[shashanka]

I have a basic question which may seem trivial to most well-informed members in this thread, but I'd be grateful for any guide-lines and feedback. I'd like to sell a property in UP and am not getting clarity about how to arrive at a figure for the fair-market value of the property. I have a govt. approved/accredited valuer to give me an evaluation for the current value of the same. The property (a semi-detached row-house) is 27 years old, in good repair and I am the first owner.

I look forward to any suggestions in this regard and thanking all in anticipation.
Regards, Shashanka

[BaCkSeAtDrIVeR]

Fair value for what purpose? Tax / capital gains / wealth tax? Stamp duty? Putting a price tag on I for sale?

[charanreddy]

Hello All,

I am looking at a plot for investment purpose with a budget of ~50 lakhs +/- 5 lakhs and a size of 30x50 or above. A bit of background as I am sure it will come up. I live in a small villa on outskirts of Bangalore ( Sarjapura) which I own - mortagage amount. I invest in SIPs and other investment vehicles on the advice of my financial planner ( Fee only, SEBI registered) , hence please do not go into a tangent on alternative investment strategy. I don’t intend to sell it any time soon and may use it for a house construction in next 4 years or leave it as a site for my retirement / kids life events expenses.

I have checked properties around Sarjapura and can find decent plots at rs 3000 per sqft. Especially close to the muthanallur cross - Chandrapura road. I have also checked near airport road as well. Near IVC road the big developers are quoting close to Rs 4000 per sqft + charges which takes it close to Rs 4300. On the Devanahalli side I am getting plots from medium size developers at around rs 3500 per sqft. My questions :

1) Is investment near IVC road worth it ? Not a whole lot of activity is there but all the big developers (Sobha, Prestige , Salarpuria, Adarsh etc ) are present. there are Uber rich projects (5 - 8 cr per villa ).

2) the Devanahalli side ( near to brigade orchards ) seems better developed and more habitable and I have found decent projects like Dukes Legend Sujay there . Is it a better investment opportunity at 1000 rs less per sqft.

3) Any other area I should consider ?

[digitalnirvana]

Recommendations for good property lawyers in Kolkata please for a relatie which is looking to buy a second hand property. Looking for someone who will vet the property documents, draw up deeds, handle all aspects of registration etc. I'm a renter and have no idea on this topic. Leads appreciated.

[whitewing]

Originally Posted by charanreddy

1) Is investment near IVC road worth it ? Not a whole lot of activity is there but all the big developers (Sobha, Prestige , Salarpuria, Adarsh etc ) are present. there are Uber rich projects (5 - 8 cr per villa ).

I have been hearing of the IVC for some years now. Given the amount of large developers in that area, something is bound to come up (some business park are already open in the proximity - ex the SLK building). But note that apart from the IVC road itself, the other roads are winding roads, abutting the existing villages, with limited scope for expansion. If all the layouts and commercial places get inhabited, it will turn out to be a nightmare to get on to the airport road.

Originally Posted by charanreddy

3) Any other area I should consider ?

consider checking out near Chandapura/Attibelle areas. This area would be close to Hosur, Attibele, Bommasandra and E-City. The KHB properties - Surya City phase 1&2 would be more expensive(due to it being from Govt body), private developer layouts would be in the price range you are looking for.

I suppose water would be and issue in both the above areas.

[mohansrides]

Of late, this thread seems to have more Bangaloreans chiming in. Frankly quite envious of the Bangalore guys. As GTO said in the other thread, houses in Mumbai have reached ridiculous costs.

In the other thread, we are discussing the ever-so-entertaining Mr. Bhargava. Most members there are talking about his quotes within the context of the car business and then concluding that Maruti has lost the plot. That may very well be true. But, all said and done, what Mr. Bhargava is saying sounds too true to me.

A very small 2 bhk costs almost 2 crores in most decent parts of Mumbai; a 3 bhk is 3.2 crores and up. In well-to-do households, my guess is that average household incomes are between 25 lacs and 50 lacs. How on earth are people taking loans for 2 crores and 3 crores on such incomes when they have so many responsibilities?!! What would happen to them, their houses and their families if the earning members lost their jobs?

RERA - This is one talking point that is repeatedly touted as a huge benefit for the buyers and consumers. But, I feel that while RERA may have been intentioned correctly to protect consumers, the biggest benefactors today are the developers and builders. Here is my analysis:

Earlier, UC properties used to cost half that of ready-to-occupy flats. The logic was that one paid a premium for eliminating risk associated with whether the UC property would get finished and handed over on time. But, now UC properties cost the same as ready-to-occupy flats, or they cost more by a significant margin. The difference becomes even more stark if you factor in the fact that you are paying almost in full for a property that you will get maybe in 3 years.

I think this is happening in the following chain of events -

• Builder's engineering team gives him an estimate for finishing construction. Let's say that this is December 2025.
• Now any of us in engineering will realise that the engineering team's estimate already has hefty cushions built in for contingencies. So in our example, the engineers would have actually estimated that they will finish by December 2024. But, they add another year to protect themselves.
• Next the builder's admin team goes to RERA and submits a finish deadline of December 2027 to give themselves even more protection. So, now the actual cushion built in for the builder is 3 full years. So there is very little probability that the builder will miss this deadline.
• Then comes a 3rd layer of protection for the builder. However improbable such delays may be, the builder assumes that he will use up the 3 year cushion that he gave himself and end up missing the RERA deadline in December 2027 by another 6 months or an year. He then proceeds to build the RERA penalties for such infractions into the price of the flat.

So, in the final analysis,

a.) If RERA penalises the builder, then it is the consumers who ended up paying for the builders' mistakes.

b.) In the more probable scenario of the builder not overshooting any RERA deadline, he pockets the penalties that he charged the consumers.

Win Win for him all through.

There is nothing else that would explain the current scenario of sky-rocketing RE prices in a Covid and lockdown battered economy. In any case, I am either clueless and terribly underpaid, or I am right and we are headed off a cliff.

Someone please educate me on this.

[sdp1975]

If I had to buy property in Bangalore to live in ( not for investment ) I'd buy a used one. The advantages are : location, lower rates, possession on Day 1. Most new launches are in far off locations, and in good locations new launches are priced too high. I stay in JP Nagar 7th phase, and here in gated communities from reputed builders the resale rates are anywhere between 6-7K per sft for old apartments. The price varies depending on the age of the building, the builder - tier 1/2 etc. Well constructed buildings can last for many decades without issues - I live in an apartment that's 15 years old. Maintenance needs to be done for lifts and the building of course. Many of the old areas also have Cauvery water supply, far off areas are unlikely to have that.

I suspect that these new launches are getting sold out due to investors, not actual end buyers. The property market is hot now due to normalcy after covid, the 2 year lull due to the pandemic and low home loan rates. High interest rates and inflation could change things though.

[ValarMorghulis]

Explored a few properties this weekend.
1. Sobha Manhattan Towers in Attibele have mad prices even though construction is scheduled to be completed in 2025/26 & it's kinda out of Bangalore.

2. Sobha Sentosa near Varthur lake gets you a 1BHK for the price of a 2BHK in 1. above

Mind==blown

[V.Narayan]

Originally Posted by mohansrides

Of late, this thread seems to have more Bangaloreans chiming in. Frankly quite envious of the Bangalore guys. As GTO said in the other thread, houses in Mumbai have reached ridiculous costs......

Thank you for putting forth a macro picture. I'll share my points on RERA but first some more macro thoughts as I see them. I'll just share a perspective and each reader can draw his or her own conclusions. Two things are growing in India and have continued to grow since 1947 - population of the middle class and disposable income of the middle class. In 75 years both these numbers have grown faster than the GDP growth rate and inflation rate and for the foreseeable future of 30 years, a nuclear war notwithstanding, will continue to grow even faster. So while there might be minor hiccups in the rise in prices of real estate for the 8 to 10 largest cities it is a given. What seems somewhat out of reach today may depending on our circumstances be even more out of reach tomorrow.

In the mid-1980s when as newly weds we booked a flat in Delhi-NCR with a loan from HDFC. It was for ~Rs 7 lakhs i.e. like Rs 70 lakhs today. Our combined take-home despite both working in very good companies was Rs 10,000 like Rs 1 lakh today. So the gap to bridge was 6 years of our combined salary and mind you this was no upper class apartment. A basic 2BHK plus study. But at 28 I was a home owner. If you are trying to buy your first home and have an existing family to support then my advice would be to tone down your expectations and desires. The reason many young people say that our father's built a home despite much smaller real incomes but why is it that we cannot. It is because the last generation kept their ambitions modest. That first house was below our desires in every way including locality but it helped us get going and save on rent outflows. The flows and surges of life very soon took us to bigger and better homes. But if we had stayed with our dream sequence home we'd never have been able to break out.

Post covid there is a surge of house buying as normal flow of demand bottled up for two years is bursting forth in a short time. Some of this will abate in a year but I doubt the real estate tigers will let prices drop in their key markets of the top 10 cities. For those 10 cities the metro can serve as a price dampener as it makes further locations more accessible time & convenience wise and thus open up a larger land area for accommodation.

Where RERA goes the 'build it into the price' may not be as blatant as member @mohanrides put it but directionally it is what builders strive for.

If you don't own a house and are moderately clear as to which city you wish to live in for the next decade then plan it thoughtfully, take a loan and invest.

[adithya.kp]

Great post Narayan Sir. Need some advice. For someone in 40's, what is a comfortable liquid net worth to house price ratio? ( Or say net liquid net worth after reducing the debt taken to fund the house but not adding the self funded amount to net. Because its a house where you live) . For example, if the house price 3 cr and net worth is 12 cr. Ratio will be 4 and net liquid net worth will be 9 cr. (I have used some random values here)
I understand house price/ annual cash flow is a better metric. But that is uncertain due to job loss (salaried), business loss (for businessman), taking break, wanting work for no profit etc.
I know there is no right/answer to this. But wanted to get some general input.

[Axe77]

Originally Posted by adithya.kp

For someone in 40's, what is a comfortable liquid net worth to house price ratio? ( Or say net liquid net worth after reducing the debt taken to fund the house but not adding the self funded amount to net. Because its a house where you live) . For example, if the house price 3 cr and net worth is 12 cr. Ratio will be 4 and net liquid net worth will be 9 cr. (I have used some random values here)
I understand house price/ annual cash flow is a better metric. But that is uncertain due to job loss (salaried), business loss (for businessman), taking break, wanting work for no profit etc.
I know there is no right/answer to this. But wanted to get some general input.

If you dont mind my perspective (conscious its addressed to Mr. Narayan). These matters are very subjective of course and there’s no absolute right or wrong, so I’m just sharing how I would see this from my lens, for whatever its worth.

Assuming you’re factoring being gainfully employed / income earning till 60 years of age, and any liquidity questions are to account for temporary blips in life, I would want at least 12 - 18 months of liquidity to deal with all liabilities associated with the house - EMIs, taxes, whatever needed, over and above other routine expenses that are part of daily life.

In terms of overall net worth analysis, I would personally look at the real estate investment in the debt bucket of the portfolio - i.e. if I have a portfolio approach of 70 equity : 30 debt, I would replace a lop sided amount of debt allocation with the Real Estate (lets call it RE) investment and maybe only partially dipping into equity, since I still believe that over a 6 - 10 year horizon, equity will yield better returns than the RE investment. So I’d carefully calibrate how much I’m putting into the RE. The tricky bit of course is that the home that you are living in is also a consumption item and translates directly to living comfort so you could want to skew that a bit further depending on how secure you are on cash flow continuity as well as upward mobility in terms of your earnings.

Having an upward trajectory view on income is much easier in your 20s and 30s. I feel this gets trickier in late 40s and 50s when you might have potentially plateaued on income earning potential as well as have some threat to redundancy or downward income in the foreseeable future for any number of reasons (for instance, an unexpected health hiccup may require you to take a step back on the professional front resulting in lower income). New jobs are also sometimes harder to find post a certain age and seniority.

So assess the requirement, take stock of your cash flows and weigh the decision accordingly I suppose.

To your example in numbers, a 3 crore investment in the context of a 12 crore net worth sounds fairly sensible and cautious.
To use the cash flow metric as an alternate, personally, at 45 yo, I would want to keep my overall borrowing / capital outflow commitment (like for a house), at any point WELL UNDER one year’s gross income.

[adithya.kp]

Thanks a lot Axe77 for sharing your views. It is useful. I think one should not assume cash flow till 60 ( or even till 50). Also, the house you live in should be treated as an expense and should not be included in the net worth. My question was in that context. The example of 3 cr purchase with a net worth of 12 crore may look sensible in a normal scenario. But not sure with that premise.
On the other hand, I have seen people stretch beyond limits when it comes to housing. One of my friends spent a lot of money for house construction. He had to borrow using high interest personal loans. Within 1 year, he had to sell it due to some financials problems in the family.

[Gaur]

This is to folks in Mumbai.

Need some advice about the future prospects of Goregaon East as an investment destination considering I.T parks in nearby area and upcoming Goregaon-Mulund link road.

Visited a newly launched project there , Arkade Aspire by Arkade builders.
2 and 3bhk apartments.
2bhk starting at around 1.6cr for the smallest unit.

RERA date for project completion is Dec 2025.

Project is walking distance from W.E.Highway (Next to Hub mall) and Goregaon station.
Metro station/Arey road/Oberoi mall in radius of around 1km-1.5km.

Builder is currently running a 0% Stamp duty registration offer as well.

Any insights ?

[sai_ace]

Originally Posted by sdp1975

If I had to buy property in Bangalore to live in ( not for investment ) I'd buy a used one. The advantages are : location, lower rates, possession on Day 1. Most new launches are in far off locations, and in good locations new launches are priced too high. I stay in JP Nagar 7th phase, and here in gated communities from reputed builders the resale rates are anywhere between 6-7K per sft for old apartments. The price varies depending on the age of the building, the builder - tier 1/2 etc. Well constructed buildings can last for many decades without issues - I live in an apartment that's 15 years old. Maintenance needs to be done for lifts and the building of course. Many of the old areas also have Cauvery water supply, far off areas are unlikely to have that.

I suspect that these new launches are getting sold out due to investors, not actual end buyers. The property market is hot now due to normalcy after covid, the 2 year lull due to the pandemic and low home loan rates. High interest rates and inflation could change things though.

I precisely did this. Got a fully furnished house (wardrobes, study, puja, glass cabinets, 2 cots, sofa, modular kitchen with hob) and the house came with two car parks - all this for a 1650sq.ft 3bhk in a 300 unit apartment complex just off Bannerghatta Road. For Comparison Brigade 7 gardens - bare shell was being quoted at 1300/sq.ft more.

[KPR]

Since used property purchase is mentioned, is home loan available for a resold individual house? If yes any limit on loan amount as compared to new construction? Is age of old house a criteria for assessment?