5 Key Factors to Consider When Investing in an Under-Construction Property



Investing in an under-construction property can be a lucrative option as it offers a good balance of affordability and potential for capital appreciation. However, there are several points to consider before making such an investment. In addition to the points listed in my previous article titled "How to Find Your Dream Home: A Guide to Searching for a Suitable Residential Property in Mumbai," here are some additional key factors to keep in mind when looking for an under-construction property:


1. Builder's Reputation:


 The reputation of the builder is of utmost importance when it comes to investing in an under-construction property. Do some research on the builder's past projects, quality of construction, delivery track record, and after-sales service. Check online reviews and speak to people who have bought from the builder before.


2. Project Status: 


Check the status of the project before investing. Find out the timeline for completion and the payment schedule. Make sure that the builder has obtained all necessary approvals like IOD (Intimation of Disapproval), CC (Commencement Certificate), etc. from the authorities and has the required funding in place. Check the physical status of the construction site , pace of construction work going on at the site and mandatory notice boards displayed at the site.


3. RERA Registration: 


The Real Estate (Regulation and Development) Act, 2016, mandates all builders to register their under-construction projects with the Real Estate Regulatory Authority (RERA). Make sure to check the RERA registration number of the project and visit the RERA website to verify the details provided by the builder.


4. Ownership Title: 


Understanding the ownership title of the land on which the project is being constructed is crucial. There are various types of land ownership, such as freehold, leasehold, land in the name of society and/or individuals who have given it for redevelopment, and title that may come from SRA (Slum Rehabilitation Authority) scheme or may be a part of undivided land. This may affect the long-term ownership prospects of the property, as mostly flat owners in Mumbai multi-storied buildings have joint ownership of land, and a defect in land title may cause heavy expenses after a few years to perfect the title. You may check the title certificate which is required to be uploaded on the RERA website to check the ownership title of the land.


5. Approved Project Financial (APF) Number: 


Most developers have tie-ups with leading banks or Non-Banking Financial Companies (NBFC) to provide home loan facilities to their customers. When a bank or NBFC approves a project for a home loan facility, it provides the APF number to the concerned developer. This makes it easy for buyers, who can just quote this number and submit their documents while applying for a home loan. The APF number denotes the approval of the bank regarding the project, paperwork, proposal, documentation, various clearances, loan sanctions, and others. Usually, a developer takes APF from several Banks and NBFCs.


Investing in an under-construction property can be a great decision if you keep these factors in mind. Do your research, take your time, and make an informed decision to ensure that your investment pays off in the long run.


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