Hi,
I am looking for investment in property in Pune for long term since the prices are low right now..around 5 yrs to 10 yrs term. What are the areas in terms of good appreciation..may be around 30 to 50%.
Some areas on the outskirts of Pune are Talegaon, NIBM, Kondhwa
Are cities like Nashik, Nagpur good for long term?

My budget is for 1 BHK around 12L to 15L

Thanks in advance for any inputs/ideas
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  • SBI is also part of RE financial transaction,...
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  • SBI is more stringent when granting loans. It does not disburse many personal loans. It maintains a high cash reserve ratio. Finally it is backed by RBI, so I do not ever expect it to default on ur savings money.
    You cannot say this about pvt. banks. At one point the govt. will wash its hands if a bank like icici goes bust
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  • Originally Posted by puser
    What will happen to people who have bought at high rates? To banks who gave high credit?

    Its complete chain; from land owners to buyers with banks, developers, workers ....

    What happens to them in case of such crash?


    If you have heard about the "Subprime meltdown" in US, which took this mighty US economy down. It is result of easy loans to people who can't affrod to pay, artificial demand in RE market.
    and it's very unfortunate that we blindly folllow the western world, instead of learning from their mistakes ...
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  • Originally Posted by Punekar_1
    If you have heard about the "Subprime meltdown" in US, which took this mighty US economy down. It is result of easy loans to people who can't affrod to pay, artificial demand in RE market.
    and it's very unfortunate that we blindly folllow the western world, instead of learning from their mistakes ...


    None of the Indians banks suffered, because there is proper regulation in India. USA, Europe and UK have very relaxed regulations because that is the way they expect themselves to grow (Artificial growth, based on no innovations or improvement in lifestyle).
    Indian banks are very strict in giving credit and RBI makes them have a good crr.
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  • However I think we should play the same game. Growth through boom-bust cycles
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  • RE funds, Private pension funds, current account convertibility, etc. is all we need
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  • Sub prime will never happen in India

    I think the US sub prime crisis was because of lack of regulation. People with dubious credit history were sold properties at some stupid products which had lower interest in the first few years and then a very high interest after that. all of them got into the market with an intention of flipping the property before the higher interest got kicked in. So I buy a home for 100,000 US$ for say 1% interest for 2 years and then after that will pay an interest of 9%. In the meantime bank charges me hefty fees for this product that gets capitlaised and at the end of 2 years I sell the home at say 300,000 US $, repay the bank with not just the principal of 100,000, but also those stupid fees and all the interest that I have never paid.. and when i sell, the bank makes a neat sum money and I also make some 50000 dollars. All this is fine and banks are making money as long as prop prices are increasing. Problem is property prices fell and the bank shows an asset in the book for 250,000 US $ and the collateral backing it is worth just 50,000 US $ and falling. Boys in wallstreet got greedy and there was no f** regulation. Greenspan and the republicans wanted the markets to self regulate and that was not the case.
    I think RBI is regulating it fairly well and such practices are not followed in India. I do not think banks capitalise the interest if u r not paying the loan and lending policies are fairly strict atleast for the poor common salary guy.
    And also banks do not fund in 100%..

    Most people in India also do not buy homes in speculation. They buy a home and not a house and will work their butt off to repay the loan.
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  • Mortgage Backed securities

    Then the banks got more creative. The said.. hey why not make an instrument out of this assets in my books and they came up with these MBS securuties. So a bank that owns these assets is having a revenue stream of say 8% yield, I securtise this and sell it to investors at an interest of 6%. You as an investor think it is a fairly secure as these are backed by mortgages and I am a part of the RE boom making money. Problem is some of the securities sold were also mixed with the so called sub prime loans and the security was sold world over. Freddie Mac and Fannie May that wa supposed to regulate this shit turned a blind eye and soon the whole world was trading in a paper whereby the underlying collateral was a hole.
    This brought the whole world economy to a a grind as banks did not know the value of the asset they were holding.
    The reason US bailed out AIG was the only requriement to securitise was to have an insurance and AIG was the insurance provider for all these papers. If AIG had gone down, all banks would have had to provide for all the assets they are holding and this would have resulted in a bigger catastrophe.
    Broadly this was the crisis... as it unfolded.. because of lack of regulation in US.. and all banks blindly investing in these silly Investment products.
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  • The home loan NPAs have already risen YoY. Add to it that buyers who bought flat using the teaser rates (similar to that what happened in US) are the ones who are defaulting regularly.

    Banks too went ahead & gave loan without collateral & based only on salary slip out of greed to make lot of money in short period & increase customer base. However, when salary slip turned into pink slip, the banks started getting EMI skips:D.
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  • Hi Real acres,
    Point taken.. but in India, the loser is the home owner who over stretched.. See the colateral is the house.. Lets say theoratically, some one defaulted and the home values fell by 30%. I do not think both of these events occur together. It is just that we do not do attempt to do something like in US like flipping a property and banks don't finance it. So the bank will take over the asset and sell it cheap as long as they are able to recover their part of the due they shld be fine.. and there is always some buyer.
    Its the homeowner.. who not only lost his job, but also his home..
    It is tragic man.. everything is stacked against the buyer and they should be careful on what they are getting into..
    Buyer Beware..
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  • Yep, the buyer is the bakra in such cases. There is no provision to file for bankruptcy either in India. Hence, we state never, ever to over-leverage.
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  • Originally Posted by Sharpj
    Hi Real acres,
    Point taken.. but in India, the loser is the home owner who over stretched.. See the colateral is the house.. Lets say theoratically, some one defaulted and the home values fell by 30%. I do not think both of these events occur together. It is just that we do not do attempt to do something like in US like flipping a property and banks don't finance it. So the bank will take over the asset and sell it cheap as long as they are able to recover their part of the due they shld be fine.. and there is always some buyer.
    Its the homeowner.. who not only lost his job, but also his home..
    It is tragic man.. everything is stacked against the buyer and they should be careful on what they are getting into..
    Buyer Beware..


    What if it turn outs to be 7 year long recession with false bottoms ?
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  • Originally Posted by stohid
    Thanks for the advice dear friend, FD will be TDS deducted after 10K interest, and blue chip companies cannot be trusted any longer..remember Satyam? More over it incurs capital gains tax too..
    thanks for the suggestion though


    Dear friend, you will also have to pay tax on any money that you make when you eventually sell your property investment.

    You don't trust blue chip companies, fine. However, if you put your money in a 10 year zero coupon government bond, you will more than double your money. This is a guaranteed 100% profit on your investment in 10 years, and this is guaranteed by the govt of India.

    Why are you looking only for a 30-50% profit from RE?

    Just asking..
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  • Stohid,

    If the returns are more than 10k on FDs, what you can do is to make FDs in multiple banks. The 10k+ tax is meant for FD in only ONE bank. So, open multiple a/c's man, simple!!;)

    Btw, Arun, add to your point:-

    The govt is soon going to allow pvt companies to float their own tax-free bonds for 5 yrs period. This will start first with infra cos. Man, pvt cos will definately yield more returns as well:). So, wait for these bonds to hit the market.
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  • Originally Posted by realacres
    Stohid,

    If the returns are more than 10k on FDs, what you can do is to make FDs in multiple banks. The 10k+ tax is meant for FD in only ONE bank. So, open multiple a/c's man, simple!!;)

    Btw, Arun, add to your point:-

    The govt is soon going to allow pvt companies to float their own tax-free bonds for 5 yrs period. This will start first with infra cos. Man, pvt cos will definately yield more returns as well:). So, wait for these bonds to hit the market.

    And I doubt companies like Reliance or SBI will go bankrupt...so you will have some other avenues to earn higher interest apart from banks :)
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