What should I do if the builder has delayed the housing project or the delivery is not as stated in the builder buyer agreement?

Author: Sachin Gupta | Find me on Twitter Follow @sach_gupta

Hello, and very warm greetings for Diwali. During the past one week, our team spent time meeting with some of the customers, readers, real estate consultants. During our interaction with customers, we noticed that most of them were frustrated with the construction progress of their homes which they have booked with real estate developers. Recently, a study published by PropEquity also showed the fact that construction progress is slow and many a residential projects will be delayed considerably.

As we write this on Diwali, a festival of light and happiness, we believe, there is no point in getting frustrated with housing project delays or any other housing related issues. In fact, you should take solid steps to overcome your housing related challenges. We list few of them here:

1. Read the document carefully:
That’s right, even though you should have read the document carefully before signing the builder buyer agreement. You can still do it, read it now carefully. And look for penalty clauses which are stated in the agreement. Approach your developer and ask for the compensation as stated in the builder buyer agreement. Even though, this compensation will be pittance relative to what you would be paying to banks in form of EMIs. Still, claim it.

Also do not forget to check if there are any deviations in the project layout, project plan, size of the apartment, specifications, amenities, etc. If there are any deviations in any of these from what was stated in the builder buyer agreement then approach your builder and discuss the things in detail. Ask for compensation wherever applicable. If possible, take the help of your legal associates.

2. Form a group with other buyers:
Yes, you read it right. You are not the only one sailing in this boat. Visit the construction site on a regular basis and interact with other buyers who are visiting the site. Make a group and discuss the common issues and approach the builder. There is no better way of putting pressure on the developer than a group of buyers coming together. As a group, you can explore various options such as cancellation, shifting to other housing projects by the same developer which is nearing completion, legal action, etc.

3. Rate and review the project:
Now that you have thorough understanding of the real estate sector and ways of working of the property developers, share this with prospective buyers. You can easily rate and review your project at www.nirrtigo.com and alert the prospective buyers of the positives and negatives of a particular developer. Just like, you would like to read reviews for things such as cars, phones, etc. others are also interested in taking tips from you about the housing projects, real estate developers, etc. So, go for it.

4. Use social media:
Social media has enabled all of us in voicing our opinions and most brands whether big or small are always conscious of the fact that social media can make or break their position in the industry. Whatever you do, from forming groups to reviewing projects, keep sharing it on popular social media such as Facebook, Twitter, blog, and LinkedIn. In fact, you can always look to form groups on these social media channels as well.

5. Approach the relevant authority:
Once, you have a group of people who are facing the similar set of challenges as you. It makes sense to approach the relevant government authority. And recently, government of India has set up a Real Estate Regulatory Authority to protect consumer interests. Approach the authority for speedy adjudication of your disputes with the real estate developer.


Above all, be calm and keep discussing the issues within the group. With so many avenues for you to take recourse to, we are quite sure that you will be able to resolve your housing issues. Good luck!

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Lease Agreement in India

Author: Sachin Gupta | Find me on Twitter Follow @sach_gupta

Leasing a property is a legal process wherein both Landlord and Lessee discharge their duties in accordance with the lease agreement. Lease agreement is prepared on a stamp paper and is duly signed by landlord and lessee in presence of 2 witnesses.

Lease agreement can also be registered at the local registrar office in India. Some leases such as the one for office space properties are registered at the local registrar office.

Here is a sample lease agreement:

Lease agreement in india from Green Realtech Projects Pvt. Ltd

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Land Development Process in India

Author: Sachin Gupta | Find me on Twitter Follow @sach_gupta

Land development:

1. Acquisition of land with the intention of constructing utilities and surface improvements
2. Reselling some or all of the developed sites to project developers or in case of housing to home builders.

Key criteria for land development business:

Before proceeding with the development, however, there must be evidence that the project is feasible or that market acceptance of the end-product (single family houses, offices, warehouses, etc.) is highly likely. This step is important even though the land developer may or may not be the developer of the final product. In other words, in the land development phase, the developer must anticipate and understand the demand for the final product (or products in the case of a mixed-use land development). For example, the economic drivers may alter the land use for residential, industrial, or for commercial developments such as Office Space in Gurgaon.

In residential land development, it is common to find firms specializing in the acquisition of raw land in suburban fringe areas and developing sites for single family detached units or for multiple uses, such as combinations of single family units, multifamily apartments and cluster housing.

Based on the market segment in which the end use will likely sell, the land developer

1. Acquires land
2. Develops a land use and traffic circulation plan
3. Constructs streets, lighting, and subsurface improvements (utilities, drainage, sewage)
4. The developer then subdivides individual sites, and sells smaller sites to builders and project developers.
5. The developer may also retain some retail sites for later sale if the site has suitable highway frontage.
6. The land developers usually stand ready to sell sites to other project developers as long as those project developers abide by the required development controls. These controls usually include construction of buildings of adequate quality, maintenance, landscaping, and so on. These controls are usually specified in deed restrictions and/or provisions in an agreement governing the operation of a business park owner’s association.

Important note: Land developers and builders or project developers may or may not be the same entities.

Feasibility study:

Many land development firms usually exist in a given urban market.

1. They enter the market for raw land by contacting landowners or land brokers and obtaining information on tracts of land available for sale.
2. These developers then engage consultants to conduct market studies to assess the demand for end use that would ultimately be developed and price ranges for each use.
3. The developer then completes a preliminary land plan, estimates the land development cost, and analyzes whether the tract can be purchased and developed profitably.

General observation:

In many cases the developer is more of a facilitator of the development process than a firm that undertakes all necessary functions in the land development process. Many functions may be done by consulting firms (land planners, civil engineers, and landscape architects) and contractors (roads and utility construction companies). In these instances, the developer owns the land, obtains the necessary financing, and implements the overall development plan, but may not employ a staff that is directly involved in construction or design. The developer must also interact with public sector officials in obtaining various project approvals and changes in zoning when necessary, and then market sites to project developers and/or builders.

The land development process:

• Acquisition of land – use of the option contract

The developer usually negotiates an option contract because it takes time to accomplish various tasks and activities prior to the decision to actually purchase the land. Some of these activities are:

Site inspection, preliminary market study, preliminary cost estimates, soil studies, engineering, feasibility, appraisal, and design strategy, bidding and/or negotiating with contractors, plan for public approvals, plan for financing.

Option periods can be very short (one month for small residential land development) or as long as 3 years or more (regional shopping centers)

• Financing and development

When financing the land acquisition and development process, a number of structures may be available to the developer.

1. The developer may purchase the land for cash. The developer may then obtain a loan for the cost of improvements and interest carry.
2. The developer may purchase the land by making a down payment only. The seller finances all or a portion of the land sale by taking back a purchase-money mortgage from the developer. The developer then acquires a loan for improvements only. The seller of the land (mortgagee) agrees to subordinate the lien represented by the purchase-money mortgage to the development loan, and the developer repays the sellers’ mortgage from funds as parcels are sold and after payments on the development loan are made.
3. The developer purchases the land by making a down payment and obtaining one loan based on a percentage of the appraised value of land plus improvements. The funds pay off the seller and construction improvements. 

An example showing the possible land development process in Haryana, India:

Land Development process in Haryana

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How can Indian Real Estate Developers reach out to NRIs and target Overseas Indians?

Author: Sachin Gupta | Find me on Twitter Follow @sach_gupta

Real estate is an extremely important industry in the growth of Indian economy. The sector contributes about 6% to the nations’ GDP. The sector is also the second largest employer of labor (formal and informal) behind agriculture.

Real estate developers buy land from the city authorities or directly from the farmers/landowners. Once the land acquisition process is complete and titles are transferred in the name of the developer, the construction work starts. What kind of development will take place on a given plot of land depends on the market conditions. A developer can develop commercial or residential buildings based on the market elements of demand and supply.

The next step for the developer is to sell or lease the project to investors who are willing to use it for their end-use or for investment purposes. When market conditions are not favorable; it becomes extremely difficult for the developer to clear the unsold stock of inventory and that seems to be the case today in India. About 7.6 Lacs of housing units were unsold at the end of June 2014. And new project launches have been greatly reduced.

In this scenario, what can a developer do? Wait for the economic conditions to improve? Wait for the interest rate cuts? Wait for the improvement in job market? No doubt, all of these factors will certainly help the developer in clearing off the existing inventory; however, real estate developers can still tap into the highly lucrative Overseas Indians market.

This is a massive market with a population in excess of 21 million. The market constitutes of Non Resident Indians (NRIs), Person of Indian Origin (PIO), and OCI.

In 2013 alone, Private remittances from overseas Indians into India stood at whopping 71 Billion US $, the largest for any single country in the world.

Where are they investing? A closer look at the RBI data reveals preference for NRE/NRO accounts.

What can Real estate developers do to tap into this segment of the market?

A well thought out strategy is based on 4 principals

1. Customers
2. Product or services
3. Region
4. Channels

Having identified the customers (overseas Indians), the next step for real estate developers is to pay attention to the behavioral patterns of Overseas Indians. What kind of home sizes they prefer? What are the amenities that they demand? Who will take care of their apartments in their absence? Are there professional Property Management Companies in Delhi NCR and other parts of the country to provide NRI audience with apartment management services? What kind of on-site infrastructure they desire, etc. etc. A well prepared survey can help real estate developers in decoding the behavioral patterns of NRI audience.

After studying the behavioral patterns, the product (homes) can be conceptualized and sold in chosen regions. The next challenge is the choice of channels to reach out to NRI audience?

• Web:

Use of web to reach out to NRIs is an inexpensive approach, but it is too generic and crowded in nature. However, it helps in creating awareness about the developer and the projects. If combined with other channels such as local brokerages and property shows, significant results can be achieved.

• Partnership with local brokerages:

NRIs still transact through Indian Channel Partners and some international channel partners (Brokers of Indian origin settled abroad). A real estate developer can tie up with a few local channel partners (brokers) in the respective countries and had them invite their customers. However, not all real estate developers can successfully do it because of limited brand exposure and competition from other reputed developers.

• Own office:

Having an office in a country can certainly help a real estate developer in reaching out to NRIs in that particular country. However, it is an expensive approach and developers with big pockets can manage to afford it. There are some developers who have set up their own offices in Singapore, Dubai, California, London, Malaysia, etc.

• Property Shows:

Property shows or exhibitions are country specific in nature, wherein 40-50 real estate developers participate and showcase their properties to overseas Indians in that particular country. Past Indian Property Show in Singapore, Dubai, London indicates a footfall of 2500-3000 visitors a day. Even though, a developer may or may not make on the spot bookings, the exhibition certainly helps in brand building and that helps in future sales.

Having identified the NRI audience, a real estate developer must make the optimum use of different channels to reach out to this segment. One cannot simply afford to ignore this massive and profitable market segment. And the developer must continuously invest in reaching out to Overseas Indians.

NirrtiGo works with Indian Real Estate developers in order to reach out to overseas Indian community. NirrtiGo organizes Indian Property shows in overseas markets, utilize web based platforms, and create awareness on the vast property investment opportunities in India. Real Estate developers looking to target NRI markets can contact NirrtiGo for upcoming Indian Property shows in overseas markets at nirrtigo@nirrtigo.com

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Shall I invest in commercial properties with 12% assured returns scheme in India?

Author: Sachin Gupta | Find me on Twitter Follow @sach_gupta

Recently in the month of May 2014, the managing director of Vigneshwara Group and two of his family members were arrested for multi crore alleged fraud. What was the fraud? Well, the group is in the business of real estate. Ohhh…real estate…yea, most of the frauds happen in this sector only. In this case, the group had received money from investors (around 700 of them) for commercial office space properties in Gurgaon and Manesar. What was the selling point of this group? This group isn't a household name like DLF, or Unitech. So, what was the selling point which brought in these many investors? Well, the selling point was ‘12% assured return on investment, till the possession of the property’. So, if an investor invested about 1 crore rupees for 1000-1200 square feet of office space, then he/she will continue to get 12 Lacs rupees per year as investment returns till the property is handed over. And the builders normally in India claim to handover the property in 3 years.

However, Vigneshwara Group despite taking money from around 700 investors for properties in and around Gurgaon in 2006-07, and promising assured returns till possession, the group allegedly didn't begin construction of some projects and defaulted on payments to investors. And that was the reason "The three members were booked under sections 420 (cheating), 406 (breach of trust), 120B (criminal conspiracy) and 34 (common intent) of the IPC".

On the surface, the 12% assured return is not a bad deal. For an investment of Rupees 1 crore, one would get 36 lacs rupees back in 3 years as assured returns. And at the end of 3 year period, the property is handed over which can be leased to earn decent income. And of course, there will be capital appreciation gains as well. So, on the surface, it looks a good deal.

However, as is the case in life, one needs to scratch the surface to fully comprehend the deal. Let’s do it here:

Why do real estate developers come up with such fancy schemes?

1. Bank money is not available or is very expensive: What do you think? The builder did not try to raise money for the project through banks or formal channels? Yes, of course, he did…but the money was expensive, i.e. @ 17 or 18%. And he found the easy goats in form of unsuspecting investors who have plenty of cash with them.
2. These schemes ensure project is sold off at early stage: Real Estate is a risky business, but a builder is always carrying out financial engineering calculations to make sure his interests are safe. When a developer launches a new project especially in commercial category, he wants to play it safe and sell the project to investors along with the incentives of schemes like 12% assured returns. Selling a residential project is rather easy because of demand in India; however, selling a commercial project takes financial engineering skills.
3. Lack of other funding options: Why can’t builders raise money from other sources such as Private Equity funds or other institutional funds? Well, all these funds carry out comprehensive due-diligence before investing in any project. And the due-diligence process also involves supply-demand analysis for the commercial property along with builder’s track record, etc. And based on their analysis they decide not to invest in such projects if supply of such kind of property is high or demand is low. Because at the end of the day, the commercial property will be valued on the basis of monthly income it can generate once leased.

Why do builders fail to deliver?

Well, all is not lost for investors who invest in such projects provided builder delivers on his promises. But a real estate developer seldom delivers on his promises and that’s why these issues of fraud and money laundering keep on sprouting every now and then.

Why do builders fail to deliver? ‘Greed’ is word that best describes the failure of the builder to deliver on time. Having successfully launched and sold the commercial project on the back of 12% assured returns scheme to fallible goats, he begins to start acquiring land parcels for new projects with similar schemes.  If one project can be successful, why can’t other projects be successful? And in doing so, he diverts funds received from first project to acquire land parcels. The construction progress of first project is delayed, and there is no money left to pay the assured returns as well.

If the builder has remained disciplined, the 12% assured return scheme would have worked. But that is a Utopian scenario.

Are schemes like 12% assured returns good for investors?

1. Stay away from such schemes if you are a first time investor.
2. If you have propensity to invest in real estate and can carry out due-diligence, then one can consider such schemes. Due diligence involves carrying out supply-demand analysis, builder’s track record, income levels of the people in the city, etc. It is a challenging task and one should look at if banks or institutional funds have invested money in the project or not? These banks or institutional funds will not invest money in any project without carrying out the due-diligence.

Good Luck with Real Estate Investment!

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Vastu Tips for Home Buyers

Are you planning to buy a flat or an apartment?

 

Great! Now that we are in the year 2016 buying an independent house is out of the question. It is better to think of buying a flat or an apartment. There are many Advantages of Apartment Living.

But before you buy your brand new apartment or flat you need to analyze a few factors.

Vastu Shastra or the science of architecture is something that you need to examine for your new home.

Some people either deliberately or not so deliberately tend to ignore the Vaastu factors when buying a new home.

Often this creates a lot of problems in the new homes, and it never dawns that certain unresolved elements are welcoming negative energy.

So, what we are going to do here is provide you with Vastu tips for your new home:

 

Directions:

The northeast direction is considered to be one of the sacred directions from mythological perspective and scientifically.

Let us ignore the mythological facts and focus on what are the scientific aspects:

In India, the Northeast direction is the farthest one from the sun. This means the Southwest is closer to the sun and if you keep this area of your home open you are welcoming the sun's UV radiations.

 

UV rays are they good? Of course not!

You do not want to fill your home with these dangerous UV rays.

So, if you have been keeping your home's Southwest door open, close it now and let us think of Northeast.

Vastu comes from the word Vas which means Space and Time.

These are the two most important components of life science that you should not ignore.

As far as Indians are concerned Vastu Shastra is the science of architecture, a legacy, handed across generations.

It is something that we need to nurture and preserve in its best form to lead a happy life in our living spaces.

 

Health, peace and prosperity are the three things that we all want in our homes.

Vastu Shastra is a science that takes into consideration the Solar Energy and Magnetic power of the Earth.

Vaastu also follows the Cosmic Law of Nature. The sun's rays have a significant effect on our body.

We are not aware of these. But staying exposed to the sun's dangerous rays for a longer time can cause severe mental problems.

Have you ever heard elders or someone tell you that you need to sleep with your head facing the South or West?

Why?

Because we know that our head is the North of our body and the feet is the South of our body.

We are aware of the fact that like poles attract and unlike poles repel.

 

So, what happens now?

Consider your body as a magnet.

When you sleep with your head facing the North and feet towards the South, you know what will happen.

The blood circulation increases when all you need is little circulation while sleeping.

So keep your head towards the South or West while sleeping.

Now you realize why Vastu is an important factor that needs to be taken into consideration when buying flats or apartments.

When choosing a builder or an architect, check whether they incorporate all the Vastu Shastra components while building the flats and apartments.

We want you to experience an immense flow of positive energy in your homes and so we recommend you cross check whether your builders consider Vastu Shastra in building dream homes.

As per Vaastu, if not possible to leave all the four directions of your flat or apartment or villa open, you need to at least let the North and East directions of your home open.

There is a lack of space everywhere, so many buildings are being constructed side by side, so obviously it is not possible to leave all your doors open.

But at least, one of them you can keep open to ensure the flow of positive energy in your homes.

We never said that you cannot choose homes that face the South or West direction because there are many people around the world living in such apartments and are leading a happy and contented life.

 

So what according to Vastu are these directions doing?

 

• West: Brings in materialistic comfort
• East: Brings in the most important factors mental peace and physical comfort
• North: Ensures prosperity
• South: Redemption, Salvation, and relieves you of all the earthly woes.

So if you are eyeing for material wealth then don't think more, a flat facing the West will be the best choice.

But, life is more than materialistic richness.

 

Some Astrology:

Indians especially since we belong to the land of the great Dwarakapuri and having been introduced to the Vedas and ancient sages and rishis, we have belief in Astrology.

 

Vastu has some relation with Astrology too.

For people who belong to the star sign Pisces, East Facing houses are suggested.

If you belong to Libra, Aquarius or Taurus, West Facing houses are the best.

For people belonging to Aries, Sagittarius or Leo, North Facing houses are recommended.

Gemini, Virgo and Capricorn go for South facing houses.

 

Vastu Shastra for Kitchen:

This is where health begins. Ensure that the flat or apartment that you're buying does not face the North East. It would be great if it is in the South West direction.

 

Vastu Shastra for Toilets and bathroom:

In India, the direction of the wind is from Northeast to Southwest, so if your toilets or bathrooms are facing the North East, the air will enter your rooms from the toilet, and it will contaminate the other rooms.

Bathrooms and toilets are best facing the Southwest direction.

 

Vastu Shastra for Bedrooms:

Best recommended that you keep your bedrooms facing the Southwest direction so that you can enjoy a sound sleep after a tiresome day at work.

These are some of the simple tweaks and tips that you can follow when buying a new house or you can think of introducing these points in your home.

Are you buying your first home or apartment? Or do you own a home? Are you leading a happy life? Did you get the Vaastu examined before moving into your new apartment? Share your thoughts and comments on Vastu with us.


This is a guest post by Vipin Nayar

Do not forget to check the loading factor, super area, carpet area when buying an apartment in a builder project

Author: Sachin Gupta | Find me on Twitter Follow @sach_gupta

Sumit Sharma recently bought a 1685 Square Feet apartment in an upcoming locality of Gurgaon. The apartment was a typical 3BHK apartment. The configuration of the apartment was as follows:

Category	Carpet Area (Sq. Ft.)
Bedroom 1	144
Bedroom 2	168
Master Bedroom	180
Kitchen	120
Hall	240
Toilet 1	56
Toilet 2	56
Toilet 3	56
Balconies	159.5
Carpet Area of the Apartment	1179.5
Saleable Area of the Apartment	1685
Efficiency of the Apartment Unit	70.00%
Loading	30.00%

As can be seen from the above example, Sumit got this 3BHK apartment with 30% loading. His apartment’s carpet area turned out to be 1179.5 Square Feet.

Initially, Sumit was taken aback and even contemplated legal action against the developer because what he saw in sample flat was different. The rooms, toilets, Hall appeared bigger to him than what he got in actual. However, on verifying the apartment units of other buyers, he came to realize that carpet area of all the apartments was substantially lower than the sale-able area.

Why? It is due to the term called ‘loading’. While announcing new residential projects, real estate developers come up with plethora of amenities within the gated apartment complex. All these amenities look attractive to prospective buyers on paper and in brochures. However, they forget to realize that more the number of amenities such as club, swimming pool, tracks, gym, more will be the loading. In addition to the development of basic facilities such as lifts, corridors, staircases, the developer will now be constructing all the amenities that he has promised to the buyer. Construction of all these amenities costs and there is no way a builder will keep the cost to himself. These costs are passed on to the customers in form of loading.

In essence, customer pays for the amenities he is getting within the gated apartment complex.

Loading shall not be confused with FSI. While FSI determines how much area within a given piece of plot can be developed as per the local municipal guidelines, loading implies addition of common areas and amenities to an individual flat owner. Loading is generally calculated on a pro rata basis.

In addition to paying for these common areas and amenities in capital value terms, a flat owner would also be subjected to pay a monthly common area maintenance charge for the upkeep of these common areas and amenities.

We have also seen an NRI Customer who invests in Indian real estate is particularly unaware of these terminologies. Therefore, before investing in a residential project, an NRI can hire a reputed realtor or one of the professional Property Management Companies in India to make sure he/she pays as per market conditions. And he/she is not taken for a ride by the developer.

• Can loading be reduced?

Loading is usually on a lower side in a low rise structure, standalone developments, villas, builder floors. In Government allocated plots, loading is zero. Even in high rise gated communities, loading can be reduced if space utilization is optimum and wasteful amenities are eliminated.

• What is the loading pattern in cities across India?

Loading varies from cities to cities and in fact from project to project. Lavish projects with wide open spaces and extra amenities will command high loading. Typically, in Delhi NCR region, loading stands at 22 to 30%. In Mumbai, loading stands at almost 50-60%.

• Is there any government guideline for 'loading'?

The government of India in its Real Estate Regulatory Act made it mandatory for developers to charge only on carpet areas. However, it is yet to be seen in practice. The bill says that “Introduction of the concept of using only ‘carpet area’ for sale which has till now been ambiguously sold as super area, super built up area etc.’’ For more about Real Estate Regulatory Act, read here.

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The two options for the soon-to-be landlord

Around the globe, there are just two options for everyone looking for the ideal tenant match for their house: One is easy but expensive and another is comparatively difficult but cost-effective and fully autonomous. The easy but expensive one is where you appoint a property management service to find and then manage the tenant and rent respectively in return of which they charge an amount. The second and only one left now is where you do all the hard work in finding a tenant and manage them in your space. While the level of guarantee as to the right tenant is less in either case but the moment you take things in your control, things become a hell lot easier both for your pocket and also provide peace of mind.

The takers for both these options are many but let us look at both the options for the first clueless timers’ sake.

For those comfortable with property management service

The choice to go for property management services is not bad, it not only saves time and effort in finding the ideal tenant but also do a clear background check to ensure that the tenants are genuine. If you are planning to opt for this model, there are just two things for you to consider: where to find the right service provider and being comfortable with the expenses that you will have to incur.

• Where to find the right property management service provider?

Depending on where your property is, you can either go for the traditional word of mouth medium or use reliable real estate portals available on the internet. The latter is much easier for all you have to do is put in your location and search, for example, if your property is in Bangalore, just put in ‘property dealers in Bangalore’ and you will get a number of results on time.

• Be comfortable with the expenses

In order to be comfortable with the expense, you will first need to get an idea of the exact amount. Confirm and research the going service rate in the market and also ask your provider if the cost of managing the property is recurring or one time. Doing this will prepare you for the coming expenses.

 

For the 'do it yourself' counterparts

Doing all the tasks on your own definitely makes you a Brave-heart. Although it may look impossible, it takes less time to get it

• Advertise your house

Begin online. For nominal fees and sometimes even free, you can now advertise your property on renowned websites. Like the last Bangalore example, what you can do is post a ‘Flat for rent in Bangalore’ ad that will eventually take the prospects to the hyperlinked image. For those who want a more advanced result for less money, they should try YouTube or Vine. Upload a simulated tour of the property, then share the links on different classified websites such as Craigslist, also add them in your various social media platforms. After listing your property, do not forget to put in the necessary "For Rent" signage in the front yard.

• Tidy it up

Strangely, some landlords do not even bother to tidy up their houses and apartments before putting it up for rent. Normally, the nicer and cleaner your house is at times when the prospect comes, the nicer it looks when they both stay and leave.

• Repair structural shortcomings

Replacing the busted appliances, chucking out left-behind scrap, pests and termites spray, getting rid of flies and mosquitoes by using the latest mosquito killer devices, and by simply adding new paint coat will take you far in attracting the ideal renter. Also the probability of getting a higher charge increases, big time.

• A ready rental policy

Have a document that clearly specifies the various lease’s TnCs, such as if pets are allowed, if you need a security deposit, and/or expect the tenants to bear their renters insurance. Make sure you have it ready even before you start shortlisting tenants.


We all know how difficult it can be to find the right tenant for your property. There is no right or wrong option here, everything depends on the efforts you can take and the money you have. Now that you know what it takes to go in either of them, make a sound decision.



This is a guest post by Tripti Rai. She writes about the real estate sector, she keeps her readers informed about the latest developments in real-time through her writing.

Are you a start-up or a growing organization? Find the checklist before you lease your next office space.

Author: Sachin Gupta | Find me on Twitter Follow @sach_gupta
 

Are you a start-up or growing organization? As a small company looking to bring new and innovative products and services to market, you want all your focus on the job at hand. You simply need no deviation from your core activities. While in large companies there is always a team to look into the non-core activities of a firm. The start-up can simply not afford it. The non-core activities include finding the right office space, manufacturing facility, admin tasks, and many such activities. Whereas the focus of a start-up is always on its products, customers, etc. However, there is no getting away from non-core activities.

Being a start-up ourselves, we understand how difficult is to perform these non-core activities within the constrained time and budget. Therefore, let’s start from the first step itself, i.e. finding your next office space. Make no mistake, having a right office space will not only allow you to focus on your core activities but at the same time it will help you to attract talent on your path to glory. So what are the things you as the founder of the start-up should keep in mind before going for office space hunting?

Tip 1 – Area Requirement:
Assess your current team size and the short term increase or decrease in team size. Let’s be clear, that most of the leases with landlord/developer will have a lock-in period of 3 years (it can be negotiated though). Therefore, having an eye on future expansion on team size will help you a great deal to justify the office space you lease for your operations. Having done that, now you need to calculate the area required. Our estimate based on the historical data assigns 80-100 Sq Ft per employee. Therefore, having a team of 10 should mean 800-1000 Sq Ft of carpet area requirement.

Tip 2 – Building efficiency:
It makes sense for you to look for office space buildings with greater efficiency. Now, what is building efficiency? Building efficiency is basically the ratio of usable (carpet) area to super area. In other words, higher the efficiency, the better is the space utilization in the building. Therefore, look for buildings with higher efficiency. For example, the building efficiency for Office Space in Gurgaon varies from 65-80%. Let’s take an example, having assessed your team size; you came to conclusion that you need 1000 Sq Ft of usable area. Now, for 80% building efficiency, the super area (the area on which you will pay rent) will be 1250 Sq Ft. And for 65% building efficiency, the super are will be 1540 Sq. Ft. It’s a no brainer that you will choose the building with 80% efficiency to cut on your monthly rent.

Tip 3 – Parking and Location:
Make sure to check for parking spaces available for your office space. As a standard practice, one parking is made available for every 1000 Sq Ft of area leased. One can also rent or buy the additional car space. If your business requires that your customers visit you frequently, it make sense to find the office space in a locality which is located in central business district, and is easily connected by road, metro, etc. And if you operate a back office call center, then location becomes irrelevant for office space set-up.

Tip 4 – verify other charges in addition to the rent:
Make sure to check the other charges in addition to the monthly rent. Typical charges include CAM (Common area maintenance, electricity, taxes, and lease registration charges). In Grade A buildings, CAM charges would typically be 12 to 16 Rs. / Sq Ft. Electricity charges will be as per actual. And taxes, lease registration charges vary from state to state.

Tip 5 – Read the lease documents carefully:
You would have heard of this phrase a many times “Read the documents carefully” :). Typically, a lease paper should comprise the parties to lease, lease date, lock-in period, minimum rent deposit (6 months, although it is again negotiable), lease term including the lease renewal options, rent appreciation format, CAM charges format, size of the area, and other legal clauses. For more about the lease document, Download "Points to remember before leasing your Office Space in Gurgaon"

Go through the process carefully, and all the best in building a great company!

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Life beings at 60! Reverse Mortgage Loan (RML) can be your gateway to hassle free and dignified life after 60.

Author: Sachin Gupta | Find me on Twitter Follow @sach_gupta

Senior citizens, a term used for people above 60 years of age are a growing population in India. Does that mean giving up on your lifestyle? Or depend on children’s income for fulfilling your basic needs? Well, whatever the logic behind in use of term “senior citizen”, there is no point living a tiring life after retiring actively from employment. In fact, this is the time to visit places, pursue recreational hobbies, learn something new from music instruments to latest in technology. One of the couple we came across in their late 60s is having the time of their life. Visiting various religious places, meditation, public work are some of things that keep them occupied. And there is no pension that they receive from their past employer. So, how do they maintain this exciting lifestyle? Well, to cater to the growing population of people above 60, the financial system including the banks has come up with an instrument called “Reverse Mortgage Loan”.

What is Reverse Mortgage Loan?
As the name suggests, it is the opposite of a normal home loan product. While, in procuring a home loan, you mortgage your property with the bank and pay EMIs so that the home can be yours once all the EMIs are paid. In reverse mortgage loan, the house which belongs to you is mortgaged to the bank or lender and then the lender pays you monthly tax free income without having to sell the house. And it is this tax free income that can allow you the luxury of living a hassle free and dignified life after your retirement at 60.

What happens to my house after the term of the reverse mortgage loan?
One can repay the loan in lump sum at the end of the loan term. Please note that the maximum tenure of the loan is 20 years. As long as you are alive and continue to occupy the house, there is no need to service the loan. However, in case of borrower’s death, lender sells the house and loan is repaid and the remaining amount (if any) is paid to the borrower’s inheritors.

Eligibility criteria:

• Should be Senior Citizen of India above 60 years of age.
• Married couples will be eligible as joint borrowers for financial assistance. In such a case, the age criteria for the couple would be at the discretion of the BANK, subject to at least one of them being above 60 years of age and the other not below 55 years of age.
• Should be the owner of a self- acquired, self occupied residential property (house or flat) located in India, with clear title indicating the prospective borrower’s ownership of the property.
• The residential property should be free from any encumbrances.
• The residual life of the property should be at least 20 years.
• The prospective borrowers should use that residential property as permanent primary residence. Permanent primary residence refers to the self acquired, self occupied residential property where a person spends majority of his time. Factors that may be relevant in this regard include the address used for general correspondence, utility bills, Bank statements, tax return, Bank accounts and Banking relations etc. However, all facts and circumstances may be considered for the purpose of determining that the residential property is the permanent primary residence of the borrower.

How much amount can be availed?

• The amount of loan will depend on market value of residential property, as assessed by the BANK, age of borrower(s), and prevalent interest rate.
• The Banks will have the discretion to determine the eligible quantum of loan reckoning the ‘no negative equity guarantee’ being provided by the BANK. The methodology adopted for determining the quantum of loan including the detailed tables of calculations, the rate of interest and assumptions (if any), shall be clearly disclosed to the borrower.
• The Banks would ensure that the equity of the borrower in the residential property (Equity to Value Ratio - EVR) does not at any time during the tenor of the loan fall below 10%.
• The Banks will need to re-value the property mortgaged to them at intervals that may be fixed by the BANK depending upon the location of the property, its physical state etc. Such revaluation may be done at least once every five years; the quantum of loan may undergo revisions based on such revaluation of property at the discretion of the lender.

How are the payments made to you by the lender?

• Any or a combination of the following:
• Periodic payments (monthly, quarterly, half-yearly, annual) to be decided mutually between the BANK and the borrower upfront
• Lump-sum payments in one or more tranches
• Committed Line of Credit, with an availability period agreed upon mutually, to be drawn down by the borrower
• The maximum monthly payments shall be capped at Rs.50,000/- or such other amount as may be notified by the Government of India.
• Lump-sum payments may be conditional and limited to medical exigencies.
• The maximum lump-sum payment shall be restricted to 50% of the total eligible amount of loan subject to a cap of Rs.15 lakh or such other amount as may be notified by the Government of India, to be used for medical treatment for self, spouse and dependents, if any. The balance loan amount would be eligible for periodic payments.
• The nature of payments will be decided in advance as part of the Reverse Mortgage Loan covenants. BANK at their discretion may consider providing for options to the borrower to change. All covenants/ conditions stipulated by the Banks shall be disclosed to the borrower in advance.

How can funds be used?

• The loan amount can be used for the following purposes:
• Up gradation, renovation and extension of residential property.
• For uses associated with home improvement, maintenance/insurance of residential property
• Medical, emergency expenditure for maintenance of family
• For supplementing pension/other income
• Meeting any other genuine need
• Use of Reverse Mortgage Loan for speculative, trading and business purposes shall not be permitted

Source: National Housing Bank

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Tips To Make Your House Look Spacious

Some things cannot be easily changed, one of them being your home, of course most of us do not have the luxury of changing residences periodically at the whims and fancy of our bored existence, but there are quite a few interesting ways, you can employ to give your home a complete makeover in surprisingly low budget…

Let us have detailed look at some of the pointers, which you can use for the purpose:

• The clutter has to go – 

The first and foremost step in this regard is to clear out all the mess and clutter which takes up most of the extra space in your house. There is in fact a very logically approach to this activity. It is said that if you have not used an item in your home for over six months, then in all probability, you’ll never use it in your life (excluding winter wears). Hence, take a good look around and identify such items…the kitchen is a good place to start…keep your OLX app handy…The next important area to de-clutter is the entry hallway of your house. If you enter into a clean and open area every day, you will automatically feel that your house is more spacious.

• Make do without too many fancy items – 

This is another thing, which needs to be carefully edited. Get rid of all those fancy items, which are not really necessary for your house either by gifting, selling or by just by throwing away. You will be surprised at how much space opens up after you are done gifting!

• Redesign your furniture – 

Another great step towards making space in your house is to change the shape and size of your furniture. For instance, you can replace your shoe rack with a hanging shoe organizer, which will not only save a lot of floor space, but will also keep your house cleaner. Another example can be that of a shelving unit, which can be built into a wall or the back of a door.

• Repaint your walls – 

Another trick, which can be used to make your house look bigger, is to lighten the shade of color of the walls of your house. The lighter the color of the walls, the bigger the house would look. Dark paints make rooms look cozy and comfortable, but they also make them look smaller and cramped.

• Decorate the ceiling – 

This is one of the most frequently used tricks to increase the height of the house. If the ceiling of your house is painted or has wallpaper, your house will automatically get more height. So if the height of your house is your main concern, consider this option to be a perfect solution for your problem.

• Re-arrange the furniture – 

Avoid putting the furniture close to the walls, as it makes the place to look cramped and closed. Pull the furniture away from the walls and you will automatically add more space in your house. You can also build your own vertical shelves and make it more fun!

• More vertical furniture – 

Instead of expanding your furniture horizontally, try to expand it vertically. Bunk beds are a good option instead of double beds in your children’s bedroom.

• Stripes go a long way – 

Try to put out rugs and wallpapers, which have stripes on them. This will give you an illusion of more width and height. Hence your house will appear far bigger than it actually is. Arrange the stripes in the direction of the longest length of the room for best results.

• Mirrors, more mirrors – 

As you must have seen in many shops, there are many strategically placed mirrors, which create an illusion that the shop is bigger and more spacious. You can use the same concept for your house as well. Place mirrors in the entryway and room entries to double the width of the room by a large margin.

• No overhead stuff – 

The more things you will hang from the ceiling, the more cluttered that room will look. Avoid hanging lights and decorative items in your house if it is already very cramped up. Instead of hanging a light bulb, try to put on a decorative lampshade instead!

• Uncover the windows – 

Remove those bulky curtains from your windows and bless your house with some sunlight. Leaving the windows uncovered automatically makes the room to look bigger and brighter. It would also have the right energy and create a positive vibe; if the windows are left open and off-course some cool breeze would be good too.

• Remove some doors – 

If this is feasible to you, you can try this unconventional method to literally open up some space. You can remove some doors, which connect rooms together and leave those particular areas open. This will not only increase the size of your house, but would lead to good ventilation too.

• Color code – 

To make things appear more organized and cleaner, one should try to keep them in accordance with their color tones. If you keep all the colors together in one place, separated by even and thin margins, your room will open up by ten folds and also it is a visual treat!

• Large scale flooring – 

The floor pattern, which you choose for your house must have large blocks. The larger the pattern, the more spacious your house will look. Also, try to arrange the floor tiles in a diagonal fashion to give the illusion of more space. Tiling is a crucial and costly step, so try to do this in the beginning itself.

So now that you are well equipped with these easy tricks on how to create more space in your house and make it look bigger, what are you waiting for? Choose your top 5 and start with them right away! These tricks are so simple and cost effective that you will be really happy after you are done revamping your house.After all a bigger place is so much better to live in!


This is a guest post by Anasua Mitra, Associate  Manager - Marketing, Wienerberger India Private Limited

Rent vs Buying a house? What should I look for?

Author: Sachin Gupta | Find me on Twitter Follow @sach_gupta

This piece of the blog is primarily meant for residential end users/occupiers who will either end up owning or renting a house. Now, owning or renting is a dilemma which most of us face sooner or later in our careers. As easy as it may sound, but the decision is never without its fare share of glitches. Sumit Sharma, 29 years old, got recently married. He moved to Gurgaon 3 years ago and is currently working in a reputed company with decent salary and like most people of his age group he was stuck with this dilemma of owning vs. renting. On one hand there is easy access to home loans and plentiful of home supply with most builders screaming aloud from the rooftop to sell their real estate projects across India (oops...Houses) but on another hand there are some worries such as monthly installments, maintenance issues, locality, property valuations, and so on.

So, what are the factors that encourages owning as compared to renting and vice versa. Let’s Break It Down (L BID) to smaller elements. The core elements in this dilemma are:

- Down Payment element
First thing first, the most important element of making a decision to own a house boils down to down payment issue. In most cases, 15-20% of house value is paid towards down payment while the remainder is provided by the bank loan if credit worthiness of the person in consideration is good. Now, minimum price for a ready to move apartment in low rise or high rise building in Delhi NCR region (check the prices for other regions) ranges from 35 lacs to 40 lacs (prices vary for different locations). So, one has to have a minimum of 6-8 lacs in his/her pocket before even thinking of owning a house.

- Cash Flow element
Now, having passed through the first element with flying colors one has to do some cash flow calculations before going to the builder. Minimum rent for a similar apartment in Delhi NCR region (check rentals for other regions) ranges from 12 to 18 thousands with no overheads of property taxes, maintenance, insurance etc, whereas cost of owning will include loan installments + property taxes + insurance + maintenance charges. Monthly loan installment for the remaining 29 to 32 lacs will dent one’s pocket by at least 25 to 30 thousands depending upon the interest rate and tenure of the loan. Globally, housing is considered affordable if it is accessible at 25 to 40 percent of gross monthly household income for either rent or loan installments.

- Bubbles in House Price/Future Value
Bubbles normally lead to exorbitant prices when considered in relation to the underlying fundamentals. In Delhi NCR region, one would have noticed that residential property prices have appreciated sharply compared to the rentals. In most areas of NCR, the prices have appreciated by about 3-4 times in last 5 years whereas rental appreciation had been rather weak. What does this suggest; I guess you guessed it right, the price appreciation in property is not indicative of the actual demand & supply elements. Rather it’s the result of expectations that investors, builders are placing on the region due to forecasted economic growth. Now, when expectations are multiplied by expectations year after year, it leads to bubbles and you & I can only be the victims of the bubbles positively or negatively (in case the bubble bursts).

- Flexibility element
Flexibility element is crucial for those who tend to relocate because of employment, family, or other reasons. It doesn’t make any sense for a person to buy a house for 2-3 years and then again have to sell it because of relocation unless the house is purchased with an investment perspective.

- Credit Quality element
Those who are just starting their career with limited salary and no previous bank record will find it difficult to get the loan unless one has sufficient equity at his/her disposal and hence renting is the most likely choice for them.

- Ease of transportation
In metros and especially in Delhi NCR region, home-office-home travel is getting longer by the day. Buying a house nearer to the office is being considered a vital element. However, that comes with a heavy price tag. However, renting a house close to the office could be a serious consideration if one’s primary focus is the proximity to the office.

- Recreational activities
With changing lifestyle, recreational activities play an important role in one’s decision to own or rent a house. Other facilities such as shopping malls, schools, local connectivity also adds to decision making process of buying/renting the house. However, all these facilities come with a price tag especially in case of buying.

So friends, having considered all the above elements, a certain weightage can be given to each element and final result should be evaluated in favor of owning vs. renting. The analysis can yield different results for different individuals depending upon how much weightage they assign to each element.

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Selling tricks used by real estate developers and how to avoid them

Author: Sachin Gupta | Find me on Twitter Follow @sach_gupta

With the festive season around, the spirits are high. Most of us buy big-ticket items during this time of the year. The big-ticket items may vary from buying a house, car, gold, etc. It is also that time of the year in India when marketers will come up with sale offers; discount offers to lure customers in making a purchase decision.

However, buying a home is a lifelong commitment and you will be paying EMIs for several years and therefore don’t fall in the trap of these discounts, offers, schemes, etc. Instead, you should do your due diligence so that you do not repent later.

We have put together a list of 9 things that the sales executive of a real estate developer will throw at you in order to close the deal. Make sure to research all these 9 things just like this smart buyer has 

So, Are you a smart buyer???

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6 Tips to Give Your Home a Charming Vintage Look

Planning to redecorate your home and add some vintage charm to it? Well, it doesn’t necessarily need to be expensive, and you don’t have to visit antique stores to get your hands on vintage decor.

Start with things like old frames, metal baskets, old cartons, and suitcases. Paint the rooms right—choose pastel shades like vintage blue, along with shades of silver and gold for that perfect vintage look.

Here are some simple tips to help you give your rented apartment or house a rustic look:

Old-School Mirrors

Go to that storeroom with the half-forgotten trunks full of old hand-me-downs from your great-grandparents. Look for old mirrors, with gold or silver-toned trim on the frames.

You could even buy one of these ornamental mirrors from furniture shops. Once you have a mirror, place it in one of the walls of your living room for the perfect vintage look. This will also serve to make the space look larger and disperse light evenly around the room.

Dishes and Cupboards

You can find antique china dishes at thrift stores and flea markets. These are a great way to add that classic vintage touch to your home. Put on your creative hat and figure out unconventional ways of working them into your decor - hang them on walls or use them as soap dishes or candle holders.

Go for wooden or metallic cupboards that have an antique-looking finish instead of modern clean-cut ones. You can also reuse your old cupboards and paint them from scratch to achieve that   beautiful distressed look.

Ladders

Have an old wooden ladder? Give it a fresh coat of paint and place it in your bathroom or kitchen to be used as a towel or soap rack.

Collectible Curios

Old telephones have a unique charm that’s been lost in modern design. They will fit perfectly into your freshly vintage-themed home. Go to an antique store or shop around online for such these telephones and use them as decor elements.

You could also look for old radios, gramophones, typewriters, and all other little curios that embody the vintage spirit. An antique-looking clock can really tie a room together by acting as the centerpiece.

Speaking or curios—mason jars are versatile and cheap decor elements. You can use them as candle holders or use them to hold lights for a touch of class.

Old Books

The vintage look feels a bit lacking without appropriately old books. There’s something about a stack of old books placed on a coffee, kept company by a vintage lamp.

You can also invest in a bookshelf. Make sure to go for one that has plain rack design and is made of wood. A dull, somewhat distressed finish is preferable. Place hardbound books - old classics - to complete the setting. And of course, these classics make for great reading, so it’s a win-win.

Kitchenware

When every room in the house is getting a vintage makeover, the kitchen can’t be left behind. Make use of bronze, brass, or earthen pots and vessels for a quaint, and functional, look.

These home makeover tips will give you that dream vintage-themed home without putting too much of a strain on your finances.

This is a guest post by Chandni Lal