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Real Estate Investments

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Risks Involved in Real Estate Investment & Ways to Attemate Them

Veröffentlicht in: Immobilien
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Real Estate Investments

  1. 1. Safety of my clients’ investment comes first, always and every time
  2. 2. My team member’s welfare and training comes next
  3. 3. My own ease and comfort comes last, always and every time
  4. 4. Real Estate Investments Olive Green Realty
  5. 5. Olive Green Realty • What are the Risks in Real Estate Investments? • How can you mitigate these risks? Scope of this presentation
  6. 6. Olive Green RealtyRisk Categories Builder Risks Real Estate Investment Risks can broadly be classified in three categories: 1. Project Delay Risks 2. Project Default Risks 3. Price Risks Market and/or Builder Risks
  7. 7. Olive Green RealtyProject Delay Risks “Project delays in Real Estate have become a norm rather than an exception” Reasons for delay: • Lack of Money • Lack of Project Management Expertise • Sudden change in Government and/or regulatory policy
  8. 8. Olive Green RealtyProject Delay Risks Lack of Money General Reasons Diversion of funds to other projects / personal use Slow sales in the project Project sold at underpriced rates Already over- stretched builder in other projects Poorly capitalized builders
  9. 9. Olive Green RealtyProject Delay Risks Lack of Project Management Expertise General Reasons New Builder Less Experience Reluctance to on-board experts Non-availability of expert manpower
  10. 10. Olive Green RealtyProject Delay Risks Change in Govt. and/or Regulation General Reasons Change in regime Overhauling of administrative machinery Regulation change e.g. NGT ban on completion due to Okhla bird sanctuary issue Policy Change e.g. Demonetization and GST Court orders e.g. Against ground water harvesting
  11. 11. Olive Green RealtyDelay Risks Safeguards SAFEGUARDS Buy Ready- to-Occupy projects. Buy projects from reliable and experienced builders. Avoid thinly- stretched Builders. Avoid Value Traps i.e. very aggressively low priced projects. Avoid aggressive payment plans. - Down payment - Time Linked - Construction Linked Instead opt for - Possession linked - Subvention schemes
  12. 12. Olive Green RealtyProject Default Risks General Causes (In addition to the ones listed under ‘Delay’ risks) Sale at extremely early or non- productive stage PONZI Scheme (assured returns, buy-backs etc.) Overhyped product in frenzied market Fraudulent Sales
  13. 13. Olive Green RealtyDefault Risks Safeguards SAFEGUARDS Do not buy projects at pre- approved stage. (especially as a retail buyer, even if the prices are attractive) Verify approvals, land documents before investing. (Thumb rule: only buy after the project has been approved by banks) Avoid buying “assured returns”, “buy-back” scheme projects. (unless from extremely reliable developers / promoters)
  14. 14. Olive Green RealtyHigh-Price Risks General Causes Hyped market conditions (Bull phase) Hyped builder (size, scale) Hyped up popular locations Hyped up, hard sold projects Poor efficiency projects (super-area to carpet area ratios) Payment plans with lots of hidden costs Poor Const. quality Fads, unnecessary frills
  15. 15. Olive Green RealtyHigh-Price Risks Safeguards SAFEGUARDS Get into Details before investing (Don’t buy based on broad parameters such as builder name and location etc.) Go for presently overlooked locations. Go for mid-sized, reliable, sound builders Do complete due-diligence. Avoid fashionable construction props, fads. These are short lived. (size efficacies, construction quality, style of construction etc.)
  16. 16. Safety of my clients’ investment comes first, always and every time Olive Green Realty www.olivegreenrealty.in