Investing in Real Estate in India……Good Strategy But Be Careful….

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Investing in home or a piece of land is the number one priority for all of us (Indians) and generations can vouch that this strategy in the long run pays off. I had been investing in Indian real estate market since 1998 and was lucky to be part of the great run. Thanks to the people around me who had assisted me to invest safely since then.  Now that I am in India and directly involved in some of these deals, I believe that not only NRIs but even local investors have to be careful with the gimmicks played by builders and brokers. Absence of law and law enforcement in this sector keeps the end investors on toe and builders and brokers take full advantage of the same. For NRIs it’s more difficult as they may be investing by looking at brochures and tall promises made by builders and brokers but they need to be very careful. Here is a list of things that you may consider evaluating before you invest.

Possession of Projects: It is very common for builders to promise delivery dates of projects, but it is almost sure that you can add at least 2-3 years to the actual possession date. Some projects are even delayed by 3-4 years; this can jeopardize your investment or your plans of moving to the new place. There is no penalty to the builder for this delay, sometimes back builders have started adding penalty clause but that will make you laugh.

Location: Most of us know location is one key element when we invest in real estate. Builders spend lots of money in creating very attractive brochures which carry most of the information about projects including location maps; anything which is not a part of builder’s location is generally shown as lush green area, you may want to check in real what exists nearby as in some cases you may find offices, apartments or malls but in some cases there will be railway lines and noisy roads going behind your plot or apartment.

Sale on Projection: This may be happening in other places as well, but this has happened in Gurgaon where the Government had announced to build a highway and builders started creating land banks and further started selling apartments, villas and plots on the highway which never existed. You may experience that your apartment or dream house is ready but they are not accessible because there is no road. Dwarka expressway is one example where most of the reputed builders are sitting on people’s money and expressway was supposed to be ready by 2011. Here we are in 2014, and people still cannot find a way to their homes.

Increase of Area: This problem is quite strange and seems illegal.  Few times people had been sent letters to deposit more money than what is in the contract because builders claim that area allocated on the plan of apartment/plot is more than what was actually mentioned in the contract. I don’t understand how the area can change in the end when architects make the plan, and then the plan gets approved by the Govt agencies. Only few cash strapped builders carry these practices but you still need to be careful.

Sale before Proper Approvals: Few very strange cases where buyers are struck so badly that they have no options left other than taking a loss on the investment they made.  Ansals Aravali, a 2500 acres community where 1 acre and 2 acre plots had been allocated to buyers, builder had provided all facilities like water, electric etc, farm house had been made and 10 years later buyers find out that builder had not taken all clearances from the required Govt agencies, which resulted, no more construction and even demolish all farm houses which are constructed by the buyers. Scared now? These farm houses may have been sold years back, but just few weeks back SuperTech had been ordered by high court to demolish two of their premier towers in Noida because they had not followed the rules.

Soft Launch Advantage/Disadvantage: I got an opportunity to invest in Gurgaon through tier 1 builders and brokers and found that some of the information probably is not even known to the regular buyers. Although nothing is hidden, I still think when people invest they are not aware of these facts because they generally deal with brokers. Anytime when the project is launched by a builder to the regular public, the builder probably already has sold their inventory to very big investors called under writers, then further these underwriters subcontract to brokers to find small investors, who buys 2-10 units and then further launch date is announced for normal public. In this process, builders make sure that their entire inventory is gone but during the process every middle party involved makes money. This entire process is called soft launch, it’s advisable to find out trusted brokers and hunt for these deals but sometimes soft launched projects may not have all approvals in place, which could put your investment in jeopardy.

Business Ethics: Observed that business ethics like any other business in India are far in this vertical as well, if you have bad luck, these brokers can play bad games and as bad that sometimes they may be selling you some property which is sold twice or a piece of land that is illegal or may not even have all the approvals in place. Always refrain from giving any direct money to brokers, they can run away forever.

Super Area Confusion/Trick: Try to understand, what is the actual build up area are you going to get when you buy any real estate. Builders generally charge you for super area but they will never mention what will be the built up area. In some cases, I even found that when I bought an office on the first floor, it had a ratio of super area and build up area of 65% but when bought the office in the same complex on ground floor then ratio became 50%.

No EMIs Trick: Real estate market is softer in India since 2012, builders are now coming up with the new gimmicks, they are promoting that you do not pay until you get possession or all your EMIs are paid on your behalf etc. Be careful and be aware of the fact that all these offers have interest factored in the price. There is no way that the builder is going to work in your favor. Protect yourself.

I had bought many properties abroad but never faced any of the above problems.  Everything is black and white, but if you are investing in real estate in India then there is no doubt that the rewards could be handsome but be extra careful and be extra vigilant.

http://timesofindia.indiatimes.com/city/noida/SC-stays-demolition-of-2-Supertech-towers-in-Noida/articleshow/34680049.cms

http://timesofindia.indiatimes.com/city/gurgaon/Nine-Aravali-farmhouses-pulled-down/articleshow/12670429.cms

http://en.wikipedia.org/wiki/Campa_Cola_Compound

(This blog is dedicated to Aastha my daughter, who is in 5th grade, checks my blog stats every day, since I do not write frequently, this time she wanted me to write a blog as her birthday present, so that stats go up. :))

Easy Ways to Expose Yourself to the World of Hackers…..

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During the last 30 years, technology had been a big catalyst in changing our lives in many good ways. Now we have many new products, tools and software applications that are part of our daily lives. Technologies like internet and its various wireless forms like 2G, 3G & 4G have really shortened the world by decreasing the communication gap and cost. I remember in 1997 when we used to call home (India) from USA, it used to cost us around $2 per minute and that cost had literally come down to pennies in the last few years. Today many software applications e.g. Facebook, Google, many email services and endless mobile applications to call, SMS and chat are offered free. There may not be any cost attached when we use these tools but there are many security threats attached to them which many of us are not aware of and because of that lack of knowledge we suffer.

Since I have been in the software development business for the last 20 years, I can easily make these two statements:  as soon as you are connected to the internet using any device whether it’s your desktop, tablet or mobile, you are not safe and second, any application, online or software residing on your PC, tablet or mobile device can potentially expose you to hackers.  If there is an extremely intelligent developer/company who claims that their application is completely secure then there is also an extremely smart hacker sitting somewhere to crack that code to misuse it. Most of these cyber-attacks are done intentionally to harm innocent users using internet and World Wide Web. People who named WWW probably had good intentions but literally did not think that “Web” still means: “A network of fine threads constructed by a spider from fluid secreted by its spinnerets, used to catch its prey.” Hackers are spiders and we are their prey.

Using Security Cameras at home: This particular instance had provoked me to write this blog and is a good example of how important it is to really to understand what you are getting into. Few months back, we got security cameras installed in our home. When the installation was about to complete, the installer asked me if I would like to track activity remotely through the web. I had a big smile and my answer was yes because it would be an advantage when we go on vacation, then we could have tracked any activity inside our home, backyard, front gates etc. on the iPhone. But while the guy was setting it up he had asked me to connect the DVR with my local internet and also asked for user id and password. When I asked him why he would need all that information, he had no answer. But, I was still watching him closely and this was what I found. He literally used my user id and password and opened one of the ports which could directly communicate through the servers in Hong Kong and through internet, stream all video activity to that server which further gets downloaded to the iPhone/Mobile app. I don’t think anyone even imagines what these security vendors are doing, but literally any day if hackers hack the server, millions of those users are exposed.

Now there are Wi-Fi security cameras available which are even more insecure. As long as you are securing the place with security cameras and recording the activity, it’s fine. But, as soon as you integrate your IPhone, you would potentially be exposing entire activity to the hackers.

Configuring and using Wi-Fi : Wi-Fi is another technology that everyone is going after. Initially it was meant to connect laptops, desktops, printers and tablets through internet but now the same is being used to control household devices, like switching on the lights, controlling TVs and refrigerators. Many folks by themselves or by installers rush through the job to get their Internet connectivity working as quickly as possible. That’s totally understandable but if the Internet is not configured properly it can cause numerous security problems. Why is security so important and what could possibly go wrong? Here is the list:

Once your Wi-Fi is hacked, hackers can use your account to download/upload movies or any media.

They can surf sites which you may not usually go to.

In some cases they can access your hard disk and that means they can access all your files.

There are many utilities easily available which can hack your Wi-Fi. It’s easy for hackers to look for all open and unsecured Wi-Fi  networks and use them. So why take that risk, at least follow these steps to secure yourself:

Change the name of your SSID and do not make it very attractive and obvious e.g. GAUTAM HOME.

Always use a password or key to connect.

Do not keep password as simple as “1234” or “password”.

Choose encryption type to WEP, if you have other choices available like WPA or WPA2 then it’s better to choose the latter.

Free Emails/SMS/Chat and social networking sites: Nothing is free in this world, anything that you get for no money, means you are definitely compromising something else. When was the last time that you completely read the agreement or terms and conditions when you signed up for the social networking site or signed up for free email service, I guess never. No one has time to go through those agreements. Recently, we were developing a website and we thought that we should have terms and condition on our website equivalent to what Facebook has. Therefore when our team reviewed the Facebook agreement, it was an eye opener and shame to see how we all have really agreed to those terms. On top of it Facebook is still not safe from hackers; every now and then they have a major security lapse. When you search on Google, Google generally tracks what you are searching for and start pushing their advertisements accordingly. I am sure everyone knows that NSA had been tracking all email services and all SMS, now that is for good cause but what if there is a hacker who is as smart as someone sitting in NSA and crack and hack all this information. Recently Snapchat was hacked and 4.5 million users had been exposed. Target and few other major retailers in USA had been hit hard by hackers.

Should you stop using these tools? I say “No”. But you should evaluate the risks of signing up for these services and understand how these new tools or devices are exposing us to the world of hackers. I used to have many friends who would not join any social network site; they would not create a Facebook account for their kids because kids could get spoiled. I had a different point of view, for how long we would be able to control our kids, few years, what happens when they go out of our hands; they would do whatever they would like to do. So why not adapt these things and teach them how to use them, what to do and what not do and also make them aware of these security issues.

Broader idea here is, be aware of these new tools and devices, how they work and what you got to do to secure yourself, because sooner or later you will have to adapt them.

Google Chromecast Availibility in India

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Google had launched a new device called Chromecast, I am sure many of you are already aware of the device but just to summarize this device from google make it easy to stream video from many devices to your high definition TV. Chromecast is a small dongle which gets attached to the HDMI port and through Wi-Fi communicates with any of the supported devices. Chromecast not only works with Android platform but Google Chromecast app is also available for iOS devices like iPhone, iPad and iPod touch users, and will automatically scan for existing local Chromecast devices, as well as allow you to set up a new one to add to your Wi-Fi network. It also lists compatible apps, which for now include both YouTube and Netflix on iOS, from which to broadcast content. Check out many other features at google’s site.

I was hoping that google would introduce this device in India but they have not yet made any announcement. Some folks in India are selling this device from INR 5500 to INR 10,000 taking undue advantage of non-availability of the product. As an alternative I ordered this device from amazon.com and paid only $52, which included delivery and import duties. Amazon global delivery has started delivering to India so it’s easy and reliable to use them.

How to setup Chromecast on iOS in India or outside USA : Since this device officially had not been launched in any country other than USA, am getting tons of questions how to set up the same in India and other countries, please go through the instructions below: Have your friend in USA create an account for you, if that is not an option then you can create a second iTunes account, set country to USA and incase of credit card verification use “None”. You will be able to download all free apps. Refer to the link incase you face any problem setting up the iTunes Account.
http://support.apple.com/kb/HT2534

How to setup Chromecast on android in India or outside USA : Refer to the link below this gentleman had explained it very well, how you can setup and download Chromecast on android devices. http://techneversleeps.com/how-to-setup-chromecast-outside-of-the-u-s/

Returning to India – few tips and facts…

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Completed one year in India, believe it or not we are still recovering from the hangover of this move. Took so much time to get back to routine, check out this long due update…
Some tips: I will start with some tips:
1. You need to fill a request to direct your mail to someone who can further either courier mail to you, or scan and send. This can be done through USPS.com, you should sign up for online fax and online mail service as well. There are lot of websites where you can upload document and send  fax,  you can also try http://www.mailaletter.com for sending letters.
2. IRS needs to be notified about the address change. I suggest you give POA to your CPA this will help you many ways.
3. Make sure all your credit cards are paid off; if not then link those accounts with your main bank account.
4. Biggest problem that I had faced was related to property taxes, in many cases because of the recession tax collection agencies staff had been cut short and most of them do not accept electronic payments. Make sure you have pay bills online capability, most of the banks offer this capability.
5. Most of the banking and financial institutes will pick up the address change notification through USPS but there are still few institutes that you may need to go back online and verify the change, so make sure you are carrying all user ids and passwords.
6. Generally people suggest buying furniture abroad thinking it’s probably cheap and have better quality but that is not the case, I think it’s just mental setup of dollar conversion. We had bought a leather sofa for USD5K but I found better stuff here in India for that much money. You can avoid shipping that hefty stuff.
7. One of the common question asked is if TVs purchased in USA are going to work in India(PAL and NTSC is a confusion). This is not a concern anymore, I had 4 flat TVs and which I was literally donating but my shipper suggested to carry them and try out, was surprised even the one which I bought in 2002 worked here without any problem. So get all TVs that you have purchased as flat TVs are still costly here.
8. If you are keeping your properties and have not already rented them out, you need to fill up a landlord agreement with the utility companies, it ensures that when tenant moves out of the home, office or any property then utilities get transferred under your name till the time next tenant moves in. If you do not do this then chances are that you need to re-initiate request all utilities from scratch.
9. If you are shipping any of the electric/electronics equipment, check if it can work on 220V if not then get converters from USA(Amazon.com is the place to get them all), they are all made in China but have better quality than but is available in India. Also see the wattage and multiply the same with 1.5, e.g if your TV consumes 1000W  then get converter which has capacity of 1500W.

Set your expectations right: One thing is very clear you need to format your hard disk of expectations on many fronts. If you are coming back from countries like USA then understand that India is a country which is four times smaller in area and has four times more population than USA which creates an overall impact of sixteen times, this impact is huge and means smaller homes, smaller cars, narrow roads and lot of people around you. But if you are in business then this also means that you have 16 times more opportunities available. Move to India could also prove to be very expensive if you think you will carry the same lifestyle that you had been carrying abroad.
Infrastructure: I could not find one thing that is not available here now, rather in many fronts India may have already beaten many countries e.g. communications, education, medical tourism etc. Some of my friends do ask about, roads, cleanliness, civic sense of people. Message for them, things are changing here fast but if you are going to compare India with USA, UK, Australia then you will be disappointed, compare with what you have seen 10/15 years back. If you keep that mindset then you will appreciate the progress here.
Place where you are moving to: Try to move back where your base used to be or where you have your most friends or family members. Sometimes your jobs could impact this decision but think twice and explore if you have any opportunity available in the area where you have proper support system of friends and families. When you move abroad chances are that you have established your life independently without any help but that is only possible because systems abroad do not impact consumers and normal public, India is a different ball game you have to have your circle to get many things done.
Kids: Kids have completely surprised me with their adaptation and how well they have settled down here. Not even a single time they have complained rather seeing poverty here they have started appreciating and thank God for all what they had been experiencing. Try to get kids in a decent school and see if you can get good apartment or Villa with club and parks. Today many such communities are popping up in main cities of India. If you push your kids in your legacy home and traditional cities, chances are it’s not going to work. Food is not a problem at all; right from Papa Johns Pizza and Baristas to great Italian and American restaurants are available in major cities. Also most of the international festivals are celebrated here, today is October 31 and there are so many kids celebrating Halloween in our community. Kids do not miss anything here in India now.
Schools and Education: I was little bit worried about school and board system in India but depending upon the grade of the kid you may have various choices. There are many international schools available. When I was researching about schools, many friends and relatives told me that we may have to donate lot of money to get them into the school. I was taking a big chance, always hated donation system but was mentally prepared, come what may, I will not admit them to a school where donations are demanded. And for that reason I had prepared list of 5-6 schools and thought of trying one by one. We were very lucky that we went to the first school and my elder daughter was offered an admission without any such demands; rather both younger kids were also offered admission at sibling discounts. Our daughter is excellent in studies and was advanced student in USA but I don’t know till date, if it was our luck or the school was impressed with her credentials or they actually do not entertain these bad practices. I found most of the international schools have best of the infrastructure. If possible admit your kids in good international school, this will really help you.
Help Available: There is a lot of help available, now professional companies are popping up everywhere who can arrange service maids for you with proper background check up etc. We used to pay $1300 for the maid in USA, and for that much money you can hire 5 maids here, right from cook, cleaning maids, gardeners and driver. This is a big advantage.
Law and Order: Many friends from USA have asked me about law and order in India, law and order here may not be up to the level but consider these two examples, there was a bomb blast in Pune, no one got hurt but 11 people lost life in USA when they were watching movie. During same time there was another attack on Sikhs in USA and I guess 6 people got killed. I seriously think that there are bad and good people everywhere, if you are a target or have bad luck then you are not safe anywhere.
Pinch: This is for most of our friends; we may have discussed “No love for materialistic stuff”, but trust me once you move and start living here, you get very different feeling. We miss our cars, I had been to Merc showroom and GL 550(Most of us owned) that monster is costing here 1.5 CR INR, 2/3 times costlier than what we paid in USA, even if you think you will spend that much, that brings security concerns and you may have your BP shoot up if someone hits the car. We miss our home (which probably is not worth more than 750K USD), space, environment and neighbors. Here in Gurgaon if I need to own something like that home then you are talking at least 10-15 Cr INR minus infrastructure. So check your bank balance and adjust your lifestyle accordingly.
Struggle: No doubt there is so much of help available here, but I miss friends, my lifestyle, I miss driving, I miss cooking, I miss how I used to handle all handy work myself. You need to understand very well who you are, can you bribe, can you deal with black money, do you have patience to see that someone bumps into your car and does not even stop, and in the end do you have enough time to deal with the poor commitment level of people around you. Systems are improving but our generation may not be that lucky to see what we experience abroad. I see things that I cannot tolerate and are wrong and every day I struggle with the question, should I be part of these wrong practices? If I become part of it then I struggle internally and if I do not then I know things will not move at all. Every time seeing so many poor people everywhere makes me think why I am sitting inside this car and why this lady, man or kid is struggling outside. I hope God gives me strength to do something constructive to help these people. This is my personal situation but you may be able to handle these issues at different level.
Satisfaction: Close to friends and family, nothing can beat that. Kids are very happy, I feel like we have given them something which they had been missing. They don’t want to go back and we are very proud. Our 6 years old son when sees garbage on the roads tells us that he will make garbage bins and teach people how to use them rather than complaining about it. For us that is a big win and I hope nothing pops up in future and if it does then I do not mind being an international citizen.

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