Honest Acres

Many of our clients ask us for stress sale properties. Our advice to all clients is to never wait for stress sale opportunity. My grandfather did not like stress sale transaction, he says “stress comes with sale” in a stress sale. He says (in hindi) “jo sauda raaji khusi hota hei usi se barkat hoti hei”.
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There are two main reasons for avoiding stress sale, one is actual stress sales transaction are very few and many of times gangster do fraud by taking shield of stress sale transaction, other is on humanity ground when you did not sale your own property for such a low price then why should you compel other to sell his property at stress sale price. We should not take undue benefit of anyone else stress times.
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Further client who has tendency to purchase property in stress sale could not take decision for any other normal opportunity available in the market, however big it may be.
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Go for straight forward transaction, in between if stress sale opportunity comes look at it also but do not wait for it intentionally. Search for properties which have strong fundamentals but presently undervalued and not looked by the majority of investors. Pay fair price and then have some patience. You will definitely be richer then your expectation.
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More you look at the most successful persons of the world, you will find that they have simple mind with strong fundamentals and are very hardworking. If you wish to be among those then be simple.

 1. Liquidity

Investment in Real Estate Vs Investment in Shares and Securities.

Share Market offers Liquidity on instant basis where as in real estate   property could not be sold instantly always and also completion of transaction also takes more time as compare to share market transaction.

2. Regulated

Share market is much more  regulated and have standard guidelines for transaction as compare to Real Estate market. Chances of fraud (e.g.Satyam) are comparatively less then real estate market.

 3. Cash Money.

In share market you need 100 % cheque money , where as in real estate cash money could be utilized. This is a big difference.

4.Time involved

It is usually seen that persons investing in shares develop a habit to watch share prices daily. Majority of persons use their precious working hours including both businessmen and servicemen and now a days even ladies in house watching news channel or newspaper. Majority of them turned in to a day trader, Which deviates there concentration from their current earning activity, that is not good in the long term.  In comparison if a person purchase a plot then he doesn’t check the prices daily and after completion of transaction he comes back to his original business.

5. Risk Involved

       Normally it is seen that real estate is more risky then share market, but it is not correct 100%. It is like a wrong use of knife resulting in cut on hand.  Knife itself is not bad, it is the way of use that is right or wrong. Real estate is risky only in respect of regulation part, Indian laws are not perfect and gangsters have chance to threaten the simple persons.  This can also be overcome up to major  extent by following some simple rules like verifying the past record of promoter, select  good and reputed real estate agent etc. Even in share market also in every eight to ten years thousand of crores of rupees goes in scams, and every time  traders come with a new type of scam.  

6. Negative effect of Liquidity

   A Person sell his property only in last stage when all other sources dry up, where as easy liquidity in share markets offers temptations and normally a investor sold their shareholding if some financial crisis came. Crisis may go after some time , but after some time you could not invest the same money. Thousands of people hold their property for more then 20 years but we seldom see any person holding a particular share for more then 20 years. In a nut shell brokers earn and investors loose.

 I have heard a reputed broker of Jodhpur saying these words “ up to 1992 my 90 % clients earn and 10 % client loose and now a days my 90 % client loose and 10 % earn Þ . One of the reason which I felt is share market is like bar you start with a single peg and ends with bottle, which is very injurious to health. Although real estate investor or businessmen also commit suicide but these cases are very few. 

7. Entrepreneurship

Land in hand inspire the person to go for a certain business instead of sitting idle. Normally we have seen that  number of businesses in our city is established because owner has the vacant land and he want to use it instead of  selling it. Everybody thinks to use his vacant land e.g to develop a restaurant, marriage garden, office space , or took a franchise which will be useful after their retirement. It makes life interesting after retirement.

 Summary :

For whom Shares is better as a investment :

1. Have a complete control over mind, after purchasing a good share he should not watch the prices minimum for a period of five years.
2. Should be fairly educated and could read different type of investment proposals.
3. He has no suplus cash money to invest.
4. Have no time even to visit his property for years after purchasing it  , that type persons give inspirations to gangsters and agents who take undue benefit of it.
5. Simple persons who could not handle day to day problems regarding property and have zero risk appetite.
6. Those persons who are not willing to pay consultancy fees to us ( ha ha ha !)

 For Whom Real estate is better as investment :

1. Have surplus CASH money for investment.
2. Less educated and  could not understand terms of agreement in stock markets. E.g. if somebody sold them ULIP and they go for it, then it is dangerous.
3. Wishes to start any future business over the purchased land.
4. Could visit property timely and have regular watch over it.
5. Should have little bit of risk appetite and could visit court and offices if required.
6. Those persons who are  willing to pay consultancy fees to us ( ha ha ha !)

 However in both the investment  most important thing is selection of property or share and long term holding. For decent returns you need the both thing correctly, for the former one you may take the help of a honest broker or consultant and for the later one you should make your mind.

POINTS TO BE CONSIDERED BEFORE INVESTMENT IN REAL ESTATE

There is general perception that investment in real estate is risky, however if we look after certain points than we can avoid the chances of fraud up to major extent. Following these points doesn’t gurantee of clear transaction but as per our experience these are the major reasons of fraud.

1. King of diamond trade in Antwerp Mr. Mehta once said   ” Don’t check the diamond , check the person selling the diamond “. Same principle is applicable in real estate also, don’t do any type of transaction with persons whom you think are not ethically right. Try to know about the background, previous history of broker, promoter, lawyer before dealing with them.

2. Don’t purchase anything cheap : No body sells his product or land for less than market value. Even in some of the cases if a person has a financial emergency than he might sale at lower price but our experience says that these cases are very very low and normally such type of cases doesnot reach the general public. These type of stress sale transaction are actually done silently between the experienced players. Recent and more clear example of  “cheap” transaction is : One of land of our relative at Pali main road near Rohit village was of value 15 lakh, professional gangster prepared forged documents incl. power of attorney and everything else and offer the same land for 8 lakhs only. One bonafide purchaser thinks that land is available at half price and he purchase the land. Now the same case is pending in pali revenue court and what is interesting is that the same bonafide purchaser sale the land to another bonafide purchaser , now all the parties are in court and nothing is going to be decided for years.

 By word “cheap” my meaning is exceptionally low price looking to the market value.

3. Check the quality rather than quantity : Before purchasing any land don’t see the price, if your budget is less than go for a small plot but please do not compromise on quality issue. For e.g. Umaid heritage scheme near umaid palace when launched than nobody wants go in that scheme at the price of 5000 Per Sq. Yard 6-7 years ago, now everybody wants to be there at 25000 per Sq. Yard. It is usually seen that quality properties always seen costly at the time of purchase in comparison to other properties but return in such properties are always better then other properties further such crème properties are easily saleable.

4. Always construct boundary wall before final registry : We suggest that purchaser should put a condition before seller that he should construct boundary wall over the plot and put the name plate before final payment. This simple step disclose many possible disputes incl. ownership of plot, size of plot and any objections of neighbors etc .

5. Give a public notice if required :  Now a days in big transaction it is better to give a public notice in popular newspaper before final payment of the property. Some times there are disputes in ancestral properties and sister or daughter may come that we have also a share in property. These types are problems are common now a days. Issue of public notice is a strong support in future legal proceedings.

6. Try to get NOC/Sale permission  from District land development authority(JDA) :

Wherever possible  try to take sale permission or NOC from competent legal authorities before going for final registry. Many of brokers doesn’t suggest these because it takes times, reveals disputes and their brokerage may be gone. Although it has its own cost but don’t forget to take permission.

7. Never purchase in a hurry : Generally brokers have a tendency to show that if you do not decide within some time then somebody else would take the plot and opportunity is going to be lost . Our view is always avoid hurry and take full time in taking decision. A shortcut may cut you short. Visit as many property as you can, consult two to three good brokers, get tax advice, thoroughly check the papers and then take decision. In real estate every day a opportunity lost and thousand new appear, so do not regret.

8. Try to get property financed through a good bank : Although you are rich enough to purchase property in cash but please take a loan, may be fraction of total cost, over the property. Reason is bank has a panel of expert lawyers, and before sanctioning the loan they thoroughly check the papers. It has two benefits one is verification of papers and other is one more proof of possession of property.

9. Don’t purchase any property whose return is dependent on certain future decisions: Normally brokers sell property by showing future prospect e.g. this land is going to be clear by government, there is some project proposed in this area by government etc. Instead of this purchase property in already developed areas. It is like purchasing share of Infosys today instead of going for mid cap, even after five years from now Infosys is going to be a great investment in shares.

10. General points about the location of property :

1. Check the neighbors, sometimes one or two good house in colony increase the value of whole colony (how far the colony may be) and its true vice versa also.
2.  Check the general infrastructure such as wide roads, garden, temple shopping market, taxi stand, bus stand etc.
3. Instead of choosing newly launch colony go for established colonies( launched 5-6 years ago), in such colonies if there is any fraud then in such time period it is normally disclosed.
4. Choose colony which is easily approachable from the main road.

As per famous mythological story, God once asked Yudhistar( in Mahabharat) – What surprises you most ? Answer of Yudhistar was simple but important . He says God , for me most surprising fact  is that-‘we all knows that we are  going to die one day but we all  live our  life like that we will never  die’. Everybody is so busy in day to day life that no body knows the end. We are so busy in silly affairs of our life that sometimes we ignore the crucial decisions of our life. One of such decision to write a WILL at appropriate time. I have seen people reaching 70 but still not written a proper WILL.  Their one mistake creates disturbance in their family, disputes are running for years in court, brothers and sisters are not talking and even not looking to each other due to property disputes.  For Years no family member can enjoy the benefits of property, recent case of a prime property at B road, Jodhpur took years before decided at Supreme Court. For our businessmen clients we advise to write their WILL just after reaching the age of 50.

 Now day’s things are complex as girls are also having share in parental properties.

 We suggest our clients to write their or pursue their parents to write their WILL at appropriate time.

 As a matter of fact it is our opinion that in witness column, apart from two independent witnesses, mother or father should take sign of all the major children as witness. It will help after the death of particular person when no legal heir could deny the authenticity of the WILL.

 General Points regarding a will :

1. Any person, who is of sound mind and of any age (not being a minor), can make a Will of her/his self-acquired property.
2. No specific format is prescribed for will.
3. A Will is a document which needs to be signed by the testator in the presence of at least two witnesses.
4. The Will must always be dated and every page of Will should be numbered so that replacement or addition of any page can be prevented.
5. The language of the Will should be simple, precise, clear and unambiguous, so as to avoid a misinterpretation or a misconception.
6. In the event of changes in certain clauses, additional pages should be submitted and finally assets and estate should be fully defined and detailed in the Will.
7. The Will must describe the property in details and the perfect identity of the property that is bequeathed.
8. Registration of the Will is optional, but we highly recommend the same.
9. The Will should be kept in custody of the executor or with some other law professional.

 Relevant legal sections: Section 59 and 63 of Indian Succession Act and Section 67 and 68 of Indian Evidence Act.

 Will is also a opportunity for tax planning. It is therefore advised in the interest of readers that before drafting a Will they should consult a tax consultant. Many revenue generating assets which is normally cannot be transferred during the lifetime of ‘testator’, can be transferred with the help of will without showing any consideration. Further registry department also levy concessional rates in case of transfer of immovable property by WILL.

Why person believing in vastu  go for  EAST or NORTH facing properties :

Note : This mail is not for promoting vastushastra . Also we did not intent to show that vastushastra is important for life. This is informative mail to show that why sometimes north or east facing properties have higher value than south or west facing properties. Any feedback or corrections from readers is invited.

As per vastushastra North East portion of house should be open or have lesser construction as comparison   to South West portion. Further vastushastra also required underground watertank in North East. 

Government laws required setback(open space) more in front and less in backside of house.

In case of North or East facing house both the above conditions can be met easily, as vastu also required openspace in front ( North East) and government laws also required open space in front. But in case of properties facing West or South, the situation is reverse, now as per vastu back side of the house should be more open as comparison to front side- as now North East is in back, whereas as per government rules you should give minimum prescribed open area in front side. In this type of case person believing in vastu normally leave same open space in both the front and back side.  Whereas as per law he need not to leave such space in backside. Result is more wastage of precious land in backside. Further now underground water storage tank is also in the back side of house. In case of scarcity of water then private tanker could not easily reach the back side of the house.  That is why person believing in vastu normally prefer North and East facing properties. Most precious property as per vastu is North East corner property.

First diagram shows situation  when plot is North facing

Now this diag. shows situation when plot is  west facing

We as a consultant if given choice and situation permit then first choose East and North facing property. It is not because we believe in vastu but because that now a days general public is day by day becoming aware of vastu laws and people are willing to pay premium for North and East facing properties and hence better returns for our client.

Try to make things clear

 Some years back I read a interesting survey in newspaper, this survey was conducted by a American University on Divorce cases, they found that divorce rate was found least in those couples who put their disputes, confusion, apprehension etc in front of each other. These couples openly talk to each other on every point. Although survey was related to divorce but I think this is applicable in other parts of life also. 

 Majority of us generally shy/fear to talk openly, this habit is more common in small cities in comparison to metros, before talking about anything we think what others will think about us. Even before asking a question we think that other would think  “he even did not  know this!”  

 Above survey  is correct in reference to  real estate also, many of times people enter in to transaction, without making things clear. All comes in our office in hurry and do the transaction in a way their flight to America is leaving next minute. Although it is the duty of broker to make things clear, but usually their prime motto is any way that parties sign the agreement and give the token money. What is more painful is parties give token money in cash without entering in to legal agreement.

 There are several things which need to be discussed before entering in to any transaction. Some of which I list below, this list is informative and differ from case to case and new points might be added depending on the situation.

1. Payment schedule, mode of payment, what will happen in case of non-payment within stipulated time.
2. In case of sale by power of attorney holder who will bear the additional charges.
3. Whether seller would provide sell-permission from Development Authority or not, If yes then who will bear the charges.
4. If purchaser wants that seller should provide boundary wall before final registry than it should also be in writing, who will bear the expenditure.
5. Any type of liability related to property before final registry should be borne by seller and after that purchaser.

f. Apart from above general points there are specific points related to every property for e.g. if purchasing a top floor  then terrace is included or not, what furniture, fixtures , light fitting, accessories etc will be provided with house or they are taken away by the present landlord.

 In a case of my close relative, they sell their house without any legal agreement for 75 lakh, purchaser (was a real estate broker) give cheque of 20 lakh in advance and 1 lakh in cash, then real estate market crash, his calculation prove wrong, he cannot sale the same house to anyone else, now he told my relative that you have promised me to give current  LCD, fridge, sofa, dining table and the chandelier with this house. Whereas it was orally decided that only hard fittings will be provided.  He gives public notice about my relative in newspaper that their property is disputed and use pressure of  all the mafia don of the city. Although case was decided in favour of our relative but dealing with such nonsense people have its own mental cost. 

 Many brokers who could not complete the transaction have tendency to demotivate the selling party, they tell seller that he sell his property undervalue and he can provide much better value of the same. Now seller gets confused and sometimes revokes his original agreement if done orally.

 Our advice to clients is that do everything in writing, however simple it may be, whatever you have discussed orally, write it in agreement.

 I find the above rule useful in every part of life, talk openly and clearly with anyone in your life, do not suppress your thoughts, psychologically these suppressed thoughts goes in  to unconscious mind and as time passes becomes more fierce and negative, result is breakdown of relationship. Try to make things clear with your boss, employees, juniors, colleagues, vendor, customer, relatives etc.