Fact Check, Which payment plan is better for commercial property investment

Article by Vikas Sharma

While investing in an under-construction commercial property, choosing the best payment plan is to reduce the risk of our investment.

These days several real estate developers offering interesting/greedy payment plans for investors to invest in their commercial projects/properties. let’s understand the payment plans one by one.

1. Assured Return Plan
Real estate developers promise ‘Assured Returns’ from day one on their under-construction commercial projects, offering 10-12% returns till offer of possession. In this payment plan, you have to make a down payment. Assured Returns is a greedy payment plan in commercial property projects to attract prospective buyers.

Profitable resale in assured return property/projects takes a very long time to grow. There are several examples of flop assured return projects in PAN India. Actually, assured return payment plans are the tricks of fundraising by fooling the public.

Basically, the assured return is nothing, the real estate developers sell their low money property at a very higher price and return your hard-earned money in the name of the assured return to you in the form of EMI. Actually, they are making you fool.

Most of the developers fail to do their commitments in assured return. Most of the assured return projects stuck, or delay possession. Several assured return developers facing cheque bouncing charges in Indian courts.

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2. Lease Guaranty Plan
In this plan, the developer assures you minimum lease guaranty after possession in virtual retail & office space.

Actually, there are two types of investors, the first one who buys retail shops or office space for self-use and the second one who bought it for pure rental income and sell when getting some appreciation.

So if you are buying it for your self-use, you can buy any size according to your uses, but if you are buying it for pure rental or appreciation income, then go for virtual space with a lease guaranty plan.

The brands or multinational companies want the bigger space for their operations. And there are several must require things such as dedicated bigger parking spaces, negotiations in CAM charges, specific signage, dedicated power backup, bigger space in a single floor plate, and several must require NOCs, which are very difficult to arrange by a small or individual investor.

In this payment plan, the real estate developer is responsible for leased out your virtual space. So if you want actual regular monthly rental income after possession, go for the post possession Lease Guaranty payment plan and relax.

3. 50-50% Plan
In this payment plan 50% at the time of booking and rest at the offer of possession. Its a good payment plan for investment in a primary stage under-construction property with less money.

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4. 25-25-25-25% Plan
25% at the time of booking.
25% at the time of completion of the structure.
25% at the time of finishing (plaster).
25% at the time of offer of possession

It is also a good payment plan for investment in a primary stage under-construction property with less money.

5. Time Linked Plan
In this payment plan, you must be paid all of your money in a pre-decided time frame. It’s a risky payment plan. You have to pay all the money in a set time frame, whether construction completed or not.

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6. Construction Linked Plan
The developer has collected 95% of the costs for just about 40% construction. Your money is losing interest and perhaps the builder is getting benefits.

The construction link payment plan is costly in comparison to other payment plans like 50-50%, etc.