Home Buyer Dilemmas

There are debates with a conclusion and the ones which don't lead to any conclusion, this is one debate that we encourage and help clients work around it logically to reach a rational decision. At the end of the day, we win when our clients win. So, here are some of the dilemmas that most of our clients come up with, typically most of the clients discuss the possibilities of buying Ready to move apartments vs. Under construction/off plan communities, Down Payment Vs. Construction Linked Payment, Rentals Vs. Appreciation etc.

Here are some pointers that have helped our clients reach the right decision:

Ready to move Vs. Under construction:

Ready to move communities typically attract working around Cash/Black Moneys as premium to the existing owners. This more often than not, does not fit in very well with the corporate clients, considering that there is no Black Moneys generated. Evolution: Apartment communities evolve year on year and every developer tends to bring out better apartments, thus Ready to move, will always be 3 years behind in terms of finish qualities and community features.

Mortgage: Considering that a ready to move community attracts almost 30% to 40% of Black/Cash Moneys, This amount does not reflect on papers and thus the banks won't fund such amounts, one has to work around tactically to make this happen, and still can't be sure if the banks would fund such amounts. Changing your white money into black is definitely not a good idea.

Rentals Vs. Appreciation: This one is a sure winner for the under construction properties, Considering the fact that Gurgaon Home Rentals are hovering around 3% to 4% of the property value, means that you could rent a reasonably good apartment for a low cost, when one compares the total outflow of rent for a period of 3 years (which is pretty much the outer timelines for the under construction property to be delivered) Vs. The appreciation of the property which is under construction, The data shows that the equation is almost 1:3, which means that if you end up spending 10 lacs on rent for 3 years, there is a likely hood of gaining and appreciation of 30 lacs on the under construction property when it is ready.

Construction Linked Vs. Down Payment: We never recommend our clients to make down payment to the developers, here is the logic, The developers typically offer 7% to 10% rebate on properties for making the complete down payment, considering that the property would be ready in 3 years time, this works out to anywhere between 2.33% to 3.33% per year respectively, on the other hand, your bank would be charging you 10% every year, which in 3 years time works out to 21% to 30% respectively. Not to mention that when you make a down payment, your cash flows get affected right away, as your full EMI starts hitting your bank, on the other hand, when you go on the Construction Linked payment plan, you are only paying the pre EMI interest for the construction period, this amount grows gradually, based on the demands raised by the developer.