Newsletter December 2013

Ethical Consulting Pvt.Ltd., A-24/21, DLF Phase-I, Gurgaon-122002, Haryana, www.ethicalwealth.in

Newsletter December 2013

Ethical Consulting Pvt.Ltd., A-24/21, DLF Phase-I, Gurgaon-122002, Haryana, www.ethicalwealth.in

Boardroom’s Communiqué

Last six years have been a kind of challenge for anybody who wants to invest his savings and make it

grow or make any capital expenditure commitment. Mortgage crisis of USA in 2007-2008, its

subsequent impact on world economy, policy and political situation in the country left people with

fewer options to invest money with safety and good growth possibility for social security. There are

primarily five type of investment options available for people; 1) Deposits in government tools

(Government bank deposits, PPF, Post Office etc.) 2) Equity Market 3) Debt Market 4) Gold and 5)

Real Estate. Our research says, only real estate has stood firm on the test of safety and growth of

investment beating other investment options as well as inflation and it gave 29% YOY growth against

21% of gold and 12% of Nifty.

At Ethical Consulting Pvt. Ltd.(www.ethicalwealth.in), we believe and act on only two things, strong

analytics and customer service. In this complex financial market, we try to relieve our customers

from the worry of scanning various numerical details of investment options to make the correct

investment decision. We break this complex data into all possible simpler points and hand hold them

in their journey of making the correct investment decision. For us, each client is different and their

needs are different. That’s why we don’t use cookie cutter approach.

We all four promoters have experience of financial and real estate market for more than 50 years in

combined and we are backed by twenty strong team based at Gurgaon, Delhi, Patna and Ranchi. As

we believe in making complex things simple, we have kept our business objective simple; we are

wealth managers in the field of real estate. You can trust us for your investment decisions, because

we have full faith in our capabilities and you must be aware of the adage, “have faith in yourself,

then only others will have faith in you”.

We wish and pray everything best for you !!! Invest smart, stay smart !!!

Newsletter December 2013

Ethical Consulting Pvt.Ltd., A-24/21, DLF Phase-I, Gurgaon-122002, Haryana, www.ethicalwealth.in

Table of Contents

1. Directors Note: Pros and Cons of Real Estate Investment by Nitin Kumar, Founder-

Director Ethical Consulting Pvt. Ltd.

2. Guest Column: Why Real Estate Prices Are High in Bigger Cities: An Outsider’s View by

Mukul Bhartiya, Marketing Consultant with Digiage

3. Some Information: Leading Bank’s Home Loan Rates

4. Work With Us

5. Locate Us

Newsletter December 2013

Ethical Consulting Pvt.Ltd., A-24/21, DLF Phase-I, Gurgaon-122002, Haryana, www.ethicalwealth.in

Mr. Nitin Kumar

Founder-Director, Ethical Consulting Pvt. Ltd.

Pros and Cons of Real Estate Investment

The beneficial points:

Property can be less volatile than stocks/shares or other investments You can earn rental income and benefit from capital growth (if your property increases in

value over time) If you take out a loan to purchase an investment property the interest on the loan is tax

deductible You are investing in something which is tangible i.e, you can see and touch

The pitfalls:

Rental income does not usually cover your EMI payments or other expenses so you may have to use your regular income to cover these costs

A jump in interest rates will affect your return and decrease your disposable income There may be periods of time where you don't have a tenant and will have to cover all costs

yourself You can't sell off a bedroom if you need to access some cash in a hurry If your property investment is your major investment then you may have little or no

diversification If the property market goes down so does your whole investment. There are many instances

where people have ended up owing more than their investment property was worth, this is known as negative equity.

There are very high entry and exit costs

Newsletter December 2013

Ethical Consulting Pvt.Ltd., A-24/21, DLF Phase-I, Gurgaon-122002, Haryana, www.ethicalwealth.in

Buying an investment property

Where and what you buy will affect your return on investment.

Where to buy

Think twice about investing in property markets you are not familiar with, for example one recommended by a unscrupulous property developer. In the

Buy in a high-growth area where there is potential for capital gains. Read the newspapers regularly to pinpoint the up and coming suburbs

Look for properties that will appeal to tenants e.g. properties with a view or are close to shops, schools and transport

Research recent sale prices to give you an idea of what you can expect to pay for property in the same area

Find out about the vacancy rates in the neighbourhood. A high vacancy rate may indicate a less desirable area. This may make it harder for you to rent your property and may make it difficult to sell in the future.

Think about changes in the suburb that will affect future prices. Things like planned developments or population changes can affect the future value of a property. Don't assume that last year's boom will continue forever.

What to buy

Look for properties with features that will appeal to as many people as possible e.g. number of bathroom or car parks.

Look for a property that will attract more than one segment of the rental market such as singles, couples, young families or retirees

Low maintenance costs are important Units can be easier to maintain than houses, although you may need to pay maintenance

charges to the builder or maintenance agency.

Investment property advisers

Think twice before using the services of related groups of advisers such as property developers, Real Estate Consultants and Loan brokers who work together and recommend each other's services. Do you own research and work with your own trusted advisers.

Costs

Buying, selling and managing an investment property can be costly and will affect your return. When you buy a property, you will have to pay for lots of extras on top of the purchase price. Costs may include stamp duty, conveyance fees, legal charges, etc..

If you sell the property, you will have to pay agent's fees, advertising costs and legal fees. You may also have to pay capital gains tax.

Newsletter December 2013

Ethical Consulting Pvt.Ltd., A-24/21, DLF Phase-I, Gurgaon-122002, Haryana, www.ethicalwealth.in

Borrowing to invest

Most people will borrow to invest in property (called 'gearing' or leveraging). Remember that the more you borrow, the more you stand to gain or lose and the more it will cost you in interest expenses. That's why you have to be very sure that your property will earn a positive return over time. You can engage your Real Estate Consultants to do all the calculations for you.

Managing an investment property

You have two options when it comes to managing your property: you can do it yourself, or engage a Consultants or Managers to do it for you.

If you manage the property, you can avoid paying management costs. The downside is that you will have to do everything, from showing the property to tenants to collecting rent and organising repairs. You also need to comply with all the regulations.

You can avoid this hassle by asking a Consultant or Manager to look after your house or unit. You will have to pay them management fees but these are tax deductible.

Insurance

While you don't need to pay for home contents insurance, you will need to organize building insurance. This covers you for full building replacement if, say, the house burns down.

If you are relying on part of your employment income to cover the interest cost and expenses, make sure you have adequate income protection insurance. Your ability to earn an income may be the most important asset you have.

Risks with overseas property investing

Investing in overseas property is more risky than investing in property in India or your place of origin. It is much more difficult to make sure the investment suits your needs if you don't have local knowledge and you can't regularly inspect the property.

Here are some points to consider if you're thinking about investing in property overseas:

Good tenants and good property managers are hard to find, especially when you're not present there.

Expensive renovations and repairs may be needed, especially if the property is in a location prone to violence and political instability. Buying property location which unseen is a big risk.

You must factor in other countries tax laws, local property taxes, insurance, management costs etc., There are lots of hidden costs that the promoter may not tell you about.

Newsletter December 2013

Ethical Consulting Pvt.Ltd., A-24/21, DLF Phase-I, Gurgaon-122002, Haryana, www.ethicalwealth.in

Investing in property is a good way to grow your assets and live a peaceful life. As with other types of investments, it's important to do your research and seek professional advice if you're unsure about anything.

(Mr. Nitin Kumar is Company Secretary by qualification and has experience of fund management of

more than 12 years in the field of equity, commodity, debt and real estate. He can be contacted at

nitin@ethicalwealth.in )

Newsletter December 2013

Ethical Consulting Pvt.Ltd., A-24/21, DLF Phase-I, Gurgaon-122002, Haryana, www.ethicalwealth.in

Mukul Bhartiya

Marketing Consultant with Digiage(www.digiage.in)

Why Real Estate Prices in Bigger Cities Are High: An Outsider’s View

I always wondered why property rates are so high in cities, especially metro cities in India. I classify

every earning person’s expenditure into following main parts:

- Accommodation

- Food & Clothing

- Education

- Health; and

- Social Security ( Saving for immediate future and old age)

And rest of the thing comes after above five points. If earning period of an individual is 35 years

(from 25th year to 60th year), then he/she should not be spending more than 5-6 years of earning on

each of the above five mentioned points. Around 2-3 years of earning should be kept as buffer for

entertainment etc. But property rates in most of the cities consume at least 10-12 years income of a

person, which is double of what I think. This use to be a challenging question for me. I would like to

mention here is that above time periods have no scientific calculation backing and I am applying the

formula of average only. The figure may vary according to the income and earning potential of every

individual.

Newsletter December 2013

Ethical Consulting Pvt.Ltd., A-24/21, DLF Phase-I, Gurgaon-122002, Haryana, www.ethicalwealth.in

These images were taken a month back in my village, and this is common reality. This is how many

young boys and girls in villages spend their time.

Recently I spent around ten days in my village and found better part of the answer of my question.

Since my early childhood (around 25 years back), this was the first time I spent so many days in the

village, otherwise, my stay there used to only for few hours and that also after couple of years. I

found following things, which are still missing in villages and forcing people to live in cramped spaces

in cities:

1) Basic sanitation facility: It has been very long since my childhood, almost a quarter of

century, but progress has been so little. More than two third of the population still uses

open field to attend their daily nature’s call. Hand pump in my mango orchard was source of

water for many agriculture workers working in that area. Since I am used to drink filtered

water in home and packaged water outside, water at my village tasted bit heavy. I was

informed that the water contains higher iron level and that’s why it used to take longer

amount of time to digest food. I am not a doctor, so, I won’t go into other details, but I

found most of the people complaining about stomach related health problems and I could

attribute it to high level of iron content in water.

2) Infrastructure: Though road infrastructure has improved considerably from the past, but

continuous maintenance is still a far-fetched dream. Despite the fact that parliament

election is drawing closer, roads connecting my village, which I used to be very proud of

couple of years back, are full of big potholes and I saw no sign of any repair work starting.

Electricity is another challenge, though it is available now. Fluctuation in electricity supply is

so high that it can damage any appliance and device. It has been ages since I had seen the

volatility of power supply in terms of voltage and time period. In my house, we used to see

Newsletter December 2013

Ethical Consulting Pvt.Ltd., A-24/21, DLF Phase-I, Gurgaon-122002, Haryana, www.ethicalwealth.in

the voltage supply oscillating between 100 volt to 240 volt. I had carried my laptop and

tablets, assuming that I will be able to do my work from there itself. But this kind of voltage

fluctuation and erratic supply schedule kept devices in switched off stage all the time. Even I

had to switch off my smart phones some time to save the power and use it in emergency.

Telecommunication was another challenge. I had carried my 3G internet dongle with me and

just for once I tried to open my laptop and finish my work. Power supply was one major

problem, but this 3G internet connection really tested my patience and forced me close the

laptop finally.

3) Medical Facility: Though hospitals are in every block, but sans doctors, equipments and

medicines. One of my relative had to go through the pain of more than 60 high powered

injections for small blister on his leg by a quack and he is yet to recover. Had there been a

qualified medical practicener, then his problem could have been diagnosed and cured

properly. Medical facility is one of the major reasons behind travel of rural and small city

folks to bigger cities.

4) Migration: Impact of migration of local population to big cities is huge and it does not seem

to be a new phenomena. Now, at least two generation has spent their life outside the

village. Even in my case, my father left village after completing his 10th class education and

we kept moving with him till we were young. We also moved away from him to bigger cities

(read Delhi and Bangalore here), when we crossed our adolescence. This is the case of most

of the families and reverse migration seems impossible or distant dream now. Now people

go to villages to attend one or two festivals and take the return train back to their adopted

cities in a week’s time.

5) Employment: This point is connected with the previous one. Population on the hand is

problem, which creates distribution of scarce resources, but on the other hand, it creates

demand and so the need to be enterprising. Enterprise, whether individual or collective,

creates employment. But migration by first generation after independence to cities and next

generation to even bigger cities has also not done to smaller cities and these cities are still in

the phase of small trading hub fulfilling local requirements.

6) Cost in smaller cities have also gone up: Disproportionate to the facilities available there,

real estate rates have also gone up high in smaller cities. So, given a chance, anybody would

prefer to invest in property in bigger cities, unless and until he/she is suppose to never come

there in their life or their children’s life.

Now, villages and smaller cities cannot be revived with individual effort and the effort has to be

collective, that also backed by government intentions and effort in full strength. Till then, challenges

will remain where they are and people will keep flocking to bigger cities and real estate prices in

cities will remain high and normal consumer will have to keep paying.

(Mr. Mukul Bhartiya is an inbound marketing and multichannel sales consultant with Digiage

(www.digiage.in). He can be reached at mukul.bhartiya@digiage.in and

mukul.bhartiya@facebook.com )

Newsletter December 2013

Ethical Consulting Pvt.Ltd., A-24/21, DLF Phase-I, Gurgaon-122002, Haryana, www.ethicalwealth.in

Bank Home Loan Interest Rates

Bank Name Floating Interest

rate Per lac EMI Processing Fee Prepayment

Charges

State Bank Of India

10.30% Rs. 984 Up to 25 lacs

: 0.125% of loan amount minimum

Rs.1000/-

Nil

25-75 lacs

: Rs.3,250/-

75 & above : 5,000/-

ICICI Bank

10.40% Rs. 992 0.50% of loan

amount upto 1 crore

N.A

HDFC Ltd

10.40% Rs. 992 0.5% or maximum

10,000+service tax

(12.36%)

No prepayment

charges shall be

payable for partial or full

prepayments irrespective of

the source

HSBC Bank

10.75% - 11% Rs.1015 - Rs.1032

1% of the loan amount applied for,

subject to a

minimum of Rs 10000 plus service

tax. This fee is payable on

application and is not refundable

Nil

LIC Housing

Scheme I:10.10% (Fixed for 2

yrs)(for female applicants) or

10.35% (Fixed for 2 yrs)(for

male applicants)

Scheme I:Rs.972

(Fixed for 2 yrs)(for female

applicants) or Rs.988 (Fixed

for 2 yrs)(for male

applicants)

Up to 50 lacs : 10,000 +(Service

tax)

Nil

Scheme II: 11.25% (Fixed

for 10 yrs)

Scheme II: Rs.1049 (Fixed

for 10 yrs)

50 lacs & above : 15,000 +(service

tax)

Newsletter December 2013

Ethical Consulting Pvt.Ltd., A-24/21, DLF Phase-I, Gurgaon-122002, Haryana, www.ethicalwealth.in

Bank Name

Floating Interest

rate Per lac EMI Processing Fee

Prepayment

Charges

Scheme III:

12.25% onwards

Scheme III:

Rs.1118 onwards

AXIS Bank

10.25% (Upto 25 Lacs), then

10.50%

Rs.982 (Upto 25 Lacs), then

Rs.998

0.5% of the loan amount

Nil

(Max. 10000/- + service tax for

Salaried)

IDBI

10.25% Rs. 982 Up to .50%of loan amount

If Balance Transfer then 2%

Otherwise Nil (Rs 2500 to be collected at login

and balance at the time of sanction )

PNB Housing Finance

10.75% - 11.50% (For

Salaried/SEP), 11.25% - 11.75%

(SENP)

Rs.1015 - Rs.1066 (For

Salaried/SEP), Rs.1049 -

Rs.1084 (SENP)

0.50% NIL

ING Vysya

10.75% - 11.25% Rs.1015 -

Rs.1049

0.5% of the loan

amount

NIL

Standard Chartered

10% (Upto 25Lacs), then

10.25% - 10.50%

Rs.965 (Upto 25Lacs), then

Rs.982 - Rs.998

Rs.5500/- + Service tax

NIL

Citibank

10.25% (Fixed

for 2yrs)

Rs.982 (Fixed

for 2yrs)

0.25% (For

Salaried)

NIL

0.5% (For Self Employed)

Deutsche Bank

10.50% Rs. 998 12000 + Service Tax

Nil

DHFL

11% Rs. 1,032 1% for Salaried & 1.5% for SENP

NIL

Newsletter December 2013

Ethical Consulting Pvt.Ltd., A-24/21, DLF Phase-I, Gurgaon-122002, Haryana, www.ethicalwealth.in

Bank Name

Floating Interest

rate Per lac EMI Processing Fee

Prepayment

Charges

India Bulls

10.25% (Upto

25Lacs), then 11%

Rs.981 (Upto

25Lacs), then Rs.1032

Rs.7500 +

12.36%(Upto 30Lacs)

NIL

, else 0.5% of the loan amount

Federal Bank 10.50% Rs. 998 7,000 + Service

Tax

N.A

Bank of Maharastra

10.55% (Upto 25lacs), then

10.75%

Rs.1002 (Upto 25lacs), then

Rs.1015

0.50% (Max. Rs. 50,000/-)

Nil

Allahabad Bank

10.20% (Upto 25Lacs), then

10.45%

Rs.978 (Upto 25Lacs), then

Rs.995

upto 30 lacs: 0.60% of the

loan amount subject to max.

Rs.12000

NIL

30 lacs - 75 lac: 0.45% of the

loan amount subject to max.

Rs.24000

above 75 lacs -

300 lacs:0.35% of the loan amount

subject to max. Rs.60000

above 300

lacs: 0.25% of the loan amount

subject to max. Rs.70000

(Disclaimer: These interest rates are collected from various websites, namely www.deals4loan.com

and different bank websites. We request the users to reconfirm the rates with respective

organization regarding complete and more accurate details)

Work with us:

We are a fast growing organization. You may get the chance to work with us if you are self

motivated and have a knack of fund management in real estate. You can work with us as our

employee or channel partner; just drop your updated profile at atul@ethicalwealth.in.

Newsletter December 2013

Ethical Consulting Pvt.Ltd., A-24/21, DLF Phase-I, Gurgaon-122002, Haryana, www.ethicalwealth.in

Locate us:

Ethical Consulting Pvt. Ltd

A-24/21, DLF Phase-I, Gurgaon-122002

Website: www.ethicalwealth.in

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