Investment Oppurtunity In Hyderabad - Nizampet

Balaji Builders is planning an Apartment complex in 3 acres with 14 ammenities such as Swimming pool, gym, childrens area ...blah ..blah. Location is 2 km from main Bombay Highway in Nizampet road, near to Bhavya Anandam Apartment complex. Please location map below, map is not pretty and definetly not to scale.

Here is the link to Google map to checkout on the location

http://maps.google.com/maps/ms?hl=en&ie=UTF8&msa=0&msid=110905554539312466419.00000111fa6a196d13dfd&om=0&z=12&ll=17.468245,78.383331&spn=0.151628,0.2314

Original Proposal: One of the partner is an engineer who is currently doing my apartment complex in prodattur. He offered investment option that he can give 3 to 4 units at the construction cost. He is offering at Rs 2150/sqft and additional cost for Car parking and ammenities he is asking 4 lakhs but i thinking he will go down once we sit for discussion. If we book atleat 3 units I am thinking we can further negotiate Rs 50 to 100/sqft and 1 to 2 lakhs on extras.

• Cost of each would have been for a unit 1300 sqft = 1300 * Rs 2100 + 3 lakhs (ammenities) = ~30 lakhs
• Today's market value of = 1300*Rs 2600(Today's Market Rate) + 3 lakhs (ammenities) = ~ 37 lakhs.
• Based on furture appreciation and potential Builder is proposing that market rate will Rs 3000/sqft once project is completed based on conservative estimate and hence value as per future potential is = 1300*Rs 3000(Market Rate at project completion) + 3 lakhs (ammenities) = ~ 42 lakhs.

After thinking about the proposal I thought we can get better deal if we go for share as oppose to out right purchase investment. Greater return by taking calculative risk, if you want to make good return you got to take some risk which is a prinicipal in any investment either it's stock, business or in real estate. I thought why don't I give a shot and see if I can succeed and finally it all worked out well, here is the negotiated proposal.


Negotiated Proposal: After several discussions I negotiated to get share in the project and finally he agreed to give 20% of his share which will be around 1.15 to 1.2 crores, for this share we will get anywhere between 25 to 26 units each unit with 1300 sqft. Out of 1.15 to 1.2 crore, 1 crore will be taken into project as our share and 15 lakhs to 20 lakhs will go towards the interest and goodwill for their(Balaji Builders) 80% share partners who invested their time (10months) and money upto 4 crores into this project so far.

Here are the details and how the whole thing works

A group of 9 (9 + me) people(mostly known , each other) will raise the required money by pooling. 9 of them will contributes 10 lakhs and rest will be contributed by me.

For our share we will receive 25 to 26 apt with avg sqft of 1300, there is potential that some will be bigger as high as 1900 sqft and some will be small as low as 1100sqft. 10 units will alloted to early investors and rest will be sold within our friend circle or in market at market price or Rs 100 to 150 less than market price to make quick sale so that we mitigate the risk of not selling for long time.

For early Investors process works as follows:

Step 1: Once you or your family member have seen the location and make decesion please inform me either droping an email @ lingamdinne@yahoo.com or calling me at 732-331-5182 (c), 973-998-9454 (H). For visit please call Ramana Reddy 9246244246, Balaji Builders Partner, he will guide you to the office or arrange a site visit.

Step 2: Early investors needs to pay Rs 5 lakhs by April 25th and another Rs 5 Lakhs by May 15th.

Details of the transaction works:

Let's say you choose 1300 sqft unit, you have given Rs 10 lakhs as early investor. Rate per sqft will be Rs 2000 plus 3 lakhs for ammenities.

Cost for early investor will be = ~ 1300*Rs 2000(Today's Market Rate) + 3 lakhs (ammenities) = ~ 29 lakhs. However you don't need to pay ammenities as we get profit by selling other 15 units which will cover for ammenities and potentially for registration costs also but no gaurentees.

Out of Rs 29 lakhs 10 lakhs you paid to become early investor, remaining 19 lakhs needs to be arranged through loan or by other sources. Builder will have tie up with several banks, which ever bank you prefer you can go with that bank.

If you buy now in Nizampet area at the current market rate your cost will be and offcourse you will not put 10 lakhs as down payment considering you put Rs 2lakhs as down payment.

Today's market value of = 1300*Rs 2600(Today's Market Rate) + 3 lakhs (ammenities) + registration charges 1 to 2 lakhs = ~ 38 to 39 lakhs.

Based on the above rough and realistic estimates for 10 lakhs that you are investing now, you are realizing an appreciation of close to 9 to 10 lakhs which is 90 to 100% return on your invesment.

By this time you might be wondering is it bull shit or realistic, ofcourse this is possible however based on couple of Assumptions, future market conditions and calculative risk we are taking. I will spend one paragraph to explain it so that we all on the same page.

Assumptions: We have to make assumption that project will be definetly be constructed and completed in 18 to 24 months.

Future Market: Indian economy will grow at current pace for next 2 years and there will be adequate job market in Hyderabad, use your judgement, I am no expert than you.

Calculative Risk: We are hoping the we can collectively sell 15 units @ the rate Rs 2500 to 2600/sqft in next 1 year either with in family & friends circle or in retail market. If we are able to sell at 2600, we will see a return of more than 100%.

So what's the catch and what's in for Srinath for doing all this. Definetly there is a catch and self interest

1. Passion in executing projects like this and have common interest for all of us to be in touch.

2. Developing business skills and learn what it takes to sell a products like this to customer like us. Good part is learning without quiting my daily job and by not investing huge amount of capital for this project.

3. Definetly I will not spend all the time of doing accounting and providing periodic updates, we will engage an accounting firm to do all this on behalf of us. The engaged accounting firm will perform the accounting activities and prepare a monthly balancesheet for early investors to provide transperency.

4. On behalf of us, a person will be in the project site to make sure that everything is done as per the agreement, I am thinking of having a person who has experience as a construction supervisor.

Let's discuss how 15 Units which will be sold to friends & Family.

Step 1: All us will spread a word regarding this oppurtunity. once you know that anyone is interested please ask them to visit the site before making a decsion.

Step 2: Buyer needs to pay Rs 2 lakhs towards booking and get into agreemnet, rest can be paid in installments by means of bank loan or other sources.

what will be the rate:

Depending on when the person get's into agreement, the sooner the lesser rate. it will be any where between Rs 2400/sqft to Rs 2600/sqft.

What about ammenities and Registrations

Buyer needs to pay Rs 3 lakhs towards ammenities and registration charges extra.

Thanks Guys for reading my blog which is put together. I typed based on my view and i will appreciate if you can provide your inputs to make it more useful and informative. One thing i am thinking about to organize the questions into Faqs so that people understand better.

Look forward hearing from, I appreciate your quick response.

Srinath.