Is it too good to be a true investment option? Thoughts?
I did consult a friend in finance and got to know it's true in general but the margins aren't attractive.
i got to know one should have enough capital to keep paying the loan if no buyer is ready to buy at a good price. And if the builder doesn't finish on time then big L.
I heard this is usually done for under-construction projects of very trusted builders... But more trusted the builder, lower the margin. For India's best builder, this is not viable.
So do people take home loans to invest in this?
Stamp Duty? GST? Anything else to be aware of?
People who have tried this already, is it worth it? And why???
And how is the Reward to Risk ratio in the spectrum for this method?
. .
Edit: To the sceptical comments below, I felt the same, I kinda still do, But i also believe every finance myth should have some degree of truth behind it. Adding some info below that can set better context to how this might have been possible. (Not my words, but from people I spoke to about this)
Apparently they do take a home loan. They don't register the purchase but they register the agreement to purchase.
They still have to pay prospective stamp duty and very importantly, 5% GST.. which is 0% for completed project units.
Any additional information is welcome.