Should You Invest In An Under-Construction Property or a Ready-to-Move-In Property?

by Anita Bhadra Anita Bhadra

Investing in real estate can be a tricky task. You must know everything about the property and also understand the technicalities of the construction while adjusting your finances. If you are looking to invest in Mumbai, then one thing that you shouldn’t miss out on is the new projects in Kandivali west.

Flats for sale in Kandivali West will prove to be a great future investment as the suburb is gradually growing and offering some great rates as well as proximity to the various prime locations in the city. The question is whether you must invest in a property in Kandivali West or flats in Kandivali West? Here is a list of pros and cons of buying a flat for rent in Kandivali West or an under-construction property.

Under-construction property:

Advantages:

Higher returns:

An under-construction property will most often yield a high return on investment due to an extended window period between the buying stage and the delivery timeline. If you sell the property closer to possession, you stand a good chance of earning a healthy appreciation on your capital investment.

Easy on the pocket:

An under-construction property is lighter on the pocket than a ready to move in 2 BHK in Kandivali West or 3 BHK in Kandivali West. If you are comparing it with a ready flat in the same location and area then you will see a price variation of at least 10-30%

RERA Advantages:

Any property with an OC as of 1st May 2017, is mandated to be registered under the state’s RERA. Under-construction properties, therefore, will necessarily come under the ambit of RERA and are liable to comply with fair trade practices. Buyers can avail of information regarding their properties on the respective state’s RERA website.

Disadvantages:

Higher risk:

There is an element of risk in an under-construction project. The builder may fail to deliver on time or the project may not finish if the builder sees a financial crunch due to various market reasons. It is, therefore, recommended to do a detailed background check of the developer before investing.

Discrepancy in the final layout:

The most common issue with under-construction properties is not getting what you were promised. There are times when the developer may not be fully transparent about the land.

GST implication:

Buying an under-construction property attracts a GST of 5% of the total cost of the property. Stamp duty and registration charges are paid separately, resulting in heavy expenditure on taxes.

Ready-to-move-in flats:

Advantages:

Immediate Availability:

There is no waiting period, all you have to do is make the payment, go through all the documentation work and move in. So there is no burden of paying your rent and the EMIs.

No-risk, you get what you see:

Unlike an under-construction unit, in the case of a ready unit, you get what you have paid for. As the unit is ready for you to inspect before you finalize the purchase, there is no risk of discrepancies with the promised layout, features and amenities.

Free from GST implications:

Ready properties, however, are left out of the ambit of GST.

Disadvantages:

Construction quality:

In an under-construction property, you have the option of evaluating the work progress, the layout, the materials used, etc. However, in case of a ready unit you don’t have this choice.

Costly:

One of the most obvious drawbacks of a ready-to-move-in flat is the higher cost as compared to an under-construction property since you pay upfront.

Age of the property:

Unlike an under-construction property, buying a ready unit might not always ensure you a brand new home. It may have been up for sale for a long time.

If you are looking to invest in a house then these two options should be weighed out and you must select one that best suits you and your requirements.