How to select the right real estate investor?

Mr. Tran Thai Binh – Partner heading the real estate practice group at LNT & Partners gave his comments regarding how to choose a reliable investor when investing in real estate. Here is what recorded on Tuoitre online:

Various solutions have been stipulated in Housing Law and Real Estate Law to protect the rights of home buyers. For example, one investor must accomplish the legal procedures to establish the project. Then foundation has to be built up and notification of the local housing authority must be obtained. Only then is the investor permitted to sign the upcoming sales contract and mobilize the deposit from home buyers.

In addition, the real estate projects must be qualified and guaranteed by the commercial bank. In case the investor does not handover the sold houses as promised, the bank will organize a refund to the buyer.


(Source: Internet)

The remaining problem lies in whether the implementation of this provision is serious or not. For example, the authority checks to ensure the investor follows their commitments, or timely “blow the whistle” if the investor executes the illegal house sale without guarantying the legality. However, buyers themselves should conduct research about the investor and the legality of the project.

As a rule, when investors want to sign a sales contract with buyers, they must be certified by the local construction department that they are eligible to sell houses. Home buyers should remember to ask investors to present such certification. It is more difficult for the project to raise capital when all the necessary conditions are lacking and it is not certified by the authority, which makes the project hard to complete with the given timelines and commitments.

Meanwhile, the qualified investors are in a better position to accomplish the project. Those investors who have had many qualified products on the market rarely violate the legislation or hands over products late.

If investors want to earn buyers’ trust, they have to present evidence, such as: the right of land use certificate of the project, the design approval, the construction approval, the guarantee letter from the commercial bank, the acceptance document to execute the project from the construction department, and allowance of investors to mobilize capital from buyers.

In general, buyers will recognize reliable investors.


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