A first-time investor’s guide in Hyderabad’s realty

The Hyderabad realty market looks to be heading to settle to a more realistic level post the euphoria post creation of Telanaga. With this transformation the segment is expected to witness the emergence of several first-time investors in the scene, who are not merely looking to make quick money. These investors do not have a fixed time period in mind while putting their money. Most of these investors are locals, and work primarily on the basis of relationships that have been built through years of doing business with the builder.

 “The local population of Andhra Pradesh or Telangana has always been business oriented. Though, in the past, greed had overtaken resulting in several fly-by-night operators entering the residential market, post the settling of the dust only steady and serious investors are slowly re-entering the market,” says Pradeep Kumar of Pradeep Property Consultants, whose family has been large landowners for generations in the state.

 “With the IT industry witnessing steady growth and several large non-IT players expanding operations in the city’s outskirts, professionals from these sectors too are looking to enter the realty market now,” says A Narasani, freelance financial advisor and property consultant. “These people are not looking to make big money within a short time, but are ready to wait for three-four years at least before they book profits.”

Given these facts, find below some factors that non-formal investors must watch out for:

• A clear contract: “While extending credit for housing to builders we need to have complete clarity with regards to any eventualities, as often projects get delayed for reasons beyond the control of the developer. So, we need to factor in these aspects even while mitigating the risks for both parties,” says Narasani.

• Systematic due diligence: “The due diligence process, especially when investing in someone else’s land must be linked to evaluating the credit worthiness of the potential beneficiaries,” says Pradeep. “These are complex deals that need to be time and delivery bound.”

• Ability to scale: There is a limiting factor when it comes to the ability to scale in terms of financing and the builder’s percentage in the project. Potential investors need to ensure this factor while investing as often there are several parties involved.

• Project division: “In deals of this kind a certain percentage of apartments are signed in ownership of the various investors. In addition, for a clear record of ownership, details about who will do the marketing for these apartments, and what will be the charges for these services need to be decided clearly,” says Narasani. “Often there are grey areas when the developer initiates a sale, which was followed up later by the investor and both the parties are present when the final price agreement is made. These could lead to disputes regarding service charges to be paid to the developer. It is best to anticipate these grey areas and address them at the time of signing the contract with the developer before the project launch.”

• As most of these properties are ancestral, land papers, ownership, transfer deals and security are some of the other issues that need to be checked before investing.

Realty investment no doubt gives good profits, a basic understanding of the processes and observing precautionary measures should ensure you make the money you intended.

SOURCE: Magicbricks