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Builders & Real Estate Bulls Theory Proved Wrong

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Builders & Real Estate Bulls Theory Proved Wrong

Last updated: November 1 2016
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  • Re : Builders & Real Estate Bulls Theory Proved Wrong

    Originally posted by khbarilal View Post
    Unfortunately, rent is not a reliable indicator due to sotic laws in India. If India abolish these sotic Law, rent will become the leading indicator. But the day this happen, real estate market will crash as market will get flooded with rental properties & long term leasing options in residential.
    rent is the reliable indicator from my viewpoint... we can consider the rents getting offered to the new customers... i agree that age old rental agreements are not an indicator but the new agreements are good examples.

    Comment


    • Re : Builders & Real Estate Bulls Theory Proved Wrong

      Rental income method

      Out of various RE valuation models, rental income method is one.
      Formula : appraisal price= Rental income / Interest Rate
      For an example
      Monthly rental = 12,000
      Annual rental = 144,000
      Appraisal price = 144000/0.095 = 15,15,789

      Explanation: If one will invest 15lakh, which can give 9.5% return he can pay rent out of investment return. If some one is smart enough, s\he can invest in asset which can give more return than 9.5%, it will be more profitable.
      NOTE: Today, lots of banks are offering 9.0% interest on 5 year deposit.

      The formula is also called as perpetuity formula.

      In current market, the rentals supply is much more restricted due to sotic laws, once the law changes there will be abandon supply & rent will fall dramatically. So the future rental incomes have downward bias. Also, once the law gets abolished, lot of long term leasing options will be available which will perfectly hedge the example explained.

      The old rental agreements do not have any consideration because as per law the tenants own the property. And the original landlords are not even collecting the miniscule rent.


      “Rahil tyascha Ghar aani kasale tyachi Jamin”

      Comment


      • Re : Builders & Real Estate Bulls Theory Proved Wrong

        HAVE A PEACEFUL LIVING

        As BhagwatGita says:

        What is yours today was with someone else yesterday.
        And will be with someone else in day to come…
        The only thing you have is your life.
        So leave life peacefully and happily.

        In a days time of 24 hours no one gets more than that how rich or poor you are.

        Many people toll too hard burn their blood to earn money and make property more than he needs and during this entire process he fails to live..
        And by the time he realized it’s too late...

        Everyone knows this but in this fast moving world fails to realize it…


        So ONE LIFE TO LIVE… HAVE A PEACEFUL LIVING…

        Comment


        • Re : Builders & Real Estate Bulls Theory Proved Wrong

          Well said

          Originally posted by Saurabh01 View Post
          As BhagwatGita says:

          What is yours today was with someone else yesterday.
          And will be with someone else in day to come…
          The only thing you have is your life.
          So leave life peacefully and happily.

          In a days time of 24 hours no one gets more than that how rich or poor you are.

          Many people toll too hard burn their blood to earn money and make property more than he needs and during this entire process he fails to live..
          And by the time he realized it’s too late...

          Everyone knows this but in this fast moving world fails to realize it…


          So ONE LIFE TO LIVE… HAVE A PEACEFUL LIVING…
          Hmm, for a moment, I thought I was on Aastha forum. Man, what you say is completely true but can be understood well by only those who understand themselves (self) well.

          Problem is many look at themselves from the eyes of society ....if I do this, what will she say, if I do that what will he say....

          Ever tried to call your own number?? It will say, the no./subscriber is busy, please try later. Same is the case with life, people have time for everything but not for themselves.
          If you are happy, you are successful.

          Comment


          • Re : Builders & Real Estate Bulls Theory Proved Wrong

            Originally posted by realacres View Post
            Hmm, for a moment, I thought I was on Aastha forum.
            I have not time for Aastha

            Comment


            • Re : Builders & Real Estate Bulls Theory Proved Wrong

              Originally posted by Saurabh01 View Post
              I have not time for Aastha
              But you can utilize same morning time slot to do Naashta just kidding. But as doctors advice people taking proper breakfast are less likely to gorge on soe unhealthy stuff.

              But whatever you said (and topped over by realacres) is true. Barring few basic necessities in life, rest all desires are creation of your own mind. People value everying else more than two most invaluable things -
              time and self. Guess since they are free ...

              Comment


              • Re : Builders & Real Estate Bulls Theory Proved Wrong

                Originally posted by compuwalah View Post
                But you can utilize same morning time slot to do Naashta just kidding. But as doctors advice people taking proper breakfast are less likely to gorge on soe unhealthy stuff.

                But whatever you said (and topped over by realacres) is true. Barring few basic necessities in life, rest all desires are creation of your own mind. People value everying else more than two most invaluable things -
                time and self. Guess since they are free ...
                My life was good before start of home hunt. As I started thinking to buy a flat(coop is more appropriate ) I lost my chain aur neend

                Comment


                • Re : Builders & Real Estate Bulls Theory Proved Wrong

                  Realty sales fall over high prices

                  Money Today, Chandralekha Mukerji / 18:39 , Jan 13, 2011

                  You will come across projects with offers such as stamp duty waive off, free parking and so on," said Shaleen Silori, research analyst with ICICI Securities.

                  If you plan to buy property in any under-construction project, the developer might offer you further discounts. The findings of a survey by ICICI Securities Ltd shows high property rates led to a decline in the absorption rate, or the number of units sold, with Mumbai witnessing the sharpest fall between August and November. The city witnessed a drop of almost 44.7% during the period. "As there is pressure on pricing, developers would be under pressure to bring down their sales realization by 15%. However, they will not bring down their basic sale price. So, you will come across projects with offers such as stamp duty waive off, free parking and so on," said Shaleen Silori, research analyst with ICICI Securities.

                  The report said absorption rate picked up in the first half of 2010 but declined in the past two-three months. Pune and Delhi-National Capital Region (NCR) followed Mumbai with a fall of 26.6% and 11.7%, respectively. However, Bangalore, Kolkata and Ahmedabad are expected to see an increase in absorption rate, the findings say. The survey on demand-supply and pricing trend was conducted in eight cities including Delhi-NCR, Mumbai, Bangalore, Chennai, Pune, Hyderabad, Kolkata and Ahmedabad. Developers said price correction was not a general trend. "It depends on the developer and the project portfolio," said Rohtas Goel, chairman and managing director, Omaxe Ltd. "The geographical spread of the projects, construction progress and developer customer base determines whether the rates should be revised or discounts should be given." The survey also says developers in Mumbai and Delhi-NCR will likely witness moderate-tolower sales as projects becoming unaffordable even as supply increases in the two regions. It says the perception of prices being higher among the respondents of the survey is increasing sequentially since August.

                  SURVEY FINDINGS - Realty sales fall in Mumbai, NCR over high prices
                  If you are happy, you are successful.

                  Comment


                  • Re : Builders & Real Estate Bulls Theory Proved Wrong

                    Originally posted by Saurabh01 View Post
                    As BhagwatGita says:

                    What is yours today was with someone else yesterday.
                    And will be with someone else in day to come…
                    The only thing you have is your life.
                    So leave life peacefully and happily.

                    In a days time of 24 hours no one gets more than that how rich or poor you are.

                    Many people toll too hard burn their blood to earn money and make property more than he needs and during this entire process he fails to live..
                    And by the time he realized it’s too late...

                    Everyone knows this but in this fast moving world fails to realize it…


                    So ONE LIFE TO LIVE… HAVE A PEACEFUL LIVING…


                    Baba Ranchoddas chanchad ki jai..!!!!!! But what you say makes a lot of sense atleast for myself.

                    Originally posted by realacres View Post
                    Ever tried to call your own number?? It will say, the no./subscriber is busy, please try later. Same is the case with life, people have time for everything but not for themselves.
                    Real.. why do you call urself????????

                    Comment


                    • Re : Builders & Real Estate Bulls Theory Proved Wrong

                      Slight change to formula ...

                      Originally posted by khbarilal View Post
                      Out of various RE valuation models, rental income method is one.
                      Formula : appraisal price= Rental income / Interest Rate
                      For an example
                      Monthly rental = 12,000
                      Annual rental = 144,000
                      Appraisal price = 144000/0.095 = 15,15,789

                      Explanation: If one will invest 15lakh, which can give 9.5% return he can pay rent out of investment return. If some one is smart enough, s\he can invest in asset which can give more return than 9.5%, it will be more profitable.
                      NOTE: Today, lots of banks are offering 9.0% interest on 5 year deposit.

                      The formula is also called as perpetuity formula.

                      In current market, the rentals supply is much more restricted due to sotic laws, once the law changes there will be abandon supply & rent will fall dramatically. So the future rental incomes have downward bias. Also, once the law gets abolished, lot of long term leasing options will be available which will perfectly hedge the example explained.

                      The old rental agreements do not have any consideration because as per law the tenants own the property. And the original landlords are not even collecting the miniscule rent.


                      “Rahil tyascha Ghar aani kasale tyachi Jamin”

                      khb,

                      You forgot the issue of a minimum 5% annual increase in rentals normally asked for. Besides, due to the 11 month lease agreements, this gives owners excuse to bump up the deposits annually too, which, given 10 month deposits now-a-days could bump up cash requirement every year substantially!

                      Include interest requirements to add additional capital at end of year for deposit top-up as well as additional capital requirement for higher interest as well as paying tax on interest earned and you will get a much higher appraisal price.

                      Besides, if you add the annual 6-8% increase in price of property, this could further bump up Appraisal value. I'm sure there are other hidden items that bump up appraisal value in the real world.

                      But good approach to appraisal value.

                      cheers

                      Comment

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