight I feel I made the right decision. I feel with a scheme like this people are tempted by the carrot of asssured returns but fail to realise that they do not have control of their investment ( dependent on builder for getting a tenant). I feel capital gains for such properties will also be dissapointing.

            Let me tell you a true story of asssured returns desi style.
            2-3 years ago I gave some money to my broker and he was giving me 24% return PA. His funda was that he will use my money to make atleast 36% PA if not more. This was done purely on trust or Zubaan as we call it and he gave my money back in 3 days when I asked him to return it. This is highly risky but I only put in an amount that i could afford to loose and in the process was able to judge how relaible this guy was ( we have known him for close to 20 years, my father also bought property through him)

            Comment

            • #7

              #7

              Re : CONFUSED ON 12% ASSURED RETURN :confused:

              Should I go for a commercial project like spitech or 1 bhk if i have small budget.. just for investment purpose?

              Comment

              • #8

                #8

                Re : CONFUSED ON 12% ASSURED RETURN :confused:

                Spire will give you assured return no doubt about it. I am a investor of spire edge and never faced any issue. However, they have fooled investors like me by offering the possession with out completing the basic things which is mandatory.

                Investing such commercial properties is always good in long run. I also have 2 shops in west gate mall rajouri and they are giving good rentals.

                Comment

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