Investing in Housing: Benefits and Risks

06.01.2020 00:30
Buying a home by investing in its construction has several advantages. Picture: Investing in Housing: Benefits and RisksThese are more loyal prices, interest-free installments, and, after all, it is a primary home, which in itself is an advantage: first, no one lived in it before, and, second, repair can be done on your own discretion.
 
Against the backdrop of the many benefits of investing in home construction, there are also a significant number of risks to consider when making your investment decision.
 
So, the risks to consider are:
 
1. The possibility of disruption of the terms of construction of the house.
 
2. Availability of all necessary permits for construction.
 
3. The variability of investment schemes and the ambiguity of the nature of their contracts
 
Let us analyze these risks to minimize them.
 
Ability to disrupt the terms of construction of the house
 
The commissioning of the house in a year or two after the stated line is an existing trend in construction. It is almost impossible to predict or influence these processes. In our realities, these are the minimum risks that can be encountered when investing in home construction. Therefore, if possible, the contract should include responsibility for the failure of the agreed terms in the form of penalties.
 
Availability of all necessary permits for construction
 
The lack of all necessary permits for construction, and history already knows such examples, indicates that investors are taking part in the scam with their money, and as a result, they themselves will suffer.
 
Therefore, it is important to first understand whether the developer has all the necessary documents, which are determined by the stage of construction. And so, the stages of construction of a multi-storey building include:
 
1) receipt of raw data by the customer or the designer (town-planning conditions and restrictions, specifications, design tasks);
 
2) development of project documentation and examination for objects IV and V categories of complexity of objects;
 
3) approval of project documentation;
 
4) execution of preparatory and construction works;
 
5) commissioning of completed construction projects;
 
6) registration of ownership of the real estate object.
 
Accordingly, confirm the legality of the construction documents are:
 
an act of ownership of a land plot or lease of a land plot;
the registered declaration on the beginning of the preparatory work and construction works at the construction sites, and a copy of the permission of the state architectural and construction control body to perform the construction works - in relation to the construction objects related to IV and V categories of complexity;
contract for connection of the construction object to the engineering networks;
a copy of the readiness statement of the object for operation prepared on the basis of the certificate of the state architectural and construction control bodies for the acceptance into operation of objects completed in construction, which belong to the IV and V categories of complexity.
 
Contractual investment scheme.
 
After the above risks have been taken into account by the investor and the steps taken to minimize them, it remains to sign an agreement under which the money will be transferred in exchange for receiving the object of the contract.
 
And this aspect needs special attention.
 
According to the Law on Investment Activity:
 
"Investing and financing the construction of residential buildings with the use of non-governmental funds, attracted from individuals and legal entities, including in management, can be carried out exclusively through construction financing funds, real estate funds, joint investment institutions, as well as through the issue of target funds. bonds of enterprises, the fulfillment of obligations under which is carried out by the transfer of object (part of object) of housing construction.
 
In view of the above, each developer offers his own scheme of investment. Typically, such schemes consist of several parties linked by several contracts. Particular attention should be paid to who the investor signs the contract with, what relationship this signatory has to the builder and what is the basis of the authority to sign.
 
Understanding what an investor buys for their money is important. In most cases, according to the investment contracts, the investor acquires a "right to the right" to the real estate object, so it is important to understand how the object itself can be obtained. It is also important to pay attention to ensuring the possible return of funds, grounds and responsible person.
 
Thus, the purchase of housing through investing is inextricably linked to risks. The study of documentation confirming the legality of the construction, and the analysis of the contractual scheme of investment makes it possible to make a balanced decision. A balanced solution minimizes potential financial losses.

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Content tags: Investments Property
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