Showing posts with label real estate value chain. Show all posts
Showing posts with label real estate value chain. Show all posts

Guide to Registering Properties in Delhi




If you are interested in purchasing some properties in Delhi, this guide intends to inform you, how you can register your property to have legal authority over it. It takes you through the process involved in registering a property in Delhi, the city that is home to many large multinational corporations and government offices. 
This guide will take you through each step of the registration process, so that you can approach it with ease.

Registering Property in Delhi

You need to apply to the Sub Registrar's office of the concerned district in Delhi, in order to register your property. The response time on registration is usually 15 days or a little more, if you proceed using paper documentation. If you wish to use the online registration system recently introduced by the Delhi Government, you will receive a response on the day you file your application itself.

Documents Required

The documents required to register properties in Delhi can be either Sale Deed, a Will, a Conveyance Deed, a Gift Deed or Share Certificates. 

The registration fee for all the documents, except for a will, remains the same, 1 per cent of the total value, with an additional charge of Rs. 100. The registration fee for a will is Rs. 600. The stamp duty differs for each document, and is based on gender.



The Registration Procedure for Sale Deeds

If you have a sale deed, the following steps will guide you on how to go about registering your property:

Details Required

You need to provide the details which will be applicable to your property, such as the date of purchase, the property transfer and inheritance issues, the legal ownership document, the proof of payment of all dues such as water bills and property taxes, and the clearance certificate from the urban land ceiling authorities.

Drafting a Legal Agreement

The next step you have to take, is drafting a legal agreement. This has to be made on a stamp paper, and you have to make an advance payment to the vendor. Make sure you mention a time period for the registration.

Completion of Registration

A property registration attorney will prepare the document, and the final deed will be printed with stamp duty certificates.

The final step involves the stamping, execution and registration of the document at the sub registrar's office. For this step, you need to be present at the office with the buyer and two witnesses. You will also need your identification documents for completing this step.

Once this is completed, the documents will be handed over to you in 30 minutes, after the submission of the payment receipt.


Online Registration in Delhi

You can register your properties in Delhi quickly, by using the online registration portal that ensures transparency in the process.

Your registration will be completed on the day you file an application.

Filing an Application

To file an application, you must have a pre-fixed appointment online or over the phone. This is so that you receive a unique appointment number, date and time to approach the sub registrar’s office. You can reach out to the appointed officials online, through the resource department website and receive your documents on the same day.

You can register 32 different property document types at the sub-registrar office. The office will have the details about your registration process, along with the forms required and the document set you need to provide. You can use the online calculator provided to determine the stamp duty based on the details you provide. You can purchase e-stamp paper, once the stamp duty is calculated.

Verification Process

Once you complete this, you can head to the sub-registrar's office, where your application is checked. Then, someone will direct you to the correct representative. You have to enter with an electronic access card, after which your documents and identity will be verified. You need to clear this step in order to appear in front of the sub registrar.

Completion of Registration

You will receive your registration documents in the evening, between 4-6 pm. This process makes the registration of property in Delhi much more user friendly, easy and transparent.



------ Thanks for reading RealT Horizon :) ------

Valuation by Rental Prospects - Real Estate Valuations


In our post - Valuation of Real Estate: How can you value your RealT?, we discussed about various parameters one should consider while valuing a RealT property. Today let’s discuss about one of the technical tools of valuation which forms a vital component of this process.



Today we will discuss about a monetary parameter of valuation. We will take a simple real-life case study and show how ‘Rental Income’ played its role in constituting the value of that asset.

Before we begin, let’s make some validated assumptions. We are saying ‘validated’ because the case we are discussing here is a real life case.


Case Study: Rental income from an asset in Civil Lines, Kota (India) [Places’ names have been changed deliberately]


An asset was bought by a person, 10 years back, in a posh locality in Kota, Rajasthan (India). Following are the assumptions:

Purchase Price
INR 2 million
Upfront Investment in Maintenance
INR 400,000 (20% of purchase price)
Yearly Maintenance Cost
INR 100,000 (5% of purchase price)
Initial Rental Income
INR 7,000 (Validated from Case Study)
Appreciation in Rental Income per annum
8% (General practice, as well as validated)

We are not taking into account the time-value-of-money & the appreciation in the asset’s value over the time. This is just to keep the things simple and calculate the impact of only Rental Income as compared to the investments in the asset.

Following are some basic calculations of total Investments and Returns in the form of Rentals:


All figures in INR '000. Click to enlarge.


 =>  Returns from only Rental Component as compared to the overall investments:


This figure shows that this person has recovered his 41% investment in the property, just by rental incomes! He didn't have to do anything in earning this revenue.


Beauty of Rental Income


The above discussed case study clearly shows that Rental Income indeed forms a vital component in the overall valuation of any asset. It is just like dividend investing: you keep on getting recurring returns on your invested money, leave aside the appreciation in the asset.

So next time you think of investing somewhere, just evaluate whether or not that asset is capable of generating recurring returns in the form of rental income!


------ Thanks for reading RealT Horizon J ------


Valuation of Real Estate: How can you value your Real Estate Asset?


While laying down on the couch on this lazy Sunday evening, a thought stuck to us: Is there any defined way to value our Realties? Of course there are few in the form of Govt. DLC rates & CMP (current market prices) that gives some indication of the possible value of our real estate properties, but still we miss out many important aspects if we go by these rates. Let’s go back to the basics and first try to slice the term ‘value in real estate’ to finer levels.


What is ‘Value in Real Estate’?


To state in layman terms, value in real estate is created if any of the following dimensions gains weight.



Let’s have a look at these aspects in finer details.


Utility 

Any asset/object is worthless if it doesn’t create utility for the owner. If real estate property, howsoever costly it may be, is unable to create its worth and use for the owner, then its utility decreases. We hope the following figure can help in explaining this further:



In above case, the utility of cookies decreased with the increase in number of cookies. Same is the case with real estate utility. If the property can’t be utilized to its full value, its utility decreases.


Supply 

Just compare the price of a commodity (like salt) which is abundantly available to a commodity (like petroleum) which is scarce! Same holds true for Real Estate in the way that properties in an area where there are several options is cheap as compared to the one where no properties are available.


Demand 

Similar to the above concept of Supply. If a property is in high demand, it is valued more & vice-versa.


Transaction 

Suppose you have bought the bicycle - Litespeed Blade (£25,317)



Just imagine how difficult will it be for you to resell it or make its transactions! Same goes with Real Estate; you invest in some property like this and get stuck to it for your lifetime: literally no value.


Psyche 

The social pride and psychological pleasure is something that no one can monetize. It will be different for each and every individual. Suppose for example, someone will definitely derive immeasurable value by just having the pride of owning the above bicycle.


Let’s demonstrate the entire above concepts using a common example. Suppose you have a family of 2-3 members & have bought the home shown below: (Just an imagination; don’t get carried away! ;-))



Just check its value on different aspects:

Aspect
Reason
Value
Utility
Such a big house for just 3 members!! Under-utilization of resources.
Supply
Definitely, houses of this sort are not available down the street. It is tough to find such houses. They are scarce.
Demand
Demand for such properties depends on buyers, which is generally very less. You will rarely find a buyer looking for such properties.
Transaction
Tough to transact, definitely!
Psyche
Un-measurable; if you can take care of the income tax folks!!
;-)
▲▲▲▲


Closing Thoughts: These are some of the basics that we thought are vital for any Real Estate Valuation. There are few more technical methods which we will try and cover in our forthcoming posts.


------ Thanks for reading RealT Horizon J ------


Channel Partners: An Emerging Trend in Real Estate


In our first post “Understandingthe Reality in RealT”, we mentioned Transaction as an essential part of the 5 step value chain. We further elaborated its details in our following post – “Transacting & Using your RealT”. Today we bring to you a fast emerging trend in the Transaction phase of real estate projects – the introduction of Channel Partners.

The figure below shows exactly where Channel Partners have made their place in the value chain:

 
 



What are Channel Partners?


Essentially CPs are the agencies that take the responsibility to sell-off whole or part of the realty projects in a pre-agreed upon duration & take their commission/fees in doing so. In this process, they underwrite the properties which are to be sold by them. More on this will get clear in the following discussions.


How are Channel Partners different from Brokers?


Although doing the same work, there is a huge difference between Brokers and Channel Partners.

A Broker acts as a liaison between the Seller & Buyer and in this process he takes his commission from both the parties.

A Channel Partner on the other end underwrites the property to be sold for a particular duration by paying the owner some percentage of its cost (refundable). The CP is then free to use any means of promotion & sale including sub-broking, conducting events, etc. to sell the property. Once the property is sold in the pre-decided duration, the CP gets a handsome cut from its sale, much larger than a broker’s, and gets his underwriting amount back from the builder.



If in case a CP fails to sell the underwritten properties in the specified time duration, he is liable to pay to the builder, an amount that is pre-specified in the agreement between him and Builder.


Why do Builders prefer Channel Partners?


With the evolution of new ways & processes in Real Estate, Builders have quickly adopted the concept of Channel Partners. We were perplexed at first about the acceptance of Channel Partners in this sector but when we looked at its profitability by putting ourselves in the shoes of a Builder, we got all our answers.

Following are some of the benefits that a builder enjoys in partnering with a Channel Partner:

  • Immediate funding of Operational Costs: The builder uses the underwriting amount to fund his immediate cash requirements. This is similar to funding by booking amount, the difference being that the percentage of cash is relatively small.
  • Guaranteed sell of the property: By partnering with the CPs, the Builder ensures that his property will be sold. He no longer has to worry about the marketing and promotional activities. Even if the CP is unable to sell the property in the specified time, the Builder easily gets the interest amount by penalizing the CP.
  • Better than Broking: Using CPs is better than relying on the brokers. This is because of the fact that brokers have no liability to sell the property, whereas CPs have!
  • Free Promotion: Suppose that a CP has underwritten 50 units out of total 100 units constructed by the Builder. Now, to sell those 50 units, the CP will carry on promotional activities by conducting events, advertising etc. But in this whole process, the Builder is getting benefit of free publicity of remaining 50 units as they fall under the name of same project.



These and several other benefits have made Channel Partners a hot topic in emerging markets. Also, it is noteworthy that this trend is picking up pace quickly in Tier 2 cities. RealT Horizon is glad that our vision of development in the Tier 2/3 cities is getting much air!


---------- Thanks for reading RealT Horizon J ----------

G+2: An Emerging Real Estate Model


As we said in our earlier post that we went to the fields in Jaipur to explore this sector further, today we share with our readers a prevalent model in this space. During our visit to actual sites and meeting with various people closely associated with RealT, we came across a model that is highly prevalent in Tier 2 cities at present. Let’s share some insights on this topic.


What exactly is G+2?


Due to recent developments, Tier 2 cities have stringent land by-laws. These laws restrict unplanned and uneven growth of these cities which are on their way to become mega cities. One such by-law restricts the vertical growth of town to a certain limit, based on the size of plot and width of the road on which the plot is located.

A typical G+2 construction


Paying full respect the laws, Builders & Developers have devised an alternative to make optimum use of the available plot and have come up with the concept of Ground+2 floors. Now depending on the designs prepared by the Architect, Builder can erect 4-6 flats on that small piece of land. Generally these plans are designed in a way that there is ample space for parking of 4-6 vehicles alongside the building. If the dimensions of plot doesn’t allow ample parking space, Builder can even go for Stealth floor for parking. Even in this case, the next 3 floors will be counted as G+2.

G+2 with stealth floor



Benefits of G+2

  • Ideal for mini-builders
  • Cost of construction minimizes due to economies of scale (multiple constructions on the same piece of land)
  • Pretty good profit margin
  • Easy to sell
  • Time-to-complete the project is small




Why is it lucrative for mini-builders?


Small Investors and new entrants prefer this model of RealT so much so that you would see hundreds of such projects going on in Jaipur all around. The reason being:

Low cost of Entry
These projects can be initiated with relatively small amount of money as compared to traditional huge projects.
Minimized Risk
Even if all the flats are not booked, the builder is safe as he is sitting on a valuable asset.
Funding Operational Costs
The operational costs of next floor can be funded by the bookings of previous floor.
Controlled Expansion
The builder is free to pull back from going deep into the project at any time.


Closing Remarks: Want to foray into Real Estate? – Go for the above model, but don’t forget to do a proper market analysis for demand side!


---- Thanks for reading. Your comments will help us improve our analysis. J ----


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