INTRODUCTION TO BASICS

OF REAL ESTATE
 TABLE OF CONTENT

Types of Investments and options Construction Process

Categories, merits and demerits

Construction Technologies
Real estate as an Investment option
Growth factors, categories, merits and demerits
Conversion matrix

Terminologies in real estate

charges, SBA, FAR etc. Ways to invest in real estate
Payment plans
TYPES OF ASSET CLASSES

INTANGIBLE ASSETS

Assets which are not in any physical shape, which we can not feel and touch.

Stocks

Mutual Funds

Equity shares etc

TANGIBLE ASSETS

Assets which have physical shape and form, which we can feel and touch.

Real Estate

Gold

Art Antiques

Gems
INTANGIBLE ASSET CLASS

1. MUTUAL FUNDS

Pros

Liquidity – Easy to buy and exit

Diversification – Can be invested in multiple instruments to avoid risk

Less cost for bulk transactions

Quick and painless process

Cons

Cost to manage the fund – Fund management charges are being paid by investors

Dilution -

While diversification averages your risks of loss, it can also dilute your profits.

Hence, you should not invest in more than 7-9 mutual funds at a time.
 INTANGIBLE ASSET CLASS

2. SHARES
Cons

Investors can't vote -

Pros
Preferred shareholders do not have the same ownership rights in the
Liquidity – Easy to buy and exit company as common shareholders.

Claim over asset and income –Enjoys a share of the incomes of the Claim over asset and income –Enjoys a share of the incomes of the company
company
High Risk
Limited liability- the share of loss over and above the capital
investment would not be borne by the investor. Fluctuation in market price

Quick and painless process Dividend is not fixed or controllable.

TANGIBLE ASSET CLASS

1. GOLD

Pros

Hedge against inflation - It has a direct relationship with inflation.

During the periods of inflation, investors fear, stocks and debt funds
could underperform. But, gold has historically performed well during
inflation.

Easy to liquidate – Can be converted into cash whenever needed.

Holds its value for long time

Cons

No steady/regular income

Gold Coin – Banks do not buy back gold bar or coin once sold.

Issue with the storage – Needs to pay locker charges every month
ASSET CLASSES – PORTFOLIO THEORY

Standard Asset Class alloca�on across life�me*

Cash Equity Mutual Funds Gold Insurance Real Estate

 LAST 10 YEARS INVESTMENT
AVENUES TO BEAT INFLATION

Asset Return

Bank FD 7%

PPF 8%

Equity (NIFTY) 12%

Real Estate 15% - 20%

Gold +/ - 10%

INVESTORS CAN BEAT INFLATION BY INVESTING IN ANY OF THESE INSTRUMENTS

*Disclaimer: Return percentage are based on investments made for minimum 5 years
Returns from Equities, Real Estate & Mutual Fund can vary depending on the quality of equities, funds & properties invested into
 REAL ESTATE GROWTH FACTORS

Growth in Growing income

Safe bet for Land is a limited Growth in Services
Population/Migration/ levels/Easy availability
investment/Status resource/Shortfall of Sector/Retail/Sez’s taking
changing family of loans/Tax
symbol House in Rural & Urban shape/NRI investments
structure advantages
 MERITS AND DEMERITS OF
REAL ESTATE INVESTMENT

Merits Demerits

Cash Flow, Monthly income as rent Difficult to liquidate

Property Value Growth Maintenance cost

Income Tax Benefits Property Taxes

Security High Transaction cost

 REAL ESTATE – CATEGORIES

High Rise

Apartments Mid Rise

Residential Plots Low Rise

Commercial & Retail Villas

REAL ESTATE
Hospitality & Institutional

Industrial & SEZ’s

 APARTMENTS – TYPES

Studio Apartment 1-2-3 BHK Duplex

Single room 1-2-3 Bedroom Residential Purpose

Bedroom with sitting area 1-Hall (Drawing/Living/Dining) & Kitchen 2 living units connected by an internal staircase

Washroom & Kitchenette .5 can be termed as Study or Children’s room

Pent House Loft

Apartment on Top floor Residential cum work place

More Amenities/Facilities 2 Units connected by an Internal staircase

APARTMENTS – TYPES

Pros

Lesser cost

Single room Lower Rent

Lower Electricity Bills

Studio Apartment Bedroom with sitting area Suitable for Singles and Couples

Less effort for cleaning

Washroom & Kitchenette

Cons

Limited Space/Congested

Not suitable for more than 2 people

APARTMENTS – TYPES

Pros

Appreciation value is high

1-2-3 Bedroom
Security

Amenities
1- Hall (Drawing/ Living/
1-2-3 BHK Dining) & Kitchen Easy to maintain

.5 can be termed as Cons

Study or Children’s room

Noisy and interfering neighbours

Rules and Regulations

APARTMENTS – TYPES

Pros

More Spacious
Residential Purpose
Security
Duplex
Amenities
2 living units connected
by an Internal Staircase
Cons

Difficult to maintain 2 floors

APARTMENTS – TYPES

Pros

More Spacious

Top most floor, more airy

Apartment on Top floor
Private amenities like
Pent House garden, Swimming pool,-
terrace etc.
More Amenities / Facilities
Cons

Expensive

Private amenities need to

maintained by owner
 VILLA

Villa is an independent house for luxury/ultra premium living, all villas with similar
structures, in single gated community.

Opened from all the four sides.

Special private amenities like garden, car parking, pool, Jacuzzis etc in villa itself.

Pros

Individual home – No interference of neighbours, solitary life.

Avoid some issues: Some important issues which you can avoid is the parking issues, lift issues etc.

More Spacious

Can be renovated anytime without disturbing other by owner’s choice.

Noise free and polluted free zone.

Cons

Amenities maintenance cost would be higher.

Expensive than apartments

No socializing
VILLA – TYPES

Villaments

Apartment cum Villa

Interconnected apartments
VILLA – TYPES

Villaments

Single wall is connected between

two houses
VILLA – TYPES

Row Houses

Houses connected in a row connected with two

walls connected
TERMINOLOGIES

Super Build-up area = Sellable area Super Built Area: is the built up area plus
proportionate area of common areas such
Build-up area = Plinth area
as the lobby, lifts shaft, stairs, etc. The
Carpet area = Usable area plinth area along with a share of all
common areas proportionately divided
amongst all unit owners makes up the
Carpet Area is the area enclosed within the Super Built-up area. Sometimes it may also
walls, actual area to lay the carpet. This include the common areas such, swimming
area does not include the thickness of the pool, garden, clubhouse, etc.
inner walls. It is the actual used area of an
apartment/office unit/showroom etc

Built up Area is the carpet area plus the

thickness of outer walls and the balcony
 CARPET AREA

The area between the walls that is actually usable space in house, can be
calculated by multiplying length and breadth.
 BUILT UP AREA
Carpet area + area used by width of the walls. Generally built up area is not
calculated separately, it is included in loading factor.

+
 SUPER BUILT UP AREA
Carpet area + terrace + balconies + areas occupied by walls + area occupied by common/shared construction (e.g. lift, stairs,
club house). Generally builders use loading factor on carpet area to arrive at
super built-up area. For example, if carpet area is 500, and loading factor is 1.3, then super built-up area is 500 x 1.5 = 750.

+ +
 CHARGES

EDC IFMS

EDC – External Development Charge IFMS – Interest free maintenance security

EDC is levied by the government on the developer and, in turn, In most of the situations, the maintenance charges are paid by
passed by the developer to the buyer. the possessors after the RWA/local authority is elected which
generally happens after 2 years following possession. Therefore,
This charge includes development charges for water supply, the builder charges this amount for the first 2 years in the
sewerage, storm water drainage, roads, street lighting, account where he is responsible for the maintenance of the
community buildings, horticulture, public health, road entire society.
maintenance, and street lighting maintenance.

BSP PBC

BSP – Basic selling price PBC – Power backup charges

The BSP amount is calculated by multiplying the super area of the These are the charges for the power back provided by the
apartment with the rate specified in the developer’s rate card. developer and is charged per KVA (Kilo Watt Hour)

IDC FFC

IDC – Internal Development Charge FFC – Fire Fighting Charge

It is levied by the developer on the buyer for developing Charged by the developer for installing fire safety devices and
infrastructure within the complex fire fighting equipments
 CHARGES

CPC

Builder's charges separately for the car parking there are different
types of car parking charges buying a car parking in mandatory in
most of the projects in luxurious projects the numbers of
Club Membership mandatory car parking depends on the type of accommodation and
the size of the apartment. Normally in case of a villas or
Club membership charges for using the facilities of the club independent floor charges for car parking is included in the prices.

A buyer needs to pay club membership fee even if he does not

wish to use the club Covered Car Parking – Covered Car Parking: - means car parking
in the basement area.

EEC
Open Car Parking – Means car parking on the ground surface.

Stilt Car Parking – it's a kind of covered car parking provision on

EEC – External electrification charges the ground floor since the ground floor of the building doesn't
have apartments.
This is the price charged by developer to lay down wires and
cables from electricity consumption meter to the Apartment. Back to Back Parking – a provision of back to back parking is also
provided in some project in which the length of the parking area
is increased thus allowing 2 cars to park in the same it is a cost
effective car parking if you compare it to buying of two car
parking's but it also gives you trouble if you want to take the car
out from parking which is behind.
 CHARGES

Preferred Location Charges (PLC) Stamp Duty and Registration

Preferred location charge is an additional which a home buyer These are the charges payable by the buyer to the government
pays while booking a unit which he prefers because of its for taking the possession of the property; different cities have
location, height or direction. different registration charges.

Eg. Floor preference (low/ high), vaastu preference (east facing), The government keeps on changing these charges from time to
highway facing, park facing etc. time.

The PLC cost on an apartment is charged per sq ft. The charges applicable at the time of registration are to be
borne by the buyer.
The PLC amount is calculated by multiplying the super area of the
apartment with the rate specified in the developer’s rate card.
In Bangalore Current Charges :

Stamp duty is 5.65% of saleable area.

Goods and Service Tax Registration fee – 1% of saleable area.

Government charges GST on under construction property at a 1% In Mumbai :

for affordable homes and 5% for remaining, mandatory for the
properties launched after 1st April’19. Stamp duty is 6% and registration fees is 1%.
 FSI – FLOOR SPACE INDEX
FAR – FLOOR AREA RATIO

Floor Area Ratio = (Total covered area on all floors of all buildings
on a certain plot, Gross Floor Area) / (Area of the plot)
 CONSTRUCTION PROCESS
Ideal time for G+20 floor construction completion

12 - 18 mth 6 - 12 mth 6 – 18 mth 2 - 4 mth 6 mth 6 mth 24 - 36 mth 6 mth

Land Pre Launch Super

& Approvals Launch Excavation Basement Finishing
Acquistion Structure
Planning

2.5 1.5 1.5 Years

Years Years

2.5 Years

Architect Constructer

Marketer
 CONSTRUCTION TECHNOLOGIES

Mivan Technology

Merits Demerits
Seismic resistant Visible finishing lines

Durable Less scope of modification/alterations

Reduced contruction time Requires uniform planning

Reduced requirement of skilled labour Can have contraction cracks

Negligible labour intensive

Smooth finish

Negligible maintenance required

Limited wastage
 CONSTRUCTION TECHNOLOGIES

PCC technology - Plain Cement Concrete Frame Structures - Types of Frame Structures
This stands for Plain Cement Concrete or Portland concrete in general. This is Frame structures are the structures having the combination of beam, column
composed of cement, sand and aggregate but are not used for load bearing and slab to resist the lateral and gravity loads. These structures are usually used
structures like RCC. to overcome the large moments developing due to the applied loading.
These are like paste to for finishing of flooring and irregularities in wall to make
a smooth surface. This is also used for DPC(damp proofing course).

Flat Slab Technique

Prefabricated construction It is recognized that Flat Slabs without drop panels can be built at a very fast
pace as the framework of structure is simplified and diminished. Also, speedy
Prefabrication refers to the process of assembling components of a building turn-around can be achieved using an arrangement using early striking and
remotely before installing it at the site. flying systems.

It has completely changed the face of modern-day construction pattern by Flat slab construction can deeply reduce floor-to –floor height especially in the
facilitating faster execution and on-time delivery of homes. Prefabrication absence of false ceiling as flat slab construction does act as limiting factor on the
involves effective cooperation from architects and developers to determine the placement of horizontal services and partitions. This can prove gainful in case of
exact size and structure of a building. lower building height, decreased cladding expense and pre-fabricated services.
 CONVERSION MATRIX TO SQFT

1 Sq Yard = 9 sq Ft

1 Sq Mt = 10.70 sq Ft

1 cent = 435.6 sqft 1 Acre = 43560 sqft

1 Gunta = 1089 sqft 1 Katha = 600 sqft 1 bigha = 17,424 sqft

 WAYS OF INVESTING IN REAL ESTATE

Payment schedule is provided by the builder mentioning details of how the buyer needs to pay for

the property and at what stages the other charges are payable by the buyer. The different types of

payment schedule are: -

20-30% within 90 days Similar to CLP but the Payment

Balance as per construction status made to developer as per the
CLP Time bound timeline specified and not as per
Plan
construction.

90-95% within 45 days of booking

Avail 5 to 10% discount

Types - NPV & Reimbursement
DPP Subvention
Similar to DOWN PAYMENT,
Interest on LOAN paid by the
developer to BANK for subvention
period.
DOWN PAYMENT PLAN

In this payment plan 95% of the cost of the property is paid within 30 to 45 days of
the booking in the project and the remaining 5% is paid at the time of possession.

For encouraging this payment plan all the builders give handsome down payment
rebates varying from 7% to 15%.

The percentage of rebate depends upon the construction status of the project and
the financial requirement of the builder.

It is the most risky payment plan as 95% of the cost of the property reaches the
builder without any kind of construction.
TIME BOUND PLAN

This is a payment plan which is normally scattered over a period of 3 years or till
possession as per RERA.

The buyer of the property needs to pay for the property according to the schedule
provided by the builder the buyer of the property has to pay irrespective of the fact
that the construction of the property is happening or not.

It is also a risky payment plan for the buyer but a very convenient plan for the
builders as he is getting his payment from the buyers of the property
irrespective of the construction of the project.
CONSTRUCTION LINKED PLAN (CLP)

This payment plan is also normally scattered over a period of 3 years or till
possession as per RERA but as this is linked with construction it stretches till the
time the construction of the property is not completed.

The buyer of the property has to pay in accordance with the construction of the
property however the first 20% -30% payment in most of the project is time linked
which is an industry standard this is the most used payment plan by the buyer as
it involves least risk since buyer doesn't need to pay if the construction is not
happening.

This payment plan also forces the builder to speed up construction as he cannot
demand any money from the buyer till the time committed construction stage of
the project has not reached.
 SUBVENTION PAYMENT PLAN

Subvention means financial support; this is the safest payment plan as it involves three parties : Buyer, Builder and Bank. The bank
only gets involved if the project is 100% safe and it is also popularly known as No Pre EMI Plan.
This payment plan normally comes with a No EMI till particular date or till possession.

How this works: -

15% of the cost of the property is contributed from the buyer at the time of booking.
Bank contributes 80% of the cost of the property for which No EMI/lnterest is paid by the buyer for the period committed in the
scheme; the EMI/interest accrued on this is paid to the bank by the builder.
5% of the cost of the property is contributed from the buyer at the time of booking and his EMI for the complete loan starts.
For a buyer to be eligible for the scheme he needs to take a home loan though during the period of the scheme buyer doesn't need
to pay anything to the bank as an EMI or Interest.
Builders normally uses this payment plan as a sales technique. Also some builders charge different rates if the buyer wants to opt
for this payment plan.
Kindly note that the buyer though needs only 15% of the cost of the property for booking under this scheme but taking a home
loan is mandatory for this payment plan and buyer should be eligible for the amount of home loan required against the property.
 COMMON TERMS TO REMEMBER

Interest Free
Basic Selling Price External Development Charges Car Parking Charges Floor Area Ratio
Maintenance Security

BSP EDC IFMS CPC FAR

NR PLC FRC PBC CMC FFC

Power Backup Club Membership

Net Revenue Preferred Location Charges Floor Rise Charges Fire Fighting Charges
Charges (PBIC) Charges
LOCATION MAP/PLAN
MASTER PLAN/ LAYOUT
CLUSTER PLAN: TOWER A1, A2 & A3
TYPE D15 - TWO BED
ARTISTIC IMPRESSION / PROPOSED ELEVATION
THANK YOU FOR YOUR ATTENTION