Mantri Developers has started a scheme for all smart investors to double their money in 3 years, see the PR extract here:"The new year brings in added reason to celebrate as Mantri Developers presents a lifetime opportunity for its customers to double their investment in just three years. Furthermore, the customers get to own a residential address at the city’s most talked about upcoming residential project - Mantri Webcity.
Mantri Developers assures to double your investment in just three years on investment for Mantri Webcity. This one of its kind offer by a leading real estate firm which is assuring 100% ROI as a value add to its customers. Suppose one wishes to buy a home in Mantri Webcity worth Rs. 60 Lacs – 20% of the total value of the home which in this case is about Rs. 12 Lacs will be the customer’s contribution the balance amount of Rs. 48 lacs will be paid through a bank loan. On the bank loan customer does not have to pay any interest till March 2017 and on the customer’s contribution i.e Rs. 12 lacs, Mantri Developers will assure 100% return, which is Rs 24 Lacs by March 2017."
By looking at the advertisement, like most of you, I thought its one of the the best risk-free instrument available in the market. So, wanted to get more details to make sure their assurance is reliable; called up bunch of sales guys from Mantri as well as other sales channels like IndiaHomes & India Infoline to get more details.
But, after talking to all of them, realized that there are so many hidden factors, which can bring you sleepless nights.
Here are my findings:
The price per sqft is highly bloated(not even close to other competitors in the same region/area), which was even accepted by their sales executives. They are asking 4990 per sq.ft as a base price and a sub-1000 sq.ft apartment on a ground floor is going to cost 60 lacs. So, if you are planning to buy this for keeping it for yourself and not as investment, you are paying almost 50% premium than the market in the same segment. And if you are looking it as a short-term investment of 3 years, you are already paying the price closer to what it could be after 3 years.
Like most of their projects, the efficiency of super built-up area to carpet area is below industry average. So, you are actually paying much higher than other builders.
Now, lets come to their "assured double your investment in 3 years"
After series of serious discussions with their executives & managers (as we were looking for group booking of 5+ units), they provided with a term sheet on their letterhead (an eyewash to fool common public), which cannot be referenced during any legal issues. After insisting them to provide the term sheet as part of sale agreement OR as an annexure to sale agreement, they clearly stated that, they cannot make the terms neither as part of the sale agreement nor as an annexure and hence it doesn't hold any legal value.
The terms sheet has a clause that if the investor/owner decides to return back the property, he/she should inform the builders six months before the proposed possession date. But, there is no assurance when the investor would receive the refunds.
Although they mention about interest payment during pre-EMI period, there is no clause about missing payments.
So, Mantri is trying to get the project funded by individuals (like crowd-funding) using their credit rating, at a cheaper interest of 10.5% p.a instead of lender rates of 18-24%
It's a very clever & deceiving scheme, where individuals would invest based on the brand value & there is no guarantee that they would stick to their terms as its not legally bound.
Please understand all the consequences before investing in this project or scheme.
Thanks,
