The Real Estate Investing FAQs?

It is well known fact that to invest in real estate is a fastest and most proven ways to earn real wealth.There are various methods like flipping, development, buy and hold, land splits which make money in real estate.

The following are the FAQs (frequently asked questions) which make an advantage in investing in real estate.

#1 - Are we in a real estate bubble?

This is by far the biggest question I hear. To be sure, the recent real estate boom was the largest the country has ever seen. Not since after World War II has real estate appreciated so much, so fast. Now the market psychology has changed and many investors question when the market will recover.

#2 - Are stocks a better investment than real estate?

I am always amazed how often this comes up and how the answer is spun depending on whom you are talking to. The real estate folks say that it’s real estate, while the stock market guys say stocks. The investor must take a close look at both the quantitative and qualitative factors of each class of investment.

#3 - Can I invest my IRA in real estate?

There has been a lot of media attention recently on this topic. People often ask me whether this is even legal. There is no doubt that it is legal, but it can be complex. Considering the uncertainty of social security, investors need to do what they can to fund their own retirement.

#4 - Can I really make money with foreclosures?

We have all heard about the money that can be made buying and selling foreclosures. But considering the risks involved, can you really make money in foreclosures?

#5 - Is making money in real estate easy?

I think you know the answer to this one. Making money in real estate takes a lot of diligence and hard work. But fortunately it can be done, and has been done by many. If it was easy to do, I’m not sure it would be so profitable.

Investment in India by Yatra Capital

Yatra Capital Limited and Kolte Patil Developers will jointly make investment in India of around Rs. 120 crore in building three residential sites in Pune. Saffron Capital Advisors Limited played the big role to make this joint ventre.

An investment account will be opened in India by the joint ventures which is a part of the strategy of partnering experienced developers of the Yatra Capital to be its shareholder .

Yatra Capital is a Real estate investment company which is based in Jersey and listed on Euronext, Amsterdam.

The budget had been raised to 100 million Euros to invest in real estate India by the Yatra in December 2006.

property investment in india

Real estate mutual funds once allowed (are not yet allowed) by SEBI in India will be a good medium for property investment in india. It is expected that the regulatory authority will shortly prescribe the framework for such funds to operate in India. In other countries, as in the USA, Real Estate Investment Trusts (REITs) are the accepted mode of investments into realty. These are listed on the exchanges, too, for easy liquidity.

Private funds have been in vogue in India for a few years. But the minimum amount of investment per person is high at Rs 1 crore to Rs 5 crore. There is a private label fund from Optimix dedicated to realty and realty related stocks which is one way to benefit from realty as a category.

Another trend in realty is to buy and share a large commercial property with many others. Each may buy 2500 sq ft upwards of a large floor plate and the developer leases the entire floor plate to one tenant, with the rent being shared in proportion to the ownership.

Biggest FDI in Indian Real Estate

An Indian origin, Royal Indian Raj International Corporation (RIRIC), a Nevada-based company disclosed the planning to invest $1 billion in real estate India which will be the largest foreign direct investment (FDI) in the newly liberalised sector.

There has been a strategic partnership with New York-based real estate investment banking firm The Greenwich Group International to finance the development of multiple private cities in India.

RIRIC CEO Manoj C Benjamin said, "We have already been working on our inaugural residential project on a 17-acre plot on the outskirts of Bangalore. With the Indian real estate sector in transition and recent landmark legislation allowing FDI into it, the opportunity for participation in this formerly closed market is heightening."

The company is targeting four megapolises - Bangalore, Mumbai, Kolkata and New Delhi by developing large-scale commercial and residential townships because of immense housing shortage.

This investment resulted in to direct employment to nearly 10,000 people and indirect employment to another 40,000 in the next 10 years.

He added,"We have got into a contract to acquire nearly 5,000 acres of land near Mumbai, 3,000 acres near Delhi, 5,600 acres near Bangalore and another 5,000 acres near Kolkata. The final settlement of these deals depended on several factors - chiefly approvals from state governments.”

He also added, “Mumbai alone would need anywhere between 180,000 and 200,000 additional residential units in the next 10 years. India is expected to see an annual shortfall of 20 million housing units till 2011.”

The booming market of real estate India ($50 billion) is expected to grow at 25 per cent annually.

The booming market attracts the investors who are planning nearly 250 new shopping malls by 2008.

The regulation adopted by the central government made the FDI easy which allow the foreigners to bid with local partners and also reducing their minimum land-holding limit from 100 acres to 25 acres.

The investors has Enthused by the liberalised investment guidelines. A slew of foreign builders are rushing to launch projects in Asia's third largest economy.

Factors Behind Real Estate Boom

The hike in interest rates by RBI and regulatory reforms by government made it easy for the non-resident Indians to safe investment of their excess fund in the Real Estate India, their home country.

There is a record breaking increment in the India’s FDI, $11.2bn which is a 155 per cent year-on-year increase. The interest of foreign investors is providing the wheels to Indian real estate market to push it towards $50bn by 2010.

The Indian government made the investment process simple and declared that FDI is permitted in real estate through the automatic route in 2005. There were no needs for ministerial approvals.

This policy was made to develop minimum land areas which required minimum capitalization. But the results came into a huge inflow of the capital. Now it is assumed that capital worth $7bn will be pumped into development projects over the next year, much of that will come from overseas.

It’s not a surprise to see the boom in Indian real estate. The following conditions helped to make it possible.

• 1.2 billion population of the country which grow annually by 1.4 percent.
• The economic growth of eight per cent per annum.
• The competitive interest rates.
• The growing IT industry.
• Demand for residential space.
• Demand for commercial space.

A New Indian Real Estate Branch In Toronto

The Indian Realtor firm, "Property Affaire's" opened its office at Mississauga in Toronto because of strong desire of NRIs for luxury housing in their home country, India.

The Managing Director Sandeep Kapoor said , "Property Affaire's, based in Mississauga that represents 12 developers with 60 under-construction properties, provides total packages to the customers, including property management, financial and legal services, and warranties against fraud."

He added, "Although India's home-grown market is huge, developers believe international sales raise the cachet of their projects and the company "brand"-- an advantage for those who hope to undertake projects abroad.A number of Indians and others have shown interest. We want them to make investing in real estate easy."

In 2005 the india's property hiked as much as 40 percent in some cities. But last year it reached to 60 to 70 percent hike. The price of properties in the cities like Mumbai, Bangalore, Kolkata and Chandigarh, and satellite townships such as Noida, Gurgaon and Ghaziabad around Delhi had already doubled.

He also added,"While non-resident Indians can repatriate the sum they initially invest in property, Indian law forbids them taking any resale profits out of the country.The biggest challenge will be to change the mindset about India. People who left the country 15, 20, 30 years ago still feel it is the same in terms of corruption, bribery. But things are totally changing. It's much more transparent now, so property is a very safe investment."

3i Plans $5 Billion Indian Infrastructure Fund

Europe’s leading publicly traded buyout and venture capital firm, 3i Group Plc is planning to raise the fund which will be invested in Indian ports, power plants and roads to $5 billion.The firm is going to invest with the first $1.5 billion it raises.

3i is shaking hand with the government to invest in india with $320 billion worth of ports, power plants, roads and other projects.The private equity investors find the biggest opportunity in infrastructure which until now have focused on smaller technology and real-estate deals.

Manoj Agarwal, executive director of mergers and acquisitions at ABN Amro Holding NV in Hong Kong said, “There's a lot of capital flowing into India and all that capital needs to find a home which provides continued returns and growth.A logical venue is infrastructure.”

An agreement has been signed by the 3i with the government-owned India Infrastructure Finance Co. to provide equity and debt financing for projects in the world's second-fastest-growing major economy.

Chris Rowlands, 3i's Singapore-based managing partner for Asia said, “We may consider raising a fund but it's too early to talk about structures or scale.''

He added, “The firm, which has been investing in infrastructure projects alongside governments in Europe for the past two decades, plans to use its own funds to invest in power plant, roads and other projects in India. We're ready to invest because of our balance sheet resources.”

The people said , “3i will first contribute $500 million to the equity fund and will raise the remaining $1 billion from institutional investors, including those from the Middle East,. 3i plans to increase the fund to $5 billion in five years, the people said.”