We all know buying a property is a long and costly process. The down payments alone can take most of your family’s entire savings and the EMIs can take a good part of your monthly income for 10-20 years. Investing at pre-launch stage in a property can be a good way to reduce this financial burden – buyers can save upto 30% on the price of a property. However, buying a property at pre-launch stage comes with its own set of risks as one is investing in a product that is yet to be manufactured. Especially in this age of illegal constructions and demolitions by regulatory authorities, buyers need to be even more cautious when thinking about pre-launch investing.
So, how can buyers ensure a successful investment in a property at pre-launch stage. Here are the six mantras for successful investing in a pre-launch property:
- Pick developers with good reputation and standing: This is the first thing to keep in mind. Pick and choose developers whose name infuse confidence and who have a clean track record. If the developer name does not ring a bell or if the developer has not delivered a single project before – you need to be extremely alert and go for much deeper due diligence before buying.
- Verify developer track record on delivery: Check how well the developer has been able to deliver his projects on schedule in the past. Instances of project design or specification changes in the interim are not desirable and calls for a rethink/no-go on the project.
- Do your own legal due diligence: Don’t rely solely on the bank to do the legal due diligence. Establish the legal bonafides of the project at every level. Ask for seeing the sanction plan, commencement certificate, draft agreement, and the title search report. The title search report needs to prove the developer’s free and legal ownership of the plot on this the project will be built.
- Choose projects that will be handed over in 1.5-2 years: The ideal projects to invest in are where the completion/handover for project is 1.5 – 2 years from the time of buying. Beyond 2 years, the investment is likely to be much riskier and needs for much deeper diligence.
- Ensure penalty for late delivery in agreement: Ensure the agreement clearly mentions the penalty on the developer if he fails to deliver on time or as per the project design.
- Check the purchase agreement completely: Even if all the above are met, check the purchase agreement in entirety and be aware of certain key facts – what is the actual size and layout of the flat and what are the key facilities/ amenities that will be included.
If done carefully with adequate attention to the above six mantras, pre-launch investing can save you lot of money and make you a happy inhabitant of a completed home. So take care and happy investing!!
This is an excerpt from the original article titled “Should you invest at the pre-launch stage?” written by Arvind Jain-MD, Pride Group. The original article appeared in The Hindu – Property Plus supplement on 21nd August 2015
It is no doubt that most of the buyers have a taste of ready-to-move properties. However, when you start searching for your home, it is important to understand the pros and cons of under-construction and ready-to-move-in projects. There are different variables such as location, price, developer, connectivity and related aspects. Purchasing an under-construction property is a good decision because you will get a good property within a low budget. When you are going to buy the same property when it is completed, the price of per square feet will be multiplied.