• What is the minimum amount of money, one can invest in Real Estate Funds ?

The minimum commitment amount is Rs 25 lakh as of now (enhanced to Rs 100 lakh going forward), 10 per cent need to be paid upfront and the remaining over the next 2 years (in equal 6 monthly installments)

  • Is there any lock-in period in these funds ?

Generally 4 to 6 years, this at times can get extended by a year

  • What is Real Estate Funds ?

These are funds which collect money from investors and invest the same in the real estate for the collective benefit of the investors

  • How to invest in Real Estate Funds ?

You have to look at the funds open for subscription, assess their capabilities, see their past track record, and sign a contribution agreement with them. Better to ask a reputed financial advisor to recommend and assist you in the same

  • I have Rs 20 lakh, should I buy property or invest in funds. What are the benefits of investing in real estate funds ?

You won’t get a property in Rs 20 lakh. However for the same money, you can invest in a fund which would spread the amount over 10 to 15 properties, diversify the risk and deliver decent returns without any hassles

  • What percentage of total investment of portfolio should go in real estate funds ?

25-50 per cent, depending on the profile of an investor and the objective of the real estate funds on offer

  • How investment in REMF (Real estate mutual funds) helps in hedging against housing price inflation ?

Not much. These funds should be looked at as pure investment product which delivers superior pre tax returns of around 20 per cent per year

  • Should sell my current investment with little merging and move it to Real Estate Funds ?

You would need to talk to a qualified financial advisor to assess your current investments and then give suitable recommendation. If you want, you can email our customer representative on » contact@smartassetpartners.com

  • How are real estate funds different from real estate mutual funds ?

Real estate mutual funds are not there in India as of now. As and when they are allowed, one would be able to participate with smaller amounts too. Till then, real estate funds is the only option

  • How to choose best Real Estate Mutual Fund Scheme ?

In India mutual funds are not permitted to launch real estate Schemes. For identifying a good real estate fund, you need to do extensive research on the various offerings, their promoters and the past track record

  • My brother and I can invest Rs 30 lakh in a property fund. Can it be done in joint names? I will invest Rs 10 lakh of the total? Will the papers define this proportion ?

You can invest jointly. The papers will not define the proportion. Also, all payments from the fund would come in the name of the first holder. You may however sign and MoU with each other, defining the percentages

  • What all points one should keep in mind before choosing Real estate funds ? Who governs it ?

You need to see the track record of the promoters of the fund, the performance of the past offerings, and experience of the fund management team. These funds are venture capital funds launched under the SEBI (Venture Capital Fund (Regulations) 1996

  • Do Real Estate Mutual Fund Scheme offers SIP (Systematic Investment Plan) option ?

No. The payment schedule is generally 10 per cent upfront and 22.50 per cent every six months, over the next two years

  • What are the benefits/advantages of these funds that consumers can avail ?

These funds offer the same kind of returns like the real estate sector with the least risk and no hassles

  • How are these funds different from Real Estate Investment Trust (REITs) ?

REITs in India are still a year away as the govt is yet to issue guidelines for the same. Overseas, REITs are listed entities which invest in commercial real estate and lets out the same. The amount that they earn as rent gets distributed to the investor and the appreciation in the price of the property gets captured in the appreciation in their prices on the stock exchanges

  • We are a group of five friends and want to invest in property. Can we collect Rs 25 lakh and invest jointly in property funds ? How to mention that in papers ? Can it be done at all ?

In any fund there could be a maximum of 3 to 4 investors. You can always sign a MoU among yourselves

  • What kind of annual returns can a consumer expect after investing in Real Estate Funds ?

Around 21 per cent (pre tax) compound per year

  • In what frequency these funds distribute returns ?

Much of the returns keep accumulating and cumulating and the major cash flow to investors happen in the 5th and 6th year

  • Are returns from these investments fully taxable ? Any exemptions ?

Approx 75 per cent of the returns are taxable. No separate exemption, other than the basic limit of Rs 2 lakh in the income tax act

  • Do realty funds invest in commercial properties only ? No residential properties ?

The objective of the scheme determines where they would invest. The funds on offer now, are investing primarily in residential properties

  • If the returns are given after 5-6 years, do funds pay interest on cumulated amount with them ?

The returns get cumulated

  • In what frequency these funds distribute returns ?

These funds are only passing through vehicles, as the money flows back from investments; the same gets distributed to investors

  • Is there any upper limit on the tenure ?

Generally eight years

  • I am have cash available and thinking whether to invest in a real estate project directly (newly launched) or in a REIT ?

If cash means black, it’s not acceptable in real estate funds

  • What are the basis requirements to get loan from Nationalised banks ?

No loans for investment in these funds or against investments in these funds

  • What is the scope of incurring losses in such investments ?

Nil, since the investments are spread over a large number of investments and each project is carefully chosen and tracked by a team of seasoned professionals

  • Do these funds give recurring returns or is it one time ?

Generally the amounts invested get returned after 4 to 5 years as a onetime payment

  • If I invest Rs 10 lakh for 5 years, how much can i expect to make in Real Estate funds ?

Gain of Rs 15 to 16 lakh

  • What kind of transparency can I expect from these real estate funds ?

They give out a quarterly report on the working of the fund and an annual audited statement

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