Investing IN

Investing In A Pre-Launch Residential Project

Pre Launch (or soft launch) is a situation where a developer informs an inner circle of brokers and investors of the availability of properties in a project that has not been officially put on the market. Word of this arrangement spreads by word of mouth and email but does not figure on the developer's website or in other direct marketing media like news papers, realty portals, etc. A Pre-Launch property may be disclosed to the inner circle at any stage of development. Some times there might be no government approvals in place, just an agreement or MOU may have been signed.

The buyers who show interest for pre launch projects are usually investors and end-users who seek to benefit from the price advantage and can wait for a couple of years before getting possession. There are some individuals with discretionary income through inheritance, sale of property, etc are also first time investors in pre launch properties. Most times prelaunch properties are purchased by individuals who have the entire purchase price readily available.

Prelaunch flats and apartments are much cheaper than properties found in resale, ready possession or even in new construction projects that are nearing completion. The price advantage of buying a property at the prelaunch stage can be a discount of 5% to 20%, depending on various market factors. The builder's reputation also plays a huge role in the pricing of pre launch properties. The better the reputation, lesser the discount.

In most cases, developers request you to book the apartment with a nominal figure, about 3% to 5% of the total flat value. This is the earnest money, also known as token amount. However, within 30 to 45 days you are required to pay at least 20% of the total booking amount. In some cases, this money could be as much as 50%. It is important to note, the higher the amount you pay within this initial time, catapults you in a position to bargain the best possible price for the flat.

Loans on prelaunch properties depends on the requisite approvals. Most times, pre launch properties do not have all the approvals needed for a loan. A bank does not provide loans on properties missing any document. However, once all the government approvals are in place and the floor plan has been approved, then the project is approved by banks. This normally happens within 6 months of the launch.

1.Pre-launch helps the builder to generate cash flow, where as buyers can get a premium property at a minimized cost at this stage and also at under construction stage.

2.Such kind of launches in the real estate sector prove advantageous to the buyers who look for price benefit over the years of possession.

3.Old customers, investors and real estate consultants can gain from this kind of offers as it reaches them the earliest.

4.Though it is said that this kind of investment is risky but if you can check the reputation of the builder and the needed approval documents then it will become much safer to invest.

5.Also the best of construction companies include a policy in the agreement that says, they would pay a compensation if they are not able to deliver the flat in time so that buyers need not suffer monetarily.