Real estate developer Ajitesh Kurupulu claims investors can earn up to 20% annualized returns from under-construction homes—if they understand the math. Speaking on a podcast with Varun Mayya, the second-generation developer behind ASB broke down a little-known formula that turns modest property appreciation into outsized gains.
Kurupulu explained that most buyers opt for 20-year home loans to reduce monthly EMIs, but in reality, the average payoff time is just seven years. “People choose longer loans for security and cash flow, but end up prepaying once incomes rise,” he said.
More importantly, he detailed how savvy investors can flip under-construction homes for 18–20% compound annual growth rate (CAGR), even if property prices appreciate at just 6.5% annually.
Here’s how: Assume a property costs ₹100. With a standard 15% down payment, the buyer invests ₹15 while the remaining ₹85 is disbursed by the bank over the four-year construction period. If the home’s value increases at 6.5% annually, it becomes ₹130 by year four.
At sale, after repaying the bank loan and accounting for interest—roughly ₹15—the investor is left with ₹30 on an initial ₹15 investment. That’s a 2x return in four years, translating to a 19.1% CAGR.
“This leverage model is under-discussed. Most don’t realize that home buying, if timed and executed right, can beat equity returns,” Kurupulu said.
However, he warned of delays. “If a four-year project slips to six, your returns tank. The biggest risk is developer execution,” he added. To mitigate this, he advised checking the builder’s past projects and comparing scale. A developer jumping from boutique buildings to high-rises, for example, increases risk.
He also suggested using RERA data to assess current supply and delivery timelines for better forecasting.
Kurupulu contrasted today’s market with the “land boom” of the previous generation. “Back then, buying barren land in pre-industrial areas yielded 100x returns over 20 years,” he noted, estimating that at a 24% CAGR. But he believes those opportunities are largely gone in the South and West. “For those kinds of bets, you’ll have to look North—places where roads, factories, and density are yet to come.”
