Risks Involved in Real Estate Investment & Ways to Attemate Them

2. Safety of my clients’ investment comes first,
always and every time

3. My team member’s welfare and training
comes next

4. My own ease and comfort comes last,
always and every time

5. Real Estate
Investments
Olive Green Realty

6. Olive Green Realty
• What are the Risks in Real Estate Investments?
• How can you mitigate these risks?
Scope of this presentation

7. Olive Green RealtyRisk Categories
Builder Risks
Real Estate Investment Risks can broadly be classified in three
categories:
1. Project Delay Risks
2. Project Default Risks
3. Price Risks Market and/or Builder Risks

8. Olive Green RealtyProject Delay Risks
“Project delays in Real Estate have become a norm
rather than an exception”
Reasons for delay:
• Lack of Money
• Lack of Project Management
Expertise
• Sudden change in Government
and/or regulatory policy

9. Olive Green RealtyProject Delay Risks
Lack of Money
General Reasons
Diversion of
funds to other
projects /
personal use
Slow sales in
the project
Project sold at
underpriced
rates
Already over-
stretched
builder in
other projects
Poorly
capitalized
builders

10. Olive Green RealtyProject Delay Risks
Lack of Project Management Expertise
General Reasons
New Builder
Less Experience Reluctance to
on-board
experts
Non-availability
of expert
manpower

11. Olive Green RealtyProject Delay Risks
Change in Govt. and/or Regulation
General Reasons
Change in
regime
Overhauling of
administrative
machinery
Regulation change
e.g. NGT ban on
completion due to
Okhla bird sanctuary
issue
Policy Change
e.g. Demonetization
and GST
Court orders
e.g. Against ground
water harvesting

12. Olive Green RealtyDelay Risks Safeguards
SAFEGUARDS
Buy Ready-
to-Occupy
projects.
Buy projects
from reliable
and experienced
builders.
Avoid thinly-
stretched
Builders.
Avoid Value
Traps i.e. very
aggressively low
priced projects.
Avoid aggressive
payment plans.
- Down payment
- Time Linked
- Construction Linked
Instead opt for
- Possession linked
- Subvention schemes

13. Olive Green RealtyProject Default Risks
General Causes
(In addition to the ones listed under ‘Delay’ risks)
Sale at extremely
early or non-
productive stage
PONZI Scheme
(assured returns,
buy-backs etc.)
Overhyped
product in
frenzied market
Fraudulent
Sales

14. Olive Green RealtyDefault Risks Safeguards
SAFEGUARDS
Do not buy
projects at pre-
approved stage.
(especially as a retail
buyer, even if the
prices are attractive)
Verify approvals,
land documents
before investing.
(Thumb rule: only buy
after the project has
been approved by banks)
Avoid buying “assured
returns”, “buy-back”
scheme projects.
(unless from extremely
reliable developers /
promoters)

15. Olive Green RealtyHigh-Price Risks
General Causes
Hyped
market
conditions
(Bull phase)
Hyped builder
(size, scale)
Hyped up
popular
locations
Hyped up,
hard sold
projects
Poor efficiency
projects
(super-area to
carpet area ratios)
Payment plans
with lots of
hidden costs
Poor Const.
quality
Fads,
unnecessary
frills

16. Olive Green RealtyHigh-Price Risks Safeguards
SAFEGUARDS
Get into Details
before investing
(Don’t buy based on
broad parameters
such as builder
name and location
etc.)
Go for presently
overlooked
locations.
Go for mid-sized,
reliable, sound
builders
Do complete
due-diligence.
Avoid fashionable
construction props,
fads. These are
short lived.
(size efficacies, construction
quality, style of construction etc.)

17. Safety of my clients’ investment comes first,
always and every time
Olive Green Realty
www.olivegreenrealty.in