Announcement

Collapse
No announcement yet.

Mathematics on Pricing of Land

Collapse
X
Collapse

Mathematics on Pricing of Land

Last updated: August 5 2009
132 | Posts
  • Time
  • Show
Clear All
new posts
  • #71

    #71

    Re : Mathematics on Pricing of Land

    Dear friend,

    I am not talking of loans like Rs. 50 lakhs or 60 lakhs. It can be Rs. 30 lakhs or less only. A fairly decent 3 bed flat is available in good locality for around Rs. 40 lakhs or below. Due to higher margin money, one may have to shell out Rs. 10 lakhs by self which normally a 27+ year would have saved in his last 4+ years alongwith his better half also in job for the last 2 years or so. It is true that job security is not like what it was earlier, but those with 4+ years experience in IT will be able to find some job or the other or continue in the same company with very less increase or no increase or even with some wage cut. Instead of wage cut, many companies plan now for increased work hours of about 1 or 1.5 hrs. extra per day. This is the time i.e., about 27+ years of age, one should go in for his dream house within his capacity and capability to manage the loan jointly with his wife, as waiting for some more years may not help as they will have to take care of their kids costly education etc. by then. Fearing the so called " collapse " or " likely job loss " etc. may make him go into his shelter and possibly delay his house dream for years, ultimately after some years, say 5+ years, and then feel/regret that he should have done it 5 years ago etc. Of course, this is for house/flat for personal use and not for pure investment purpose.

    ks2071746

    Comment

    • #72

      #72

      Re : Mathematics on Pricing of Land

      Originally posted by ks2071746 View Post
      Dear friend,

      I am not talking of loans like Rs. 50 lakhs or 60 lakhs. It can be Rs. 30 lakhs or less only. A fairly decent 3 bed flat is available in good locality for around Rs. 40 lakhs or below. Due to higher margin money, one may have to shell out Rs. 10 lakhs by self which normally a 27+ year would have saved in his last 4+ years alongwith his better half also in job for the last 2 years or so. It is true that job security is not like what it was earlier, but those with 4+ years experience in IT will be able to find some job or the other or continue in the same company with very less increase or no increase or even with some wage cut. Instead of wage cut, many companies plan now for increased work hours of about 1 or 1.5 hrs. extra per day. This is the time i.e., about 27+ years of age, one should go in for his dream house within his capacity and capability to manage the loan jointly with his wife, as waiting for some more years may not help as they will have to take care of their kids costly education etc. by then. Fearing the so called " collapse " or " likely job loss " etc. may make him go into his shelter and possibly delay his house dream for years, ultimately after some years, say 5+ years, and then feel/regret that he should have done it 5 years ago etc. Of course, this is for house/flat for personal use and not for pure investment purpose.

      ks2071746
      Dear KS,
      Timing the entry in to RE is very important particularly in this once in a lifetime economic crisis because if you get it wrong you could easily lose 20-50% of your money invested even if it is for personal use.

      People who had invested in stock thinking 12000 as bottom for sen had lost 35% of their investment and this can happen in RE also and dont forget already 45 percent of the world's wealth has been destroyed by the global credit crisis.

      Comment

      • #73

        #73

        Re : Mathematics on Pricing of Land

        Originally posted by ks2071746 View Post
        Dear friend,

        I am not talking of loans like Rs. 50 lakhs or 60 lakhs. It can be Rs. 30 lakhs or less only. A fairly decent 3 bed flat is available in good locality for around Rs. 40 lakhs or below. Due to higher margin money, one may have to shell out Rs. 10 lakhs by self which normally a 27+ year would have saved in his last 4+ years alongwith his better half also in job for the last 2 years or so. It is true that job security is not like what it was earlier, but those with 4+ years experience in IT will be able to find some job or the other or continue in the same company with very less increase or no increase or even with some wage cut. Instead of wage cut, many companies plan now for increased work hours of about 1 or 1.5 hrs. extra per day. This is the time i.e., about 27+ years of age, one should go in for his dream house within his capacity and capability to manage the loan jointly with his wife, as waiting for some more years may not help as they will have to take care of their kids costly education etc. by then. Fearing the so called " collapse " or " likely job loss " etc. may make him go into his shelter and possibly delay his house dream for years, ultimately after some years, say 5+ years, and then feel/regret that he should have done it 5 years ago etc. Of course, this is for house/flat for personal use and not for pure investment purpose.

        ks2071746
        Look this news. Will any one from IT will dare to take loans now to RE

        TCS raises performance bar
        Shanthi Kannan
        Freezes hiring of experienced professionals
        Promotions for current year deferred
        CHENNAI: Tata Consultancy Services (TCS), the biggest Indian IT major, has decided to tighten its belt. In this process, it has frozen the recruitment of experienced professionals unless they are approved by the respective business heads for project-specific skills. Wherever possible, it will re-train experienced professionals within the company to take on these roles.

        On the offshore movement, it has pointed out that though in the current context, increasing its offshore leverage was a win-win situation for customers and the organisation alike. This will result in offshore movement of people who are now located on-site. Similarly, promotions for the current fiscal year have also been deferred, as was done last year. With current uncertainties, the deferment continues for now.

        The company has finally asked the operating units to raise the performance bar and utilise resources in a most effective manner. The process for undertaking this is a detailed one and will result in some involuntary attrition. The company is helping these employees with out-placement, counselling, alternative positions in subsidiaries, if available, or a fair exit.
        As part of optimisation, route rationalisation in transportation has also been looked in to. These measures were stated in a recent circular issued by the company’s higher officials to its employees.

        TCS has decided to take these measures with immediate effect to ensure that the company is well-equipped to deal with the sharp contraction in global economic activity. It is also stated that the company has taken these steps to mitigate the risks emerging from the current economic slowdown and uncertainties.

        Operational efficiency
        Most TCS customers have started feeling the pain of the slowdown and are looking to extract maximum efficiencies from their reduced IT budget. In this context, it needs to work on bringing in greater operational efficiencies across the organisation by conserving and controlling costs.

        At the same time, it wants to continue to invest in people, technology and training to ensure that it can adequately respond when the economy does turnaround.

        Though TCS has come forward with these announcements, there are other IT companies, which are quietly issuing pink slips to their employees based on their performance.
        Many firms have cut down the strength of employees on-site, while some have even sent out the employees waiting in the bench.

        This economic slowdown will act as a correction methodology for many IT companies.

        They will re-look at the factors such as quality, pricing, efficiency, productivity and delivery in a more stringent way. Similarly, the industry which went on recruiting heavily during the boom period, now adopts go slow tactics.

        ="http://www.hindu.com/2009/03/11/stories/2009031151351600.htm"]http://www.hindu.com/2009/03/11/stories/2009031151351600.htm[/URL]

        Comment

        • #74

          #74

          Re : Mathematics on Pricing of Land

          Dear friend,

          This is 1 % of TCS staff strength and from the last 5% in the performance ladder at the bottom, and may also be from the bench. This 1% or 5% or even 20% may not make a very big difference. But out of the the other 80 or 95 %, atleast a portion of that would like to make use of the current downtrend to their dream flat for personal use, may not be for investment as the current opportunity of downtrend in prices and banks ready to loan under the reducing ROI regime etc. may induce people to select and go for their flats.

          ks2071746

          Comment

          • #75

            #75

            Re : Mathematics on Pricing of Land

            Originally posted by ks2071746 View Post
            Dear friend,

            I am not talking of loans like Rs. 50 lakhs or 60 lakhs. It can be Rs. 30 lakhs or less only. A fairly decent 3 bed flat is available in good locality for around Rs. 40 lakhs or below. Due to higher margin money, one may have to shell out Rs. 10 lakhs by self which normally a 27+ year would have saved in his last 4+ years alongwith his better half also in job for the last 2 years or so. It is true that job security is not like what it was earlier, but those with 4+ years experience in IT will be able to find some job or the other or continue in the same company with very less increase or no increase or even with some wage cut. Instead of wage cut, many companies plan now for increased work hours of about 1 or 1.5 hrs. extra per day. This is the time i.e., about 27+ years of age, one should go in for his dream house within his capacity and capability to manage the loan jointly with his wife, as waiting for some more years may not help as they will have to take care of their kids costly education etc. by then. Fearing the so called " collapse " or " likely job loss " etc. may make him go into his shelter and possibly delay his house dream for years, ultimately after some years, say 5+ years, and then feel/regret that he should have done it 5 years ago etc. Of course, this is for house/flat for personal use and not for pure investment purpose.

            ks2071746
            I agree with you that to reap full benefits of leveraging, one has to enter early when taking loan.

            The earlier the age, The longer is the tenure for repayment and higher is the eligible loan amount.

            While, planning out a investment portfolio one should plan only taking their own money.The money they have saved and what they are hoping to earn.Even if its for self use, When taking a bank loan it should be considered on par with any other investment.

            The additional income from spouse and other sources should be only part of the contingency measures and for cushioning.

            Confusing both would lead to unknowingly over exerting your capacity and putting yourself in high risk.

            Are husband wife going for joint loan?then its different.Both people's repaying capacity is taken into account.

            There may always arise a situation where one of the partner would want to take a break to look after other priorities in life, quit the job and want to start a business etc.

            Investments should be planned in a way so that one shouldnt feel handicapped by their liabilities.

            Planning 25-30% of your take home salary for EMI for a short tenure loan is the best way according to me.Even if its conservative and would mean less returns.It will make it easy to manage the EMI even if there is a salary cut/job loss or any other difficulties.

            Its better not to take the complete eligible loan amount and entire tenure of 20 years that the bank offers.

            Take loans only based on your needs and individual repaying capacity not how much you are eligible for now.
            Last edited March 11 2009, 04:46 PM.

            Comment

            • #76

              #76

              Re : Mathematics on Pricing of Land

              Originally posted by Nataraajg007 View Post
              In chennai, mots of the ads are being repeated with no takers.

              The reason is simple. People are loosing jobs/promotions.increments.

              No cash.

              Hence naturally RE is collapsing
              Hey, you are writing here like a madman, trying to impersonate my id and you are talking about repetitive advertisements. So many on this board have asked you to bugger off and you dont. If getting an idiot like you out of sight is so difficult then to sell RE takes time. So dont use that as a reason for your imaginary view that RE prices are falling you idiot.

              Comment

              • #77

                #77

                Re : Mathematics on Pricing of Land

                Originally posted by ks2071746 View Post
                Dear friend,

                Jobs are a little difficult now for those with less than 2 years of experience in IT field. I have referred to those of about 27 + years of age, who will have atleast 3 or 4 years of experience who can somehow manage to be in some IT job or the other with even Rs. 30,000+ pm type of take home pay and with his spouse also with atleast 2+ or 3 years experience can supplement with another Rs. 20000 + a month atleast. it will not be easy for the initial period of 2 or 3 years to manage the family within what remains after the EMI, but it is to be managed and possible though difficult in today's situation. 15 years back, when I went in for a flat of about 850 sq. ft. at Saidapet, costing Rs. 7.5 lakhs then, I managed to put in about Rs. 3.0 lakhs out of my savings/Provident Fund withdrawals and a house loan of Rs. 4.5 lakhs from HDFC at a whopping 16 % ROI. The EMI was coming to Rs. 7700 PM and my take home salary was then less than Rs. 10,000 with a son going to school, of course living in company township with a low rent of Rs. 300 PM. It was Himalayan efforts initially, but we did manage. The ROI has come down later to almost 8.5% progressively in another 7 years time and the loan was fully paid of 2 years back. I was the only breadwinner in the house and we did manage somehow. Unless some risk is taken and the couple manage, ing a flat any time will look most difficult and at times impossible. I feel, one should not only look into what income comes in today but also what can be the income possible in the coming years till the loan repayment. Afterall, the so called dull economy may reverse after 2 or 3 years and it may be flourishing again. Regards.

                ks2071746:p
                I think what you did 15 years ago is crazy. You were so desperate KS to get a house I suspect. 7700 out of 10K towards housing loan is dangerous. However you had one stuff safe. YOUR JOB WAS ALMOST 100% SAFE IN THOSE DAYS.
                Today that is not true, so if one loses a job he is in trouble.
                However dont take the above to mean I am bearish. Not one bit. The fact is for the first time Indian middle class learnt what is money (2003 to 2008) and what is firing (2008 onwards). Not many other than folks in top IT firms and in Mgmt consultancy had seen job losses and pink slips before 2003. Those guys were top guys who picked another job the next week after taking a fantastic exit package!
                Now if job losses in India really becomes large then I will agree with the bear point to some extent. However the fact is when just 5% jobs are gone, who cares! Even 20% is nothing as most of these are anyway useless guys, or in your words the freshies who anyway were worthless from damn it colleges (ask Wiseman for his degree and he will squeam!!).
                So in essence if job losses really become biggggg then there will be a liquidity issue. I dont seem to see that happen ONE BIT. Hence I tend to believe we are actually in for another big bull run in RE.
                (Read my new post in a few min from now on PROF FEES).

                Comment

                • #78

                  #78

                  Re : Mathematics on Pricing of Land

                  Originally posted by badrig View Post
                  People have herd mentality. they tend to realise the gravity of the problem only after it is too late to do anything. when all are ing RE one also gets carried away & gets into debt trap for 25 to 30 years . debt is very sharp edged sword. people will surely bleed by the cuts of debt sword
                  People who take loans will bleed especially the 99% who did not know what a loan is. Those who dont realise that in a 20 year loan after 10 years you probably paid only 5% of the loan deserve to bleed anyway!

                  Comment

                  • #79

                    #79

                    Re : Mathematics on Pricing of Land

                    Originally posted by ks2071746 View Post
                    Dear friend,

                    I am not talking of loans like Rs. 50 lakhs or 60 lakhs. It can be Rs. 30 lakhs or less only. A fairly decent 3 bed flat is available in good locality for around Rs. 40 lakhs or below. Due to higher margin money, one may have to shell out Rs. 10 lakhs by self which normally a 27+ year would have saved in his last 4+ years alongwith his better half also in job for the last 2 years or so. It is true that job security is not like what it was earlier, but those with 4+ years experience in IT will be able to find some job or the other or continue in the same company with very less increase or no increase or even with some wage cut. Instead of wage cut, many companies plan now for increased work hours of about 1 or 1.5 hrs. extra per day. This is the time i.e., about 27+ years of age, one should go in for his dream house within his capacity and capability to manage the loan jointly with his wife, as waiting for some more years may not help as they will have to take care of their kids costly education etc. by then. Fearing the so called " collapse " or " likely job loss " etc. may make him go into his shelter and possibly delay his house dream for years, ultimately after some years, say 5+ years, and then feel/regret that he should have done it 5 years ago etc. Of course, this is for house/flat for personal use and not for pure investment purpose.

                    ks2071746
                    BTW, KS, there are so many divorces happening nowadays that if you a joint loan with a wife who becomes EX WIFE then you really will be in pits! Just my 2cents worth!

                    Comment

                    • #80

                      #80

                      Re : Mathematics on Pricing of Land

                      NOW FOR THE PROFESSOR AND HIS FEES. I noticed in Hindu a advt by Sastra University (god save the number of universities in this country!!) for jobs. A Senior Prof (well these designations are funny) gets upto 75K p.m. and if you add the rest it will be 110K p.m.
                      Now a professor in IIT (max position in IIT is prof and dont argue about dean and director..dean is only a designated post and offered to a professor and adds some small carrots... dean is not a permanent post in IITs!) in 2004 was only getting Rs 40K all put together.
                      If College Professors can get a cool deal then I dont find a reason to think that jobs are not there!!
                      The asst Prof there will get around 30K in this univ, the lowest pay scale mentioned in the advt.
                      So in todays world a job of 4L p.a. is PEANUTS, not that I consider it that way. Well in late 1980s the Prof in IIT was getting around Rs 4K and the best SW guys (like me) got the same at entry level! So nothing has changed but for a cipher in the back. So if a flat cost then 2L now it costs 20L.
                      Well well, you might say what? That is true in Bangalore but with archaic FSI rules in Chennai it costs 40L. So how does that matter to me?
                      In summary RE has not really gone up so much as imagined. Salaries have actually gone up a lot and so RE has been pushed up. Ofcourse many who have suddenly seen 20K salary think that they are super rich and deserve a flat in Adayar. Well a 2K salary guy in my times might have had a tough time ing a flat (I mean in 1980s). The same hold good now. And if you see KS example with 10K sal 15 years ago (which will be in my view about 80 to 100K today's equivalent) he just managed a 800+sqft flat.
                      Today's guys want a 1500sqft flat. So they are doing what they should not. THat is their problem. However RE especially in terms of Land price has just managed to outperform the inflationary salary rises. No more.
                      And if you think you will lose your job, think clearly. Were you worth the job in the first place!

                      Comment

                      Tags: mathematics
                      Have any questions or thoughts about this?
                      Working...
                      X