How to buy apartment in Bangalore - I


When I came to Bangalore, the first thing that struck me is that everyone is (and literally everyone) is buying either a plot/flat or independent house etc. When you see so many people surrounding you looking out for 'investment opportunities' in housing/real-estate, somehow you are bound to get influenced. I was also caught into this 'rat-race'. The emotion that controls this rampant buying is the same emotion of human beings that plays a crucial role in stock-markets i.e. greed. I have heard so many stories of people buying flats at 15 lakhs few years back and the same flat now said to be costing more than 70 lakhs. The biggest mistake people do while buying a house is "not researching enough". I got into the same trap, but thankfully got out of it just loosing 10 K Rs (cancellation of booking amount).


In these series of posts, I will try to put my experience of "trying" to buy a flat in south bangalore. These tips typically apply for people buying their first house. Some of the general tips/gyaan would be useful for buying across the entire country.

  • Fix your budget before seeing any property and stick to it at any cost (very difficult).
  • Never think of buying the first house as investment. It should only be considered if you want to live in it.
  • Don't think of "tax-benefits" while buying your first house. It only comes into picture when you are buying a house in a city of non-residence. Otherwise the tax-benefits of home loans will be compensated by no HRA benefits.
  • I have heard this a lot "Always go for big builders, since that assures less pain", this is a myth. Buying a house is a lot of pain and efforts, it does not matters much whether the builder is big or small. All builders are crooks and are out their to make money
  • Getting a good house is more luck than anything else. You got to be lucky to get a house without much hassel
  • Big brand names do not necessarily mean higher resale value. What matters more is the location and the construction quality.
  • Flats do appreciate in value but only up to a certain point. Say the original price is 2000/- per sqft at the time of booking. It might go to 2500/- by the time the construction is over and you register it (2 years). From that point on, the appreciation slows down a bit because it is now a second-hand flat. It might go to 3000/- (5-10 years) if the location is good but that’s generally the limit. After that the wear and tear on the flat bring the value down.
  • Also the stories of astronomical price increase is in realty a myth. Imagine a 2BHK flat in say Bannerghatta Road (near IIM) costing 15 lakhs in 2002 (five years before) is now costing 70 lakhs (as per the market rate in the same apartment complex). But is that a real re-sale value of the flat? Do you think there would be any takers of the flat for 70 Lakhs when the same type of flat (in terms of quality/space etc) would cost me around say 30-35 lakhs near the same locality (Meenakshi Temple)? Since the real-estate market is on the upwards, a new buyer would always look at the new projects rather than buying a second hand flat. If the market goes down, then the projected cost of 70 Lakhs would also come down steeply.
  • Always go for home-loans from reputed financial institution (even if you are capable of), since that ensures a cross check of documentations obtained by builders. For example, I booked the Ittina Mahavir project in electronic complex, HDFC refuses to give loan to any of the Ittina properties. When we enquired further, we got to know that there are lot of BDA notices against illegal activities from Ittina.
  • Read all the documents before signing (even signing the booking form). It is easier said than done, since the marketing department of the builder will ensure that you get engrossed in the sugary talk so much that you believe anything he/she says and sign without reading.
  • Go through agreement copy atleast 5 times with your family lawyer it’s almost 25 to 30 points and usually its mostly one sided.
  • Make sure that following things have been put into agreement
    • Builder will not demand for any other payments other than whatever has been specifically disclosed to the buyer in writing.
    • Clear possession date in writing
    • To avail housing loan from a bank or a financial institution of buyer choice. Usually they force you to get a loan from private banks
  • Go and talk to the last completed project of the builder and talk to the owners.
  • You may not be Vaastu believer, but purchase a flat which is vaastu compliance just to ensure its re-sale value.
There are so many things to keep in mind while buying a flat that you need to burn your fingers to actually understand everything. The most important point to keep in mind is not to get awed by the glossy advertisements from the builders (usually there is always some hidden constraints). Also don't ever think that if you dont book a flat now, you will miss the opportunity later. When I wanted to buy a flat in electronic complex, I talked to a friend, who has booked a flat at 2400 per SFT some nine-ten months back. So when I got an offer of 2350 per SFT, I booked it immediately thinking that this is the best buy I could ever get. Now few months down the line, I am seeing offers of 2100 per SFT also. If you do your research properly(which implies a lot of pain), you can get a good bargain even in the most "real-estate saturated pockets" of the city.

34 comments:

  1. Anonymous5:30 PM

    Hey, that's a very good post... brings me out of the 'intimidated state' that I am in! so that I can go out and research..

    Rajit

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  2. Ketan7:41 PM

    Thanks for your comments. Will be posting more on this topic, since lot of people have misleading expectation from real-estate esp in bangalore

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  3. Hi
    Your post is really helpful to plan ahead.

    Thanks,
    Vasundhar

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  4. Sachin2:02 PM

    A real good article about real estate.

    Also Can you please include some tips about buying a resale property?

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  5. Hariprasauth8:11 AM

    Its really nice to hear this.. Could you please let me know the present appreciation in the areas like marthahalli, Balandur junction, Sajapur Road?

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  6. Hariprasauth8:11 AM

    Its really nice to hear this.. Could you please let me know the present appreciation in the areas like marthahalli, Balandur junction, Sajapur Road?

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  7. A nice piece of advice / information

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  8. This article makes real sense. If all the buyers get this awareness, Real estate guys can't make such easy bucks that they have been making till now. Salaried class sweat it out to make those builders and banks richer.

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  9. deepkumar4:29 PM

    Thanks a Lot for your valuable time. Hope this will surely help lot of people looking for Apartments like me. Very Good Info. Keep it up.

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  10. Sashidhar10:47 AM

    Good job, your insight into the topic is simple at clear.

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  11. great post... i have some questions to ask:
    1. do apartments in bangalore follow the 99 years lease which means the apartment is no longer owned by the current owner after 99 years?

    2. what happens if the apartment just crumbles down within 5 years? what are the buyer's rights?

    3. can i get the apartment insured against such cases? Any suggestions on what kind of insurance would protect against such cases?

    4. how do you value a 10-year old apartment taking into account its depreciation, current market value of land, renovation required to live in it, facilities, etc.?

    5. What are the risks involved in buying a re-sale apartment as compared to a new apartment?

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  12. Anonymous6:49 PM

    Can we have some advice on how to go about the registration?
    There is always a 'hidden' component when we come to registration.
    How do we settle on that?
    Also about the agreement. Thanks a lot for the four tips.
    Also i agree with the fact that big builders are as bad as small ones - The RMZ group earlier called Asiatic properties limited has cheated more than 400 owners on many accounts.
    Thanks again for the words of advice.

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  13. Anonymous11:46 AM

    Thanks for the advise. I was in the same dilemma and even my lawyer told me to buy a flat ONLY if its a STEAL. Else, just use HRA benefits.

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  14. Anonymous5:55 PM

    Thanks for your useful comments. Is it a good idea to buy a Ready to Move flat every if it costs me a bit more. Since I get to see the quality etc. Let me know if there are any better ideas. Thanks.

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  15. What are your vies on apartments offered by Shriram Group at http://www.shriramproperties.com/Bangalore_Apartments.aspx ?

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  16. Hi,

    Your blog is very much helpful.
    But I am having one question in mind.
    Y max apartments in Bangalore are built on or beside of the great drainage??

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  17. Hi Ketan,
    I am considering buying a 13-year old flat (only basic amenities) in JP-Nagar 2nd phase. The flat is offerred for around 48 lakhs, and is around 1170 sqft built-up area. Given the fact that, the land value in JP Nagar 2nd phase is around 8000 per sqft, is the offer price reasonable? What would be the resale value of this flat 15 years down the line.
    Thankyou in adavance for your response,
    Guru.

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  18. Hey Thats a really great blog for the buyers!!
    I had all these issues as my thoughts and never allowed it to come out of me as i thought they are all silly questions..
    Now I am concerned about those..
    Thankzz A LOTTTT

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  19. Thanks for your write up. Can anyone advise about background verification of an apartment unit. How to make sure everything is in complaint with govt building authorities?

    Of course we know that going for a house loan with a public sector bank ensures background verification. But can we do a background check of our own? How to do so?

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  20. Nice article and neatly put :-).
    Thanks!

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  21. ashish3:22 PM

    Hey, that's a very good post,it will a really greathelpfull blog for the buyers

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  22. Thank you Ashish for your comments.

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  23. Nice information. Nicely done to clear my doubts.

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  24. Anonymous1:23 AM

    Nice blog....really useful. Thanks :)

    --Raj

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  25. Anonymous1:44 PM

    hey, thank you for your excellent suggestions. they are very much helpful.

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  26. Good post,
    it is helped me to understand and take an necessaries pre cautions actions....
    thanks!!

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  27. Hi , I've read a few things on this site and I really do think that it has helped tremendously. There's still a heap I need to learn thus can continue learning and can keep coming back.
    Thanks.
    Budget apartments in bangalore

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  28. You have covered everything nicely on apartments in Bangalore. Apartments in Bangalore are increasing day by day. The pricing is affordable too.

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  29. This is a good piece of advice for those interested in investing in real estate. On one hand, where investing in property can be risky, it also fetch good returns in future.

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  30. Thanks for sharing this article. you can also refer BBMP Approved Apartments in Bangalore for further information.

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  31. As you said not many does proper research and fall in the rat race , would also like to add the problem of thugs these days of land grabbing and selling so will have to be careful yes there are many Villas In Whitefield that are safe but a through research is a must and thank you i dint know about the HRA benifit issue.

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