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Better ROI within 1 year - Seek advice on 2 Options!

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Better ROI within 1 year - Seek advice on 2 Options!

Last updated: March 30 2012
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  • Better ROI within 1 year - Seek advice on 2 Options!

    Dear Friends,

    Please advice on these 2 Investment for which shud to adopt for the frame of 1 year :

    1) Whether to buy Residential Land and keep it for 1 Year ? - Pure Investment

    2) Buy Residential Land and build 4 floors while collaborating with builder ( giving him 1 floor ) and rest 3 floors sale once constructed within a year.

    In which scenario i can make more profits for a time frame of 1 year..

    Pls suggest..

    Regds
    GM

    Sent from my GT-I9001
    Last edited March 26 2012, 03:18 PM.
  • #2

    #2

    Re : Better ROI within 1 year - Seek advice on 2 Options!

    Originally posted by GauravMarwah View Post
    Dear Friends,

    Please advice on these 2 Investment for which shud to adopt for the frame of 1 year :

    1) Whether to buy Residential Land and keep it for 1 Year ? - Pure Investment

    2) Buy Residential Land and build 4 floors while collaborating with builder ( giving him 1 floor ) and rest 3 floors sale once constructed within a year.

    In which scenario i can make more profits for a time frame of 1 year..

    Pls suggest..

    Regds
    GM

    Sent from my GT-I9001
    Dear GauravMarwah,

    Frankly, none of these options sound good for a short investment span of just 1 year and below are my reasons :

    OPTION 1
    1 year is too short for any land to appreciate to its potential and hence option 1 may not be the best way to invest our money unless you can hold the investment for atleast 2 to 3 years at the minimum to get the max possible returns.

    OPTION 2
    Usually when a builder does a JV (which is what you intend to do in this case), the property would be split in a ratio of 40 : 60 (40 to the landlord and 60 to the builder) and in some cases 60 : 40 (60 to landlord and 40 to builder) incase where land is extremely expensive (like in CBD etc).

    You say that out of 4 floors, builder will keep only 1 and rest you will get which makes the ratio 75 : 25 which is very abnormal. If someone is agreeing to settle for such a rate, such a builder would either use sub-standard material or build an unauthorised structure (going beyond the maximum allowed FSI, encroaching on setbacks etc) to make it profitable for him.

    Hence you must rethink on this strategy and proceed with caution after making sure the builder is not cutting corners as ultimately, you will be the one in trouble if the builder goofs up.

    Although both above options are not the best (investing in apartments and flats is the best for a 1 year investment period), I would recommend the second option if you HAVE to choose between the 2 and dont want to look at any other options of investing.

    Cheers.
    Jhashank RCA

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