By Soniya Gaonkar on Dec 23, 2022 6:46:39 PM
Now, that’s a valid and very sensible question to ask. Real estate investments are usually believed to be lucrative. But the timing of investment surely matters. In real estate, you either have an ongoing project (either proposed or under construction) or a completed one. So, let’s discuss when to invest in these projects.
Investing in Completed Projects
These are ready products you can see, assess and decide whether to invest in or not. They’ve been shaped already. Thus, you don’t have to imagine how they will look after completion. With all the documents like the building approval plan, mother deed, sale deed, Khata Certificate or Khata Extract, Power of Attorney, Encumbrance Certificate (EC), stamp duty, the latest tax paid receipt and betterment charges receipt verified and authenticated by a lawyer, you can invest in the property.
While you can invest in completed projects anytime, ensure they will turn productive enough. Accordingly, assess the property’s location, business potential, sustainable promise, facilities and amenities before you make an investment decision. Hiring a realtor can help you. They can help you assess the property’s RoI potential and thus determine if it is a worthwhile investment choice or not.
Investing in Ongoing Projects
Investing in ongoing projects could be a little tricky and require a strategic thought process. To determine when to invest in an ongoing project, let’s look at the various stages of the project and the potential pros and cons of investing in the project during each of them.
· Early Planning Stage Process – Approvals are Yet to Come
This is the primitive stage where the project is yet to receive some or all approvals. So, the project is only chalked out on paper. One of the most significant benefits of investing in a project at this stage is that the property’s price will be substantially lower. So, it is evident that investing during this stage will help you gain a commercial advantage.
But there’s a flip side to the coin as well. The developers will happily sell you a property, probably as the project’s first customer. But then you must remember that project is yet to materialize, as approvals are yet to come. Even if it starts, depending on its size, it will take at least a few years to complete. Further, changes in regulations, etc., midway might affect the project’s progress. The developer’s commitments matter here. But you must factor in these elements before investing.
If you can wait for such long periods, and you are sure the project will commence and complete, you may choose to invest, considering the monetary advantage.
· Mid-Stage Project – Construction has Already Commenced
Investing in a project at this stage is less risky. It is because such projects would have already obtained the necessary approvals from authorities like RERA. In some cases, some part of the construction work would also have commenced.
So, while investing in the project, you would have something to look at and decide whether you should invest in a project or refrain.
But here, a mid-stage project will not offer the cost-benefit an early stage might. The developers will have already invested in the project, and hence the cost will be quite higher than the pre-launch or early-stage phase.
So, in a nutshell, you wouldn’t necessarily have as much of a cost advantage investing at this stage. But you will at least be assured that the project has the necessary approvals in place and that its development is already underway.
· Late-Stage Projects
Investing in this project is the least risky. It is because these projects are either in their final construction stages or completed. So, in these cases, you get to see the real property product. The decision-making at this stage is much more straightforward, as you don’t have to worry about approvals, completion, etc.
Thus, while investing, you can focus on the more strategically important aspects like location, amenities, quality of work, etc.
However, at this stage, the project will be the most expensive. The project’s developers will leverage the project’s completed status to sell the property at a price much higher than what it was in the early or mid-stages.
So, if you don’t want to potentially risk your investment but have more significant investment potential, you can choose to invest in the late stage of the project.
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