Strategic Investments in Under-Construction Flats: Can ₹20 Lakh Turn into ₹1 Crore?

A fintech influencer has sparked a conversation about the potential of real estate investments, particularly in under-construction flats. In a recent LinkedIn post, Sharan Hegde shared that investing ₹20 lakh in an under-construction flat in Hyderabad a few years ago could have yielded a profit of ₹1 crore today. This insight challenges the common perception that real estate is a slow money game, requiring significant capital and long-term patience.

Hegde emphasized that while real estate can be a slow-moving asset, savvy investors know how to maximize returns through strategic timing and leverage. He explained that experienced investors enter projects early when prices are at their lowest and use construction-linked loans to reduce initial cash outflow. This approach allows them to benefit from the appreciation curve without tying up excessive capital. 'If you play it like the pros, it’s high-leverage, high-upside, timed risk,' he noted.

To illustrate his point, Hegde shared a recent visit to Hyderabad, where he met with a developer building over 10,000 homes and achieving sales of ₹6,000 crore. He wanted to understand the strategies that real estate investors use to achieve 2X, 3X, and even 5X returns. 'The common belief is that property takes decades to appreciate and requires huge capital upfront. But seasoned investors use timing and leverage to their advantage,' Hegde explained.

One of the key strategies is to buy during the excavation stage, which often provides the highest upside in real estate. At this early phase, prices are at their lowest, and investors who enter at this point stand to gain the most as the project progresses. 'In one project I recently saw in Hyderabad, flats that were priced at ₹1.2 crore during the early stage appreciated to ₹2.2 crore by the time construction was completed. That’s a ₹1 crore gain in just four years,' Hegde wrote.

However, Hegde also cautioned against chasing finished flats, which can often mean 'ready-to-trap-yourself.' He pointed out that while ready-to-move-in properties might seem attractive, they can lock your capital and offer modest returns. 'With rental yields hovering around just 2–3%, the cash flow does not justify the high entry cost,' he added.

Another critical aspect of investing in under-construction properties is the risk associated with the builder. Approximately 30% of under-construction properties in India face delays, leading to financial strain for buyers. Hegde emphasized the importance of conducting thorough due diligence on the builder before making any investment. 'Start by studying their past projects—have they completed similar developments successfully? Look for scale continuity: are they consistently growing and delivering, or are they jumping between one-off projects? And most importantly, understand how they fund their construction—a builder with a clear financing cycle is far more likely to complete the project as promised,' he wrote.

In conclusion, strategic investments in under-construction flats can offer significant returns, but they require careful planning, timing, and due diligence. By following these insights, investors can potentially turn a ₹20 lakh investment into ₹1 crore and more.