- Country: India
- Industry: Construction, Engineering, Architecture
- Stage: Seed
- Investment size: $334,000 / min. $334,000
Investment sought for a real estate project in Kochi, the fast growing metro of Kerala. The financing is needed for construction of blocks of flats on the land owned by the proposer. Value-for-money flats will be built in the IT city. The project will be completed in six months’ time.
The project is about construction of a total of 12 Flats at 13.75 Cents on a land plot very adjacent to Cochin University of Science and Technology (CUSAT), Kalamasserry, Kochi, Kerala. The University is being prepared for upgradation into IIT. The plot is at exactly one Kilometre distance from the Cochin University junction on National Highway 47.
The project cost is Rs. 18360000 (USD 333400) excluding Land Value. The Land Value is estimated to be Rs. 10175000 (USD 185000).
The investment is required to be made as the project progresses. Initial investment will be 25% of the Investment. This will be safeguarded by allotment letter of 7 flats on the name of the Investor.
The investor will be rewarded at 14.5% interest rate for the investment and with 25% share of the profit of the project. Alternatively the Investor can opt for 7 out of the 12 flats. By this option the investor will get a flat at Rs. 26.23 Lakhs (USD 47700). The selling price of the flat could be in the range of Rs. 33-35 Lakhs (USD 66000-63636) if sold immediately on construction. If considered as an investment for the future, the capital appreciation will be much higher considering the effect of 1) new projects being implemented in and around Kalamasserry , 2) the ongoing metro rail project, (where one station is in Kalamasserry), 3) the Smart city IT project, 4) the proposed up gradation of Cochin University to a an IIT etc. etc.
If invested for future rental income the project is again very attractive. Each flat is provided with own car parking. And the demand for rented house in this area is going to be multiplied for the reasons mentioned above. The upgradation of CUSAT alone is going to create large demand and the proposed project is the one most near to CUSAT literally. Each flat could reasonably expect to be rented out for Rs 12000 (USD 218) monthly. Even if we consider 25% of the amount as expenditure on maintenance and running, we could still be assured of a net cash income of 9000 (USD 164) a month or 7.56 Lakhs an year (USD 13745). The capital appreciation will be in addition to this.
Another advantage is that it would be easy for the investor to manage his investment in case he decides to rent it out since he is getting seven flats in the same building.
The investment can be described as risk free. Upon initial advance of 25% (46 Lakhs, USD 83636) the investor is allotted 7 flats. And consequently, he gets the rights over the undivided land to the extent of 8.02 cents valued at 59.35 Lakhs (USD 107909). And further investments are sought as the work progresses and hence the entire investments are always fully secured.
However, as a matter of abundant caution investors are notified that any real estate investments are associated with normal risks due to changes in government policy, people’s perception about housing, acts of god etc. Against the risks which may happen as a result of acts of nature/God upon promoters ability to carry on the business we are guaranteeing fully transparent documents with which the investor will be able to claim his legitimate rights through courts of law.
The location of the site is the most valuable advantage of the project. The land is owned by the proposer and is ideally located. The small size of the project makes it break even early. Also, because of the small size the project could be completed in six months’ time. The investment is secured from day one of the investment with security cover above the investment amount.
Rationale for the deal
The demand for quality homes is rising in the market. The large amount of investment activity currently undergoing in Kochi is offering more and more job opportunities and a large number of migrations are happening to the city creating demand above supply for quality value-for-money homes. The real estate industry when approached with long term strategies and integrity is always winning reasonable returns. People are highly selective of quality of construction and promptness of delivery. Because of the smaller size of the project these factors are well within the control the proposer. In and around the selected locality almost all reputed builders are constructing homes for the potential of the location both current and future.
Use of financing
The investment is sought for the cost of construction of the proposed flats. The proposer owns land which is ideal for the project chosen and lacks money for the construction. Hence, the proposal is for joint construction/profit sharing.
The first instalment is to be provided when the deal is approved. The allotment letter or any necessary document will be created for the security of the investment. Subsequent payments will be collected against progress in the project. The entire investment is expected to be completed in six months and the project will be ready for sale.
Opportunity for the investor
The investor is offered 14.5% interest for the investment and 25% share of the profit. Otherwise the investor is offered seven out of the 12 flats being built. Upon completion of the project long term investments and equity sharing of the proposed company can be negotiated upon.
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