How to get a loan for buying commercial property

How to get a loan for buying commercial property

Though lenders are keen to offer funding to buy a house, it may not be the case with commercial property, especially if you are an investor. Here are 11 factors that influence the lending decision for commercial property

"Can I get a loan if I buy an office space?" heard this many times from borrowers who had taken not less than three home loans, but calls me to enquire on this. Getting a loan against residential property is a piece of cake these days, but raising funds for purchasing a commercial space isn't so. Most importantly, the public know-how on this matter is really poor. So this how it works.

Commercial purchase can be broad-based into two types- (A) An office space & (B) Retail outlet. And again these two can have subsections like (i) Ready to occupy & (ii) Under-construction.

Lenders are more skeptical on funding in commercial property, and more so for under-construction ones. Most commercial property purchasers are 'investors' and that may be the reason. Though a few buy for running their own business and if that's the case, a lender feels more comfortable too. A lot of top lenders do not fund commercial properties and a few of those who do, fund only the ready ones and avoid under-construction types. So, before locking yourself on any project, please check with your loan adviser to weigh the funding option.

Differences between funding a residential and commercial property:

Though the financial documents required by the lender to ascertain the loan eligibility of the borrower is same, following are the differentiators-

1. Lesser Loan to Value (LTV) ratio- For residential funding, it ranges between 75-90%, however, the funding percentage is restricted to 55% for commercial purchases. This means more self-contribution by the borrowers.

2. Higher fee- Processing fee for residential purchases are standard fixed fee of 10,000/-. During some schemes, even lesser fee as low as 'Nil' are offered to borrowers. However, for commercial purchase, it is standard 1% of the loan amount and with certain lenders, if they like the profile of the borrower as well as the property, they reduce it to a minimum of 0.5%.

3. Higher ROI- Rate of interest (ROI) is a pivotal factor while borrowing and in commercial type, it is at least 1-2% higher than the residential ones and it can go to even 4-5% if the financial documents have lesser strength and some surrogate product is offered. 'Surrogate' could be like, some other loan track or healthy bank balance etc.

4. Builder category- Lenders are very specific about the builder's profile if the property is under-construction. Whether the commercial property will be ready on time is of utmost importance. Generally a commercial property will take much lesser time to be constructed and the number of occupants in one building will be lesser than that of a residential. For example, there could be one buyer for one complete floor plate, or, say, the number of toilets to be constructed in a commercial setup is much lesser with no bath-area etc, which makes the construction easy and lesser time-consuming. Lenders will look at the previous delivery-schedule maintained by the builder to decide whether to lend in this builder's property or not.

5. Technical evaluation- The building needs to have all proper technical specifications complied with. Be it shafts, lifts, escalators, fire-extinguishing arrangements, emergency exit, double staircase etc. The authorised technical evaluation team of the lender will verify every detail. It isn't so that residential property is not verified well, but commercial properties do have more aspects to inspect.

6. Obtaining all statutory approvals- The builder will have to have all clearances such as approved plans, clearance from different departments like fire, forest etc. to be in place. There should be no demolition risk on the property due to any pending approval. It is the same in case of residential property too, but as mentioned in the previous point, it is stricter and more in numbers in commercial buildings.

7. Loan tenure- Loan tenure offered in residential property could be as high as 30 years, but in commercial purchase it is mostly restricted to 10 years. This means higher EMI outflow for the borrower again.

8. Capping exposure- If someone is buying a commercial property worth 10 crores, the lender may decide not to lend more than 3 crores on the transaction, even if he is eligible income-wise and there are no issues on the property front either. This comes from the fear of the loan going bad and the hit the lender will have to take in case of any eventuality like building demolition (fire, earthquake etc.) or demise of the borrower. Since insurance is a matter of solicitation and the borrower in India may choose not to opt for it, the risk remains.

9. Valuation- Purchase cost if inflated by the builder/seller to enable the borrower to take more funding from the lender, it is shot down by the expert evaluation team outsourced by the lender. Almost all of them have multiple experienced valuation-agents who submit report independently and the lender considers lower or the lowest of all, to hedge risk.

10. Residual age of the property- Very old properties do not get funded not only due to the risk related to the age of the building, but also due to not having proper sanction plan or fire-exits or many other things which have been made mandatory in new policy of the lender. So, have a quick check with your adviser. Even if it is a famous commercial building which houses large corporates, it may not get funded by some or all lenders. On another hand, retail spaces are more expensive in terms of rate per square foot than office spaces in same commercial building. Lenders do recognise that fact. So, the same building a office space may be valued at 20,000/- per sft., but retail at 30,000/-. One shouldn't assume that since retail is 30, then so will be the office.

11. Minimum area- Lender will want to fund a minimum area square foot. In retail outlets, there are small spaces called 'vanilla' where generally bank ATM-s etc. are made. These can be even smaller than 100 sq. ft. The lender may refuse to fund any space if it is lesser than 250 sq. ft. or so. Different lenders will have different policies on this matter, so better to check with your loan adviser again.



At the end of it, though acquiring a commercial property works out to be more expensive for you in terms of monthly outflow, since the tenure is less and rate of interest is higher along with more self-contribution to be paid; nonetheless, the 'return' on the investment in commercial property has always been on the higher side. So, if your property is 'eligible' for a funding, then why not?

Happy Investing

Source:Moneycontrol.com

Do not agree on this while buying under construction property

Do not agree on this while buying under construction property

Developers have been inserting clauses that can led to monetary loss and stress to buyers of under construction properties. Here are some of the clauses you must avoid.

Accept it or not, the real estate sales are slow and unless there is a real value-proposition in the offering, a buyer is smart enough not to invest in an under- construction property these days.

There is surely a big dream attached to the upcoming property you buy, be it for an investment purpose (renting out or selling off for a profit) or for end-use as an occupier. You must not just sign a sale agreement without reading it carefully or agree to any terms which later on become a costly proposition for you. There are many clauses being newly incorporated by the builders to protect their interest. That is no harm, if it is within limits and does not violate the buyer's interest and rights. Unfortunately, there is no guideline about the sale agreement and hence many builders do what they feel like.

Following are a few instances I have come across while doing home loan for my clients:

1. The builder takes a year plus ,after accepting 25% from you as booking money, to get the plans approved and upon receiving it, wants your to-date payment in 7 days max, failing which he has right to cancel your booking and refund without any reminder or discussion! They do this for a gain. They can now sell your flat at a higher price to a new buyer who will pay premium for the available sanction plan as well as not having to block his 25% for a year plus the year old appreciation for the location can sell the flat too. You have booked early, so your chosen flat will be selling now like a hot-cake!

2. You cannot sell your property unless the builder exhausts their stock! Now that is something you can never accept as a buyer, since the builder may never sell their entire stock! Even if they do or do not, you will never know.

3. You cannot sell your property at a lower price than what the builder is currently selling at! Again, you do not know for sure at what price the builder is selling. At best you can know what they are quoting openly. The advantage you must have that you booked the property many years ago, is to get an appreciation on it. It may not be as high as what the builder is selling at, but that's your USP as an investor while selling, which no one can take away from you.

4. Under subvention scheme, even if it is promised to be 'till possession', it suddenly expires! Builders define 'possession' as different than yours. For you, an OC is called 'ready for possession'. But there is a new term called 'soft possession or fit out possession' which means when builder is ready to allow you to start woodwork. Now, that can be one year before the building received the OC and actually fit for you to occupy. Why should you be paying rent as well as EMI for that one year if you knew?

5. You are not eligible for a delay penalty from builder who delayed his project for 3 years, if you have delayed your payment even by a day in any installments, you pay! Many builders have done this to their buyers. This is absolutely unfair and you must make sure that no one can deprive of your dues for a flimsy reason like this.

6. The square feet area can increase at the time of possession without any capping on the percentage! I have seen a 2800 Sft apartment becoming almost 4000 Sft and the builder demanding the 'balance payment' for handover. Now, how can anyone go so wrong with the math unintentionally?

7. Paying all the Govt. taxes upfront. Some builders will ask you to pay all the service tax and VAT in advance, though the building is only 10% complete. For your knowledge, both the above taxes are supposed to be deposited with the Government within 7th of the next month after raising the invoice in the previous month with you. But to your surprise, the builder will definitely deposit it as and when it becomes due as per slab casting and not at one go at the time of collecting from you.

8.Paying lakhs of rupees as 'Caution money' for doing furniture work and asked to get a refund after the society gets formed! The builder takes a 5 Lakh deposit from you to allow you to start the woodwork and the caution money is to protect them against any damages that may occur due to the carpentry or plumbing job etc. Fair. But not returning the money after the work is finished and the labours leaving your premise is not. You are told that the builder will deposit all such caution money (will be in crores depending on the number of flats he is delivering) to the society after being formed, that too, without any interest, and that is for you to get the 'refund' from the society-to-be-formed, which no one knows how much time will take or will it ever be formed at all, as in most parts of India(not every city is Mumbai) a society is not so strict a rule.

9. Amenities like clubhouse, gym etc be given by the developer after the possession! A gym without equipments, swimming pool without water connection, gas pipe without gas reservoir, garden without plants, fish pond without fish, fountain without water, children play area without swing or sea-saw....the list goes on. I am sure many of you have faced this. So, please be careful.

10. Builder having right to construct another tower or increase number of floors after you have purchased! If you have chosen the top minus one as your choice of floor, you surely do not want 10 more floors to come on top of you. If you have looked at a breezy direction for your balcony, then two taller towers in front is not what you are looking forward for.

11. Builder pushing you to take loan from their chosen lender as they have taken project finance from them! This is most unsuitable for the buyer. At the beginning it may sound like a 'time-saving', 'easy-process' kind, but soon you will realise that there is a bigger backdrop. The builder wants his credit-line to get free by transferring your individual loan to the same lender. It may not be the best choice for you, right? You might get a lesser rate, lower fee, a better product, a more suitable bank (as you may bank with another), a better service, some cash-back offer elsewhere. And why should you not opt for what is best-suited for you?

At the end, please be sure who is signing the agreement on behalf of the builder as you will later have no clue. Do not forget to keep a copy of the document with you for records and again, before signing any amendments on the agreement, do due diligence once more. It may cost you some time, money (if outsourced to a lawyer) and energy, but every effort is worth it! It's a tried and tested method and no amount of time is wasted for the 'dream home' you aspire.

Be informed. Stay happy.

Happy investing

Source:Moneycontrol.com

FINANCIAL PLANNING

FINANCIAL PLANNING

As Eisenhower would say eloquently,

Plans are worthless, but planning is everything. There is a very great distinction because when you are planning for an emergency, you must start with this one thing: the very definition of emergency is that it is unexpected, therefore it is not going to happen the way you are planning!

So, it’s worthwhile to have a roadmap or a compass when you take this journey of life.

Let’s look at financial planning in a similar way: A financial plan is a road map to help you achieve your life’s financial goals.

At RupeeManager, we have looked at the jigsaw pieces of financial planning separately. The pieces areasset allocation, risk analysis questionnaire, 3 principles of money, the mathematics of money, thepsychology of money, etc. It’s time we bring the pieces together to create our financial plan.

Here are three basic questions that you will answer during financial planning:

• Where are you today? What is your current financial situation?
• Where do you want to get to? What is your vision of your future financial situation?
• Will you be able to get there? How do you plan to achieve your vision?

During the financial planning process you analyze what your financial needs and goals are. Then, you quantify in money terms what resources you need to meet those goals, and quantify the time period during which you want to achieve these goals.

The Process

The personal financial planning process is a six-step process as followed by the CFPs (Certified Financial Planners):

Step 1: Setting goals with the client.

This step (that is usually performed in conjunction with Step 2) is meant to identify where the client wants to go in terms of his finances and life.

Step 2: Gathering relevant information on the client.

This would include the qualitative and quantitative aspects of the client’s financial and relevant non-financial situation.

Step 3: Analyzing the information

The information gathered is analyzed so that the client’s situation is properly understood. This includes determining whether there are sufficient resources to reach the client’s goals and what those resources are.

Step 4: Constructing a financial plan.

Based on the understanding of what the client wants in the future and his current financial status, a roadmap to the client goals is drawn to facilitate the achievements of those goals.

Step 5: Implementing the strategies in the plan.

Guided by the financial plan, the strategies outlined in the plan are implemented using the resources allocated for the purpose.

Step 6: Monitoring implementation and reviewing the plan.

The implementation process is closely monitored to ensure it stays in alignment to the client’s goals. Periodic reviews are undertaken to check for misalignment and changes in the client’s situation.

Before we conclude and go on to build the financial plan for ourselves, here is a red flag

Let’s take a plan for your child’s education. The normal template of the financial plan would identify the projected cost of the child’s education based on inflation assumption and will calculate how much to invest so as to reach that goal. However, in reality, no one knows what would happen after 15-20 years and what the career opportunities & your child’s preferences would be. Could anyone predict 20 years back as to the career opportunities that are available today!

Happy Investing

Source:Rupeemanager.com

ASSET ALLOCATION is THE Game

ASSET ALLOCATION is THE Game

In investments, we all want to time the markets or select the “best” stock, mutual fund or any other investments. We find out later (the hard way) that they are not in our control mostly. But there’s something that’s in our control and that’s called asset allocation. Let’s understand this thing that’s called asset allocation.

Let’s imagine a journey from Mumbai to Delhi. There are various methods of going from Mumbai to Delhi. We can travel in a train, car or a plane. You can also hitchhike your way and reach Delhi after a long meandering journey. In a train, you can travel first class or in sleeper class.

Similarly, your investments also have various classes as options. These are called asset classes. There are different asset classes of investments. In common parlance, the various asset classes are debt, equity, gold and real estate.

Your investment journey can also be planned by using the various above options and the technical word for this plan is “asset allocation”.

The key factor to decide is the time in which you want to reach your destination. Your safety and comfort are the other two factors in deciding your asset allocation.

Let’s dig a bit deeper and understand what and how of asset allocation.

What is Asset Allocation

Asset allocation is based on the idea that in different years a different asset is the best performing one. It is difficult to predict which asset will perform best in a given year. Thus, although it is appealing to try to predict the “best” asset, proponents of asset allocation consider it risky. They say that someone who “jumps” from the one asset to another may easily end up with worse results than any consistent plan.

Studies have pointed out that replacing active choices with simple asset classes worked just as well as, if not even better than, professional fund managers. The study also pointed out that a small number of asset classes were sufficient for financial planning. This study supports the idea that asset allocation is more important than all other concerns like market timing, finding the right asset class every year, stock selection, etc.

Let’s begin with a few snapshot data. In 2000, the Sensex gave you a -26.1% return, Gold -3.33% while Debt Funds gave a +10.19% growth. But in 2006, it was  +46.7 for Sensex, +5.28% for Debts and 35.0% for Gold. Every year, there’s a different growth story for the three asset classes.

And nobody knows for sure what 2020 will give returns on the three asset class. If the papers tell you that Debt funds are doing well and you take out your equity investments and put them into Debt, chances are that the equity is back to performing well and the debt funds nosedive.

If nobody knows when and what returns will an asset class give, jumping from one asset class to the other is really a bad idea, right?

How to set up your Asset Allocation?

Essentially Asset Allocation is your Investment policy. Depending on your own understanding of your risk profile, you need to finalize the best fitting pie for your debt, equity and other investments.

To start off, the thumb rule of asset allocation is based on your age. So if your age is X, invest X% in debt and 100-X% in equity. If you are a 25 year old guy, invest 25% in debt and 75% in equity. Always remember, it’s just the thumb rule.

What are the takeaways from this knowledge of asset allocation? Let’s take it in steps.

Step 1: Understand Yourself

There’s always a risk-return trade off.  You must know whether you can absorb the shocks of short term losses when you aim at higher returns. It’s not possible that you want attractive returns and you are not exposed to a few shocks here and there. So be aware of your risk profile to start with. The three broad categories of risk profile are: Aggressive, Moderate and Conservative. Which one is your risk profile?

Step 2: Understand the Asset Classes

We must invest in assets we understand. Blindly investing in any of them could be disastrous especially equity. So one should know what options are available under equity and debt assets and then take a reality check on our comfort level with them.

Step 3: Decide your allocation ratio

Now you knew the thumb rule that if you are a 25 year old guy, invest 25% in debt and 75% in equity. But after going through steps 1 & 2, it’s time you set a allocation ratio for yourself. You should allocate according to your risk appetite and not because of some thumb rule. Moreover, you can also allocate funds for equity classes like gold and real estate too.

Step 4: Balance the Portfolio

We need to monitor the portfolio and rebalance it to the original allocation ratio. Why? Well, once you have invested (for example) Rs 1,00,000 , Rs 50,000 in equity and Rs 50,000 in debt funds the portfolio will change it’s ratio over time. In a few months, the equity portfolio may be valued at Rs 75,000 and debt portfolio at Rs 55,000 , total Rs 1,30,000. (just an example). So if you want to maintain your asset allocation ratio of 50% each, you may have to sell Rs10000 from your equity and invest the same in debt to make them valued at Rs 65,000 each.

By maintaining this asset allocation ratio, you are booking profits when the equity markets rise. Similarly, you are buying more equity when the stocks go down, thereby reducing your cost of your stocks acquisition. This is what asset allocation can do for your financial health.

“Since a common investor can’t really time the market successfully or select the right stocks, asset allocation should be the focus of his/her investment strategy. This asset allocation is the only thing that the common investor can control.”

Conclusions

Call it asset allocation or modern portfolio theory (they even got a Nobel Prize for the theory in 1990!), in essence it is about not putting all your eggs in one basket. A wise and common sense approach to investing is to create a portfolio across various kinds of investments across different asset classes.

Asset allocation is your plan for investing, a plan to organize your portfolio among debt, equity and other asset classes. It’s a diversification plan.

Asset allocation is the only element in your portfolio that you can control. So to conclude, the asset allocation or the investment plan is more important for you than the investments themselves.

Happy investing

Source:Rupeemanager.com

RULE OF 72

RULE OF 72

Here’s a simple thumb rule that is good to know. This is a part of the series on understanding the number game in personal finance. We have covered time value of money, power of compounding andrupee cost averaging earlier. Hope it helps you in your day to day investments related activities.

So what’s the rule of 72?

If you divide the number 72 by the rate of interest, you get to know the number of years it will take for you to double the money.

Example: if the rate of interest is 9%, simply divide the number 72 by 9% and the answer is 8. Thus 8 years will take to double your money if you invest at 9% of rate of interest.

We can use this rule in reverse to know the rate of interest needed to double your money to achieve your set goal.

Example: You have 2.5 lakh today and you need 5lakh in 5 years. Just divide the number 72 by 5, the answer is 14.41%. Thus you need a type of avenue, where you earn at least 14.41% as rate of interest, to double your amount in 5 years.

INFLATION:
This ‘Rule 72’ helps you to understand about inflation also. It helps you to calculate the amount of time it will take for inflation to make the real value of money half.

Let’s say present inflation is 5.5%. When you divide 72 by 5.5% the answer is 13.09 years. That is to say, if you have 1 lakh in your kitty today, it would take around 13.09 years for the value of the money to be halved.

Happy investing

Source:Rupeemanager.com

HOW TO DOUBLE MY INVESTMENT

HOW TO DOUBLE MY INVESTMENT

I get a lot of questions on how to double the investments. Obviously, people are looking for quick tips and fixes (instead of using the power of delayed gratification). One of my earlier responses was that doubling your money is simple: Just fold it into two and keep it in you pocket. The questioner often looks at me very angrily for that answer J

Here’s the question: If I have Rs 1 lakh, where should I invest to make it double soon? Please bear with my long winded answer.

Just like there are multiple ways of taking a journey from point A to point B, there are a lot of ways to take the journey of Rs 1 lakh to Rs 2 lakh. In going from A to B, you have a choice of walking, 2 wheeler, four wheeler, bus, train and flight. Similarly you have different vehicles for your investments too.

Another issue is that the question has not really defined the “how soon” part.

The other issue is how comfortable are you with driving those vehicles or hiring a driver for yourself that comes at a cost. To train yourself to be a good driver, you must know the basic principles of money, asset allocation and financial planning.

Some of the popular vehicles available for investments are Real Estate, Mutual Funds (MFs), Bonds, Stocks, Unit Linked Insurance Policies (ULIP) and (not at all popular option) Exchange Traded Funds (ETF).

And let’s try to rate them on four parameters of investing. i.e. 1) Growth, 2) Liquidity, 3) Security and 4) Expenses

Growth: Stocks, MFs and ETFs top the rankings here. Over a period of over 15-20 years, the Compounded Annual Growth Rate (CAGR) is above 15% in comparison to 8% in Bonds. ULIPs begin to give a good growth only after 5 years or so because initially they are very expensive. Real estate is not really on a good run these days.

Liquidity: Again, Stocks, MFs and ETFs score heavily while Bonds and ULIPs have a lock-in period or have substantial surrender charges. Real estate scores low here (You have to be lucky to get good buyers at the right time).

Security: Most financial products that we are discussing are secure over a long-term of over 5 years. But you may get into a bad stock or real estate which is unsecured. Otherwise also, stocks and real estate are very volatile and can affect your blood pressure too!

Expenses: ETF is the least expensive with charges of around 0.5% compared to 2% from MFs and much more in ULIPs (especially in the initial years). Stocks too, are the least expensive, provided you get into the right stocks at the right time.

One man’s meat could be another man’s poison. Moreover, the diversification rule says that one should not keep all our eggs/ apples (for the vegetarians) in one basket.

So let us take a briefly look at the various options, one at a time.

Shares: Investing in the equity market directly is exciting and sexy. You are in the thick of things and learn a lot in the process. Though the volatility and the information overload makes it a daunting task, investing in stocks is not rocket science. One should start with identifying a list of 10-15 companies out of 3-5 sectors which you know about and interests you. You can then keep a tab on their management team, financials, and future outlook and over a period of time, and will be able to take a call on them.

Real Estate: I feel that one has to be plain lucky to get into a good deal and be able to get the right buyer at the right price and time. I can’t think of any other factor other than luck. So if you feel you are blessed and have the right tip, go for it. Also, a lot of black money has been invested in real estate, which really scares the good guys.

Mutual Funds: One should allocate their time to investment decisions in proportion to their income generation goals. Also, convenience and hassle free investing should be a major factor. Mutual Funds fit the bill where Fund Managers are into it full time. If you can identify fund managers who have consistently performed over last 3-5 years, nothing like it. The fund manager also has the muscle power of crores of Rupees and is able to take entry and exit decisions impartially. MFs continuously churn their portfolio. When MFs buy and sell stocks, they don’t have to pay capital gains as you would do when you churn. With Systematic Investment plans (SIP), you can start investing with as low as Rs 500 per month. But MFs have its own loading and administrative charges and the fund managers make merry on your hard earned money.

Exchange Traded Funds: More than 70% of the mutual fund schemes underperform the markets returns. Also, diversified equity funds usually have larger expense ratios compared to index funds. For example, the expense ratio of IDFC Nifty Fund, an index fund, is only 0.25%, while it is anywhere between 2-2.50% for diversified equity schemes. This means that while you pay extra for active fund management, more often than not, it does not give you a better return.

ULIPs: Unit linked insurance policies combine two products, i.e. Insurance and Mutual Funds. In the initial few years, ULIPs are very expensive. But only in case you don’t want any hassles of investing, and you have a tried and tested Insurance agent who is almost part of your family, then ULIPs are for you.

Bonds: Bonds are for those of you who are risk averse and want fixed returns

HAPPY INVESTING

SOURCE:Rupeemanager .com

Define your Legacy to outlive you life

Define your Legacy to outlive you life

The day you are born, you assume the role of a child to your parents, as you grow older you assume the role of a sibling, the role of a spouse, the role of a parent. With each role you also accept the affection and responsibility associated with that role. In some sense you become irreplaceable for your family when you shoulder the responsibility of your family’s wellbeing. You carefully plan to meet all your responsibilities so that in case of any unfortunate event, your family is financially secure and can live with their head held high. While financial planning to secure your family’s future is important, it is equally important to share your thoughts with your family to guide them.

Keeping your family informed

All your planning will be useful when you share it with your family so that they have access to it even in your absence. HDFC Life has developed a tool known as the 'Little Book of Legacy' which allows you to take a backup of your crucial financial information and share it with your family. The ‘Little Book of Legacy’ is an editable PDF document which can be downloaded and printed by you. You can add information related to your bank accounts, investments and any other important financial information that you may have. You should update it regularly and share it with your family so that they are aware of all the careful financial planning that you have done.

Creating your Legacy

Your legacy is not just your financial planning, it is all your memories, your thoughts, your words of wisdom which are equally precious for your family. Advancement in technology it has made it very easy to leave behind messages for your family.
HDFCLifeMemoriesforLife offers you the opportunity to record, store and deliver your messages to your family so that your legacy is complete.

Memories are the keys not to the past but to the future

HDFC Life believes that an individual leaves behind much more than just money for his family.MemoriesforLifeis a digital platform that allows you to record a video memory or collate a scrapbook" so that you can leave behind more than just a financial legacy.

HDFC Life Memories for Life

HDFC Life launched a new platform 'MemoriesforLife', where you can leave behind more than just money for your family. It comes from the insight that, often, a lot is left unsaid in strive for securing the future of loved ones.
'MemoriesforLife' allows everyone to record video messages and collate a scrapbook full of your memories with your loved ones. You have the liberty to share it with them at a date and time of your choice. This time capsule can store messages for up to a period of 10 years. While creating the message, you have the freedom to choose the sound track, background template and create captions as many times for as many people.

Recording your message

Recording and sending a message is very simple and can be completed in 3 easy steps.

Your video message will help you explain to your family, your decisions, your story as well as things, that they may not understand right now, but over the due course of time will. You can create messages for occasions likes birthdays, anniversaries or milestones that one achieves. 

You can now be rest assured that not only have you financially secured the future of your loved ones but have also planned for leaving behind more than just money for your loved ones.

16 Tips to sell your flat faster & optimise investment return

16 Tips to sell your flat faster & optimise investment return

If you have invested in a flat thinking that you will make a good return on your investment. Here are some tips to sell it quickly on a slow real estate market.

When Raghu invested in a property in Bangalore two years ago, he found the property prices are quite high. He spent more than one crore rupees for buying a two bed room apartment in the Eastern suburb. But he was hopeful that the prices will go up. Since he had started looking for buying one, it always seemed going upwards. Following that trend, he hoped that in the next one year he will have a 20% appreciation and he can sell it off easily while moving out of India with his offshore posting, which was pre-announced. But to his surprise, the price remained almost the same. And to top it, since he had limited timeframe to dispose it off, he became a 'distressed seller'!

This might be the story of many like Raghu. Here's my effort to share a few inputs with you, so that you can cut your losses and make most out of the apartment you bought, while selling.

1. Stay invested for at least 3-5 years, if it is an apartment:

Apartments, unless it's in a prime location with no other inventory and has excessive demand (which is not so for most part of the city), it is best to wait for some reasonable time. For example, you may get a 8% increase in the first, 11% in the second and 19% at the end of third year, making it a 8+11+19=38% return after three years which is not an yearly equated growth.

2. Either buy in pre-launch to strike a good rate or buy after it gets ready:

A pre-launch has it's own risk and rewards. All the requisite statutory approvals when not in place, the developer tastes water by offering pre-launch low prices for a hand-full of apartments, which, if you are lucky and well-connected, you might chance upon. Else, the next negotiation time is when the builder has unsold ready inventory and wants to exit the property.

3. Buying an under-construction apartment has many costs involved which can't be ignored while selling:

Costs like home loan interest, paying rent in the currently occupied home, not getting tax benefit (since property is not ready) etc are the few costs you must keep in mind. If you add these costs to the actual purchase price, your profit margin gets skewed and even get into minus!

4. Builder subvention is the only answer should you have to borrow in an under-construction property:

If you have to pay bank loan interest till possession happens, which in most builders are delayed in any case, and that goes up to four to five years, it is advisable to look for builder-subvention deal 'till possession'. It costs the builder approximately 5-8% cheaper than taking construction finance and they might be glad. It's a win-win if all goes well.

5. No need to upgrade the fixtures:

Please do not spend extra cash on upgrading the floor to italian marble, or indulge into extravagant bath fittings etc; as you may not get the price for these. Any opportunist buyer (read: a smart one) knows that you have no choice but to sell it including the upgrade.

6. Please do not change the internal plans to suit your needs:

Some buyers try to make the living room bigger by cutting down on the bedroom-size to suit their lifestyle but it might pose a problem as either the buyer may not like the plan or think that it is a 'deviation' from the actual standard plan.

7. Please do not cover the balcony to make a study etc.:

Many buyers do not know that covering balcony is considered an FAR violation and even the society can fine you for doing that. The entire building can lose fire-insurance claims etc. for one resident doing such. Your buyer, if informed, will never want to buy such apartment.

8. Do not compromise on servant's quarter to get extra space:

It may not be important for you as you may not have a live-in servant, but your buyer just might, and this becomes one of the most important requirements for him. He cannot construct the toilet again if all pipes etc have been sealed by the builder upon your instruction. He will surely not buy your apartment.

9. Do not invest in high-cost woodwork:

After all, you are going to sell it as you aspire to be in a bigger, better apartment. This was never your final destination. Then why fix teakwood furnitures? You will never get a price for your investment as your buyer might sincerely want to throw it away as he prefers modern modular stuff.

10. Buy that one additional car park, if so, but don't go overboard on buying three:

There has been instances when builders have given 'compensatory' car parks in lieu of cash while delaying possession, convincing you that they are giving you a lifetime-investment which is valued at a very high price and not a mere delay-penalty of Rs 1 lakh, but this can ultimately become a bone in your throat as your buyer may not want to buy 4 car parks just because you have it. You may have to let the extra ones go free!

11. Engage a real estate broker who is selling in the complex already:

My humble request is to budget the broker's commission to sell faster and not try to save that money. It's not easy for a broker who sells for you. You have added advantage in engaging one or better multiple. They will have ready database of buyers who are already seeking to buy in your complex. Those buyers have zeroed in not only on the location, but the complex too, which makes your selling time reduced to a great extent.

12. Upload property pictures along with your listings in different real-estate portals to generate direct enquiries:

Trying to garner buyers directly will need a little bit of your time-investment. If you can do that, it's possible that you chance upon a buyer directly on your lap!

13. Let your neighbours know via the whatsapp or yahoo group in the complex that you are looking to sell:

Many times your neighbour is looking to buy another apartment in your complex for in-laws, siblings, or can refer their close friends whose first-hand knowledge is readily available with them. Your neighbours will be your advocate in promoting your sale, that too free of cost!

14. Maintain the property well:

Do not think that you will clean the floor, paint the walls or repair the tap after you find a buyer. Your prospective buyer will have an instant disliking for your product (apartment) if it is not clean or smells of rotten rats because it's been locked-up for some time. If you have just vacated a tenant, it needs a proper hygiene cleaning before you start showing it.

15. Fix small issues before you start showing the apartment to prospective buyers:

A minor leak, a dripping tap, a broken window-glass, an oily chimney may put the buyer's wife off instantly. She might just not like it. Period.

16. Understand your target group well:

If you are trying to sell a ground floor flat, may be an elderly couple will like it better than a 20-something buyer. If your apartment is not vaastu-compliant, you better be upfront with that info with your broker as well as not try to push it to those who believe in it. You must understand the pulse of your potential buyer and not waste your time.



Happy Selling, Happy Investing!
Source:Moneycontrol.com