Here is a typical High Net worth investment idea that you can participate in:-

Hennur Road in North Bangalore has seen a lot of real estate activity in the past 3-4 years. The new Bangalore Airport and the promise of many tech parks and other industries in the vicinity has triggered the demand for residential spaces in and around Hennur road. This road also serves as an alternate route to Bangalore airport for people travelling from the outer ring road area. It is a four lane road and is already chocked with traffic on any normal day. All well known builders in Bangalore, including Mantri, Shobha, Prestige, Brigade have launched projects in this locality. Apartment prices are around Rs. 4000 to 6000 per sq ft.  Land rates depend on the exact location – but typical land rates are around Rs. 4000 psft to 7000 psft.

A group of High Net-worth Individual investors are looking at investing in a 7 acres piece of land off Hennur road - this land is owned for about 4 decades by an erstwhile royal family and the price negotiated is just below 2000 psft.  This land piece is also literally on the proposed Peripheral Ring Road –this proposed road will in fact take a small portion of the land –the work on this road will happen in the next two years.  Needless to say that this road will increase the value of the property tremendously.

This investor group is looking at procuring the land and then getting into a JV with a builder to build residential villas or apartments  and exit the investment with the sale of the built up property. The time frame of investment is appx 5-6 years and I expect the investment to give 250-300% ROI during this period.

I have personally visited this land and I am convinced of the viability of this proposal. The risks in this scheme are the following:

·         the delay in signing the JV with a developer; or

·         the delay by the JV partner to deliver the project; or

·         delay in selling the project and exiting it.

The minimum investment for participating in this Rs 30 lacs – as this investment is for buying the 7 acres of land – you will need to invest this money by Jan end. So if you have this liquidity and have a 5 year time holding power - I would surely recommend this investment.

If you are interested and want more details or want to visit the site and meet the key investor, please reach out to me at rajasekharan.sg@gmail.com  (Ph +91 98452 63000)

How to become a smarter investor in 2014?

Year end is a good time to introspect and plan.  At this time of the year, most of us make New Year resolutions.  I am sure one of your New Year resolutions would be to do well financially in the coming year.

So here are some thoughts on “How to become a smarter investor in 2014”.

1. Visualise Financial freedom - We all agree that achieving financial freedom can change our lives.  So visualise your life once you are financially free. What will you do from 6 am till  10 pm?  How you will spend seven days a week when you are financially free? What are the projects that you will pursue once you do not need a job to live your life?  I want you to list all the things that you have always wanted to do - but did not do due to time and money constraints. Visualising how your life will change once you achieve financial freedom is really the first step towards becoming a better investor.
2. What do you invest your time on? The rich people continually invest their time in educating themselves to become better investors. They invest time and effort in getting clarity in their mind on their long term goals – over time, they know exactly what they want. They put time and effort in building networks with like minded people. It is this financial education, clarity of mind and networks that make them rich over time. So these are the three areas where you will need to work on.
3. Getting rich is not magic or luck – it is 10 year project. Anyone can become rich. All it needs is to break this large 10 year project to 10 smaller yearly projects. Take one project every year and just do it.  Over time you will reach your goal of financial freedom. So while the world may think that you are lucky – you know that you have worked for it – you know that you have invested your time and effort and over time reached the goal of financial freedom.
4. Where do I start?  Here's what you need to do:
1. If you have not done it already – start by visualising how your life will change once you are financially free –this is required to motivate oneself over the next few years to sacrifice your today for a better tomorrow.
2. Make a long term financial plan – I have a 20 year financial planning template that I can share.  It is explained in detail in the book. With the help of the book and the template, you can make a GET RICH PLAN for yourself.
3. Commit two hours every week for improving your financial education, clarity of mind and networks  -these are the things that will make you rich over time.
4. Break the long term plan to annual plans and take one step at a time  -  measure the current ROI on your investments and work towards increasing your ROI over 2-3 years to 15% per annum (post tax)
5. Over 3-5 years, you will see that you are a smarter investor and you can clearly see that you are getting closer to financial freedom every year.

Remember life is a vacation once you achieve financial freedom – all seven days a week you are on vacation.  You can chose to do what you want and refuse what you do not want.

Now that is surely something worth working for – don’t you agree?

One day workshop on "Attaining Financial Freedom through Smart Planning and Investing"

Financial freedom means being able to finance your life without depending on your salary. This one day personal development program is aimed at helping you reach financial freedom.

At the end of the program, you will be equipped with 
• A framework to analyse your current financial status; 
• A template to define your personal definition of financial freedom based on your dreams and aspirations; and 
• An understanding of the various investment paths that you can chose to achieve financial freedom

Achieving financial freedom is not magic or luck. You can achieve financial freedom by following a process.

The program faculty is Raja Sekharan, who is the author of this blog and has also authored the book “How to get rich and retire early” http://bit.ly/EarlyFinancialFreedom. He currently advises hundreds of professionals across India in their quest to achieve financial freedom and teaches Wealth management to MBA Finance students. He was Sr. VP - HR for Keane India till 2010.


Who should attend?
This program will be useful to individuals at any level who are keen on achieving financial freedom.

Date: 8th Feb, 2014
Time: 10am to 5pm
Venue: Christ University Institute of Management

To register or for more info please contact- info@digiteyes.in or please fill in the form below.
Registration fees – Rs. 2000   

Prestige Lakeside - How to make 63 lacs profits by investing 38 lacs in 4 years

I had recommended a property investment in my last blog and quite a few people had reached out to me and few did go ahead with the investment. Many did not as they could not fathom the calculations on how the ROI is calculated.

So I have created an excel sheet that is formula driven –you can download it from drop box url here.

https://dl.dropboxusercontent.com/u/73601331/Prestige%20lakeside%20ROI%20working.xlsx

In the excel sheet, you can change the numbers and see for yourself.

Let me share the big picture.  

• You are buying a 2000 sq ft flat at a cost of Rs 5000 per sq ft plus one car park (at Rs 3 lacs). So you commit Rs 103 lacs for the flat.
• The flat is ready in 4 years – i.e. Quarter 4 of 2017
• You pay 20% upfront right away (i.e.20.6 lacs Nov 2013) and take a home loan for the remaining 80% amount (Rs 82.4 lacs) that is paid over 12  equal instalments by the bank
• The home loan rate is 10.5% and you pay the pre emi for the loan for the next 4 years every month. The pre emi that you have paid over four years totals to Rs 18 lacs.
• You sell the flat at Rs. 9000 a sq ft – and get Rs 4 lacs for the car park – you get Rs 184 lacs by selling it in March 2018 (you may ask why Rs 9000 - well that is my forecast of the price of the property after 4 years)

You have paid Rs 20.6 lacs now and then paid a monthly pre emi totalling to Rs 18 lacs – so your total outflow has been 38 lacs.

By selling you get Rs 184 lacs – you repay the loan of Rs. 82.4 lacs – you are still left with Rs. 101.6 lacs

Remove the amount that you have invested i.e. Rs 38 lacs – you will be still be left with a profit of Rs. 63 lacs ( let us leave the change out of our discussion)

So you get Rs 63 lacs profit from this transaction  -

Will you be able to save Rs 63 lacs over four years through your salary? Most probably NO

This is one smart way to get rich and retire early

Even though this example is for a three bedroom flat and Rs 100 lacs investment, you can start with Rs. 60 lacs for a two bedroom flat in Prestige Lakeside   - and you can go up to a few crores - the mathematics will not change.

If you have any questions - please do come back to me.

If you want to go with the investment - please reach out to my ex student Varun - his number is 99459 50109 - he works for a good real estate advisory and will help you with all the documentation.

I also would like to have comments from my readers and people who have already invested in this property

One good investing idea for you now

One of the feedback that I received after the last two posts is that – it is good to know what happened – but tell me where I can invest now and make similar returns.

So I am sharing one good property idea where you can make returns similar to the one I shared recently.

Prestige Shantiniketan is a well know property in Bangalore. This is the property where my friend made 65 lacs out of an investment of 35 lacs over 7 years (please see my blog dated Sept 21st 2013).

Now Prestige builders are coming up with a bigger property than Shantiniketan. It is called Prestige Lakeside Habitat. It is in a good location off Varthur lake in Whitefield area – the total land area is around 120 acres.  They are planning 28 towers with a total of 3500 apartments – there will 2 bhk, 2.5 bhk, 3 bhk and 3.5 bhk apartment options. Then there are 350 villas.  The apartments would cost between 60 lacs to 150 lacs (4300 – 5000 per sq ft) and the villas around 2.5 cr to 4 cr (7500 -8000 psft).

The project will take 5 years for completion – so it will be ready by 2018 end.

The builder is likely to launch the project on Oct 20th – if you want to book a flat, you need to pay Rs 5L while booking and if you want to book a villa – you need to pay Rs 10 lacs.

I expect the property value to double by the time it gets ready in 2018. So if you have invested 60 lacs (paid over 3-4 years), you can take a profit of Rs 60 lacs by selling the same flat in 2018. This is my forecast – the location, the builder credentials, the size of the property is what makes me so sure.

So depending on your ability to invest next week and also your ability to arrange funds in the 3-4 years, I recommend you to book a flat or villa.

 

If you want more information on this – please do reach back to me at rajasekharan.sg@gmail.com or Varun Rajaratnam at varun.rajaratnam@clovermark.in  (ph - 9945950109)– Varun is my ex-student and works for Four Clover in Bangalore and I trust him with good honest advice in real estate.

 

Here is one more story of someone who made 22 lacs by investing 34 lacs within 30 months

In Q4 2010, I came across a project called SNN Raj Serenity that caught my attention (http://www.snnbuilders.com/raj_serenity.html).  SNN Builders is not a well known builder  – but Sanjay, one of the owners of the company was living in my flat complex and he was a decent person. The project by itself was in a good upcoming location (behind IIM Bangalore) and the club house and overall design looked good.  Further, the property was priced well and there were many investors who booked flats early. Seeing all this, I had recommended this to friends of mine.

One of my colleagues in the MBA institute (where I teach) booked a flat for 34 lacs. He also shared this with his friends and two of his friends booked two flats for 34 lacs each, purely as an investment.

Now the phase 1 of property is ready and residents are moving in and investors are moving out. The two friends of my colleague sold their flats for Rs 56 lacs each – their investment of 34 lacs over gave them a profit of 22 lacs each over 2.5 years –a 22% CAGR return.

Was it difficult to sell the property? Not really.
Is SNN Raj a tier 1 builder? Not really.

But then the end product looks good and the location is good and the price is still fair.

Want a similar idea for investing today – you can get similar returns by investing today in Shriram Smrithi (http://www.shriramproperties.com/projects/smrithi/overview/) – very similar story – good location, well priced, good tier 2 builder and surely will appreciate over time.

If you want more such ideas  - write to me.

If anyone has any such stories, and want to share it with my readers – then please write to me. I would want to speak to the investor first and then you can publish your story in my blog.

One good story of someone who tripled his money in 7 years (and made Rs 65 lacs in profit)

In 2006, a friend of mine, working in Saudi Arabia visited us in Bangalore – and invested in a 3 bed room, 2000 sq ft flat in Prestige Shantiniketan  in Whitefield  (http://www.prestigeconstructions.com/shantiniketan-residential/overview.html).

The logic then was that the location is good – IT companies are all around and this property was a large project – 3000 flats, a five star hotel, a mall, a 2 million sq ft office complex and a convention centre– all within the same compound.  Bangalore did not have anything like it then.

That time, the flat was costing appx. Rs 50 lacs – he invested  Rs 10 lacs from his side and took a loan for the remaining amount from HSBC.  His decision was impromptu – he did not come to Bangalore looking for a flat.  But he nevertheless took the call and invested. Did he have Rs 10 lacs? No – how he managed it is another story :-)

Over the next few years, quite a few things happened globally that I do not want to dwell upon. There was also a serious accident in the project site where one of the towers being built just collapsed and that delayed the project by about 2 years – finally in 2010-11 the project was completed.

Now it is a great place to live and work and is a well known address in Whitefield for mid level and senior professionals.

My friend is now looking at selling the property. The flat will go at an estimated Rs. 140 lacs now. Of this Rs. 140 lacs, he will need to repay his 40 lac loan. He will be still left with Rs 100 lacs. The pre emi he has paid over the past 7 years is about 25 lacs.

So his investment of 10 lacs and Rs 25 Lac emi payments over 7 years has given him Rs 100 lacs now - he has tripled his Rs 35 lacs to Rs 100 lacs.

Do you want to do a similar act now?  Write to me and I will give you a few similar ideas.