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Why Do Intelligent People make wierd Real Estate Decisions

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Why Do Intelligent People make wierd Real Estate Decisions

Last updated: April 23 2012
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  • Why Do Intelligent People make wierd Real Estate Decisions

    Hi All I have been a member of this forum for quite some time now and have observed some very interesting trends in real estate which are reflective of our general life fundamentals. We are the coke loving, Levi's wearing generation who like everything to be handed out on a platter. Common examples are when people post one line in a forum "Any idea about XYZ project or builder." If you have interest in a project then at least call them ask for rates, view site plan of the web site and post your thoughts. We are like sheep in most cases following the latest trends and being fooled by marketing honchos who get paid in lakhs to fool us. Some common observations I made are given below.

    Having Houses close of Offices: We have been led to believe the having houses near IT parks, office complexes, is very good so these areas should be highly priced. You spend 8-10 hours in office and the rest at home. So home is typically a place where you relax and spend quality time with family. Thats what you work so hard for. Your child should be able to play around your house without fear of excessive traffic, pollution, noise, etc. All these factors are negated when you buy houses near major office destinations. You have to satisfy with an 10 X 10 garden with one swing where everyone can play. Unless its like Magarpatta which has been planned well its not worth paying so much to live close to your office. I am scared of what will happen in Wakad. One narrow road which cannot be extended will lead to Hinjewadi Phase 1,2, and 3. The traffic, strain, and noise on the road will be tremendous.

    Buying Houses Based on Assumed Appreciation:: Most property dealers tell us we will get great value for houses when we sell them years later. What about its value today? Most builders use this tactic to cover up lack of basic amenities near their projects today. Kharadi and Wagholi are prime examples. Builders are signing at prime rates without basic amenities while they promise the world in future. Kharadi, does not have water, roads are yet to be build, no street lights yet beefed up rates because its close to where your office could be, and it will have tremendous appreicataion in future . Houses in Kharadi and Wagholi houses should be bought on what they are today rather than what it could be 10 years down the line. If you want to buy it for the future rate should be justifiable around 2000 maximum. I have nothing against Kharadi, Wagholi, Hinjwadi etc, but i just want to emphasize that buy the house for a right reason, and not on trends, false promises and market jargon.

    Paying tons of money for useless amenities I see so many people asking for houses with standard amenities such as swimming pool, gym, club house etc. The quality of such amenities is pathetic and we end up paying prime rates for them. Take my own example. I have paid for 1400 sqft where my carpet and terrace area is 1100 sqft. At 2400 per sqft i have paid Rs 7 Lakh extra to builder for things i may not use for most of my life. I could have paid the same amount to the best health club in Pune for lifetime family membership with facilities such as large size pool, tennis, SPA, etc. Builders make tons of profit from such ventures and we do not use most of these sub standard facilities. I loved the house and had no choice but to buy it for personal reasons. Also all builders give these amenities now, so you cannot do much. All I am saying is that dont let builder con you into the belief that he is doing a favor on you by giving you such things. You are paying big bucks for it.

    Treating Real Estate as an Investment: I have observed only two kinds of people make money in real estate. The first kind of people are those who are plainly lucky. 99% people come in this category. No one knew, Pune was going to go bang like this. So guyz who had been living here and following parental advice about buying houses have made their money. This trend has started and should finish now. The current rates make it foolish to consider real estate investment. Remember the US market slump did not lead to real estate slump. Excessive inflation in real estate prices was one of the reasons why the market fell. India has gone through its growth phase and now we will see the stabalization. Some Tier 2 cities will grow like Pune but Pune has seen the 100% appreciation. Its totally foolish to expect another 100% jump. The second type of people who make money on real estate are ones who do not follow trends and do lot of research to invest in real estate. These people did not follow trends but relied and solid research and instinct and had a very good idea about how changes impact real estate and economy. It better to learn about the financial management and then decide where you want to invest your money. Avoid investing everyone around you does it.

    Buying houses with exorbitant finishing because builder provided Italian, Spanish finishing. Builders are trying to sell houses at not so good localities and pricing them at exorbitant prices because flashy interiors. One walk in Home Town in Ishaniya should dispel the myth. Great flooring, awesome bathrooms, amazing doors, will cost you 10L at the maximum. Thats when you buy the best available in the market and own a decent sized 3 BHK. When you compare this to difference in rates the difference is startling. Normal project cost upto Rs 15-20L lesser and the quality of stuff in the posh house is not even half of what you can buy for 10L you are spending. In most cases the location determines the price and thats how it should be. Better for buy a 3 BHK in a decent locality and spend some money on it to develop it.
    Sorry if I was too preach but I hate the fact that intelligent people who do awesomely well in life can make some foolish decisions in real estate.
  • #2

    #2

    Re : Why Do Intelligent People make wierd Real Estate Decisions

    Originally posted by akssenti View Post
    Hi All I have been a member of this forum for quite some time now and have observed some very interesting trends in real estate which are reflective of our general life fundamentals. We are the coke loving, Levi's wearing generation who like everything to be handed out on a platter. Common examples are when people post one line in a forum "Any idea about XYZ project or builder." If you have interest in a project then at least call them ask for rates, view site plan of the web site and post your thoughts. We are like sheep in most cases following the latest trends and being fooled by marketing honchos who get paid in lakhs to fool us. Some common observations I made are given below.

    Having Houses close of Offices: We have been led to believe the having houses near IT parks, office complexes, is very good so these areas should be highly priced. You spend 8-10 hours in office and the rest at home. So home is typically a place where you relax and spend quality time with family. Thats what you work so hard for. Your child should be able to play around your house without fear of excessive traffic, pollution, noise, etc. All these factors are negated when you buy houses near major office destinations. You have to satisfy with an 10 X 10 garden with one swing where everyone can play. Unless its like Magarpatta which has been planned well its not worth paying so much to live close to your office. I am scared of what will happen in Wakad. One narrow road which cannot be extended will lead to Hinjewadi Phase 1,2, and 3. The traffic, strain, and noise on the road will be tremendous.

    Buying Houses Based on Assumed Appreciation:: Most property dealers tell us we will get great value for houses when we sell them years later. What about its value today? Most builders use this tactic to cover up lack of basic amenities near their projects today. Kharadi and Wagholi are prime examples. Builders are signing at prime rates without basic amenities while they promise the world in future. Kharadi, does not have water, roads are yet to be build, no street lights yet beefed up rates because its close to where your office could be, and it will have tremendous appreicataion in future . Houses in Kharadi and Wagholi houses should be bought on what they are today rather than what it could be 10 years down the line. If you want to buy it for the future rate should be justifiable around 2000 maximum. I have nothing against Kharadi, Wagholi, Hinjwadi etc, but i just want to emphasize that buy the house for a right reason, and not on trends, false promises and market jargon.

    Paying tons of money for useless amenities I see so many people asking for houses with standard amenities such as swimming pool, gym, club house etc. The quality of such amenities is pathetic and we end up paying prime rates for them. Take my own example. I have paid for 1400 sqft where my carpet and terrace area is 1100 sqft. At 2400 per sqft i have paid Rs 7 Lakh extra to builder for things i may not use for most of my life. I could have paid the same amount to the best health club in Pune for lifetime family membership with facilities such as large size pool, tennis, SPA, etc. Builders make tons of profit from such ventures and we do not use most of these sub standard facilities. I loved the house and had no choice but to buy it for personal reasons. Also all builders give these amenities now, so you cannot do much. All I am saying is that dont let builder con you into the belief that he is doing a favor on you by giving you such things. You are paying big bucks for it.

    Treating Real Estate as an Investment: I have observed only two kinds of people make money in real estate. The first kind of people are those who are plainly lucky. 99% people come in this category. No one knew, Pune was going to go bang like this. So guyz who had been living here and following parental advice about buying houses have made their money. This trend has started and should finish now. The current rates make it foolish to consider real estate investment. Remember the US market slump did not lead to real estate slump. Excessive inflation in real estate prices was one of the reasons why the market fell. India has gone through its growth phase and now we will see the stabalization. Some Tier 2 cities will grow like Pune but Pune has seen the 100% appreciation. Its totally foolish to expect another 100% jump. The second type of people who make money on real estate are ones who do not follow trends and do lot of research to invest in real estate. These people did not follow trends but relied and solid research and instinct and had a very good idea about how changes impact real estate and economy. It better to learn about the financial management and then decide where you want to invest your money. Avoid investing everyone around you does it.

    Buying houses with exorbitant finishing because builder provided Italian, Spanish finishing. Builders are trying to sell houses at not so good localities and pricing them at exorbitant prices because flashy interiors. One walk in Home Town in Ishaniya should dispel the myth. Great flooring, awesome bathrooms, amazing doors, will cost you 10L at the maximum. Thats when you buy the best available in the market and own a decent sized 3 BHK. When you compare this to difference in rates the difference is startling. Normal project cost upto Rs 15-20L lesser and the quality of stuff in the posh house is not even half of what you can buy for 10L you are spending. In most cases the location determines the price and thats how it should be. Better for buy a 3 BHK in a decent locality and spend some money on it to develop it.
    Sorry if I was too preach but I hate the fact that intelligent people who do awesomely well in life can make some foolish decisions in real estate.
    will edit this if moderators are kind enough to let me post it.

    Comment

    • #3

      #3

      Re : Why Do Intelligent People make wierd Real Estate Decisions

      god bless moderators. they let me post this message after i tried 17 times. i have never felt more elated.

      anyway, i agree with all the points except one. the first one. people like to stay near their offices only because of poor traffic conditions. pune needs a ring road with three lanes on each side. some people who drive their own vehicles to office may want to save money on gas and that could be one reason why they want to stay near their offices but i think that percentage is quite low.
      Last edited by Vinod Gupte; July 31 2009, 01:23 PM.

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      • #4

        #4

        Re : Why Do Intelligent People make wierd Real Estate Decisions

        good work keep it up .this anlyasis is based on lot of inputs . but as u said resons beyond our control make us buy the houses that r offered in the markets.
        do keep posting such things so that people like can think clearly while taking investment decisions
        thanks once again

        Comment

        • #5

          #5

          Re : Why Do Intelligent People make wierd Real Estate Decisions

          Anticipate future trends/directions as well ...

          While I agree that commute to office is a major time waster, there is a growing trend to tele-commute. For example, I only commute to office 2 days in a week (and whenever there is a need otherwise). Rest of time its telecommute. Today, wherever possible (except in factory environments) telecommuting is a growing trend which may make it big especially when petrol goes to Rs100 per litre.

          I do agree about the unnecessary finish section. You see this in every product segment when the prermium asked for exceeds certain limits (and the basic functionality, , has reached some maturity). For example, high-end cell makers realise they cannot ask for 40000 when other cell s work equally well at Rs.6000. So they bring in music, games and pictures to get you to focus in an entirely wrong direction.

          So, you have Ads with super-heroes jumping from rooftop to rooftop (and possibly breaking the Olympic and World long-and-high jump records in the process) in their business suits painting pictures, jigging to rap and beating schumacher all together with ... the latest 50k cell-cum-musicsystem-cum-camera-cum-pda-cum-blahblah.

          The best part of it is, people wo buy this stuff are so crowded for time, all they do with this magic gizmo is make calls!!! Just like all the guys who buy those apartments do is simply live in them!

          cheers

          Comment

          • #6

            #6

            Re : Why Do Intelligent People make wierd Real Estate Decisions

            Originally posted by Vinod Gupte View Post
            god bless moderators. they let me post this message after i tried 17 times. i have never felt more elated.

            anyway, i agree with all the points except one. the first one. people like to stay near their offices only because of poor traffic conditions. pune needs a ring road with three lanes on each side. some people who drive their own vehicles to office may want to save money on gas and that could be one reason why they want to stay near their offices but i think that percentage is quite low.
            Hey Vinod

            I agree your with your point about travel time. My idea is to always measure the advantage with the cost. If I have to travel an hour to office.. its fine by me as long as my family gets all the advantages like homely environment and less noise and pollution.
            Also one can always use the cars stereo to listen to some nice audio books and songs and other stuff. Once i come home i hate to hear too much noise. This is a rather personal opinions and is bound to vary from one person to the other.

            Comment

            • #7

              #7

              Re : Why Do Intelligent People make wierd Real Estate Decisions

              Originally posted by akssenti View Post
              Hey Vinod

              I agree your with your point about travel time. My idea is to always measure the advantage with the cost. If I have to travel an hour to office.. its fine by me as long as my family gets all the advantages like homely environment and less noise and pollution.
              Also one can always use the cars stereo to listen to some nice audio books and songs and other stuff. Once i come home i hate to hear too much noise. This is a rather personal opinions and is bound to vary from one person to the other.
              You are rite Akssenti, people who are coming from Viman Nagar, kharadi, Vishrantwadi etc get more advantage then staying nearby area's to hinjewadi. They leave for home early as they come from a distance & no1 bothers them too. They feel home once they are left for home as those areas are quiet secluded and more peaceful in nature. When people can spend 2-3 hrs each side commuting in Mumbai, why we punekar's believ commuting even 1/2-1 hr is a pain ???

              Comment

              • #8

                #8

                Re : Why Do Intelligent People make wierd Real Estate Decisions

                Originally posted by akssenti View Post
                Hi All I have been a member of this forum for quite some time now and have observed some very interesting trends in real estate which are reflective of our general life fundamentals. We are the coke loving, Levi's wearing generation who like everything to be handed out on a platter. Common examples are when people post one line in a forum "Any idea about XYZ project or builder." If you have interest in a project then at least call them ask for rates, view site plan of the web site and post your thoughts. We are like sheep in most cases following the latest trends and being fooled by marketing honchos who get paid in lakhs to fool us. Some common observations I made are given below.

                Having Houses close of Offices:

                Buying Houses Based on Assumed Appreciation::
                Paying tons of money for useless amenities
                Treating Real Estate as an Investment:

                Buying houses with exorbitant finishing because builder provided Italian, Spanish finishing.
                Nice to see your artical as you have touched so many points. I think everyone will agree with you including me. But I think I am agree because of reason which is recession and current situation.
                My views are.
                1) If office is near house you can just walk to office , save time, save pretol , save money and environment.
                2) Amenities : Please choose which you are interested for. I use my society Gym but to join any club Gym I need to travel use car (parking issue ?). Childers in our society use swimming pool. They can't go to swimming club as they need to travel with parents and all have to waste time.
                3) finishing and other amenities :- No need actually. I will prefer to buy and arrange as per my choice.
                4) Real estate as an investment :- Big question ? I agree you need to be lucky.

                My view is buy what you need and what you can afford.

                Comment

                • #9

                  #9

                  Re : Why Do Intelligent People make wierd Real Estate Decisions

                  Good one.

                  Good post Aks.

                  I have gym, swimmig pool etc. in the complex where I live in right now. However, I don't use these feature because:-

                  Concerned about water at such swimming pools. Personally, I feel that swimming pools should be in a private domain though many would consider it as a luxury.

                  Gym:- I go to professional gym with good equipments. If your are addicted to professional clubs, you will find the gym given by builder useless. No ellipticals, treadmills (even if they have, it is of poor nature), no big TVs for fun during exercise, poor maintenance once society is formed, lack of enthusiasm with locals (as gyms members have some goal & feel motivated). The petrol spent is worth as you gain health, & health is wealth, isn't it? How many of us walk for over 3km/day?

                  Distance:- I like the US concept of living in countryside & traveling to work. Feels peaceful once inside the house. Why should the entire family pay for your reduced traveling time? Anyways, I may be biased as I travel on highways frequently for work & cloak some times more than 500km/day. So, daily travel of even 20km is no big issue for me, provided I don't have to travel from say Baner to Kalyaninagar. Hey, what is the rate/hour for choppers?

                  Instead of staying in prime areas, I would buy better & bigger house in the outskirts & hire a chauffeur for my car in the money which is saved just by not staying in prime localities. One can hear music & play with Crackberry!!

                  The biggest trick the builders play:-

                  Calling a HOUSE A HOME. It is you & your family which makes house a home, isn't it & home is where heart is, & my heart is at outskirts!
                  If you are happy, you are successful.

                  Comment

                  • #10

                    #10

                    Re : Why Do Intelligent People make wierd Real Estate Decisions

                    some good thoughts in the thread.

                    well, one need to have a lot of maturity to reach to a level where he can decide whats the best suitable place to live a happy life. The whole family need to be mature enough to choose a countryside for their home, its not easy to decide such things in a set-up like India. I personally have thought of many such things, but there are real challenges.

                    First, one need to clearly understand what are the current problems in city-life. Articulating this problem clearly from a high level provides an opportunity to think about a solution. If the whole family understands and believes in that complete problem defenition, then a solution can be arrived at. And though money cannot buy happiness, its essential for making such decisions. Even then, infrastructure, society, culture and many other reasons does not allow us to have such an option of a countryside living with driving long for work in India.

                    The closest I have seen is one of my friends in Kerala living in a beautiful hilly village area and driving for 2 hours to work in Kochi. He works from home 2 times a week.

                    >> Why Do Intelligent People make wierd Real Estate Decisions

                    going back to the subject of the thread, we need to answer ourselves a question "whats the best I can get out of life in a city?". The answer is different for different folks. For some guys buying a house with all the bells and whistles mentioned in the original thread as amenties provide lots of bliss. And they deserve the right to enjoy that.

                    Life is not about making every decision right as per the dictionaries and bibles. Its about enjoying what you are passionate about while following some basic rules of thumb which will make sure you dont fall into bigger pits. So the intelligent folks are not really making any weird decisions ;-)
                    And importantly its also about whether your family perceives those things right, and you are able to make them happy. I repeat that again, doing things in a syntactically correct way may not make your spouse and family happy, it may need all the bells and whistles which you may not want but others around you might need.

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