Saturday, September 21, 2013

One good story of someone who tripled his money in 7 years (and made Rs 65 lacs in profit)


In 2006, a friend of mine, working in Saudi Arabia visited us in Bangalore – and invested in a 3 bed room, 2000 sq ft flat in Prestige Shantiniketan  in Whitefield  (http://www.prestigeconstructions.com/shantiniketan-residential/overview.html).
The logic then was that the location is good – IT companies are all around and this property was a large project – 3000 flats, a five star hotel, a mall, a 2 million sq ft office complex and a convention centre– all within the same compound.  Bangalore did not have anything like it then.
That time, the flat was costing appx. Rs 50 lacs – he invested  Rs 10 lacs from his side and took a loan for the remaining amount from HSBC.  His decision was impromptu – he did not come to Bangalore looking for a flat.  But he nevertheless took the call and invested. Did he have Rs 10 lacs? No – how he managed it is another story :-)
Over the next few years, quite a few things happened globally that I do not want to dwell upon. There was also a serious accident in the project site where one of the towers being built just collapsed and that delayed the project by about 2 years – finally in 2010-11 the project was completed.
Now it is a great place to live and work and is a well known address in Whitefield for mid level and senior professionals.
My friend is now looking at selling the property. The flat will go at an estimated Rs. 140 lacs now. Of this Rs. 140 lacs, he will need to repay his 40 lac loan. He will be still left with Rs 100 lacs. The pre emi he has paid over the past 7 years is about 25 lacs.
So his investment of 10 lacs and Rs 25 Lac emi payments over 7 years has given him Rs 100 lacs now - he has tripled his Rs 35 lacs to Rs 100 lacs.
Do you want to do a similar act now?  Write to me and I will give you a few similar ideas. 

5 comments:

  1. There is an important thing about Residentail Real Estate - You may buy the flat at price X and you shall see the price to be X+Y in a year or so. However this X+Y is a notional money only on paper. Ive seen people who struggle to sell thier flats even after completion simply becasue there are many other projects in that location, etc.. I do not deny that we can sell and make money but it is not as easy as it looks. It is a time copnsuming process and should be well planned.
    There are times when the developer itself shall buy it back from you. Residential real estate does carry a lot of Notional money with it and we should not get too excited with the X+Y as its only on paper. Many of my clients struggle to sell their flats as the supply of new flats is on the rise.

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    1. Agree with all you said - one has to plan and work towards selling it - takes about 6 months to sell a flat - if priced at market valus

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  2. This is a classic example of how investing in a A-grade builder is just worth the risk. I have also seen quite a few of my clients who have invested in a small scale builder or probably living in one, is now adamant about shifting to a A-grade builder. To consider the chances of such good returns in real estate, one should only need to be analytically sound about the city/area and foresee the growth.
    Some factors that i would closely look into:
    - Which zone of the city? Depending upon how the city is going to grow in long term
    - Which area of the zone? Depending on whether the project is located in the main road, water issues etc..also short term growth of the area
    - Builder? Reputation.
    - Project size? Sometimes bigger the better or otherwise also
    - Quality of construction? High quality or one among the best
    - Pre-launch offer? Should latch onto best offers at the right time.

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    1. Good points Varun - that one should consider while investing -thanks for sharing

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