'100% returns on Bengaluru real estate in 2 years': What a Reddit post got right, and what it missed

A Reddit user recently posted a compelling investment scenario that’s caught the attention of property enthusiasts and aspiring flippers in Bengaluru. Claiming he can consistently identify opportunities offering 10% CAGR, the user described how some builders are offering flats under a staggered payment plan — pay just 10–20% now, and the rest after 1.5–2 years, when construction completes.

Here’s the logic laid out: 

If the property is priced at ₹100 today, they pay ₹20 now and ₹80 later. Assuming a 10% annual appreciation, the property is worth ₹121 after 2 years. Sell it at that point, pay the builder the pending ₹80, and walk away with ₹41. That’s more than double the initial investment — over 100% returns in 2 years. They acknowledged that taxes and fees would eat into some profit but still saw 50% returns as achievable.

The math isn’t wrong — but it misses several real-world variables that can dramatically cut those headline profits.

1. Hidden & Statutory Costs

• Stamp Duty & Registration: These range from 5–8% of the agreement value, payable at registration or possession. On a ₹100 property, that’s ₹5–8 right there.
• GST: Applicable at 5% for under-construction properties (1% for affordable housing). That’s ₹5 more.
• Preferential Location Charges (PLC), Parking, Clubhouse Fees, Maintenance Deposits: Can add 2–5% more.
• Brokerage Fees: If using an agent for resale, expect 1–2% of the selling price.

Together, these increase your effective cost base from ₹20 to ₹30 or more, even before construction ends.

2. Project Delay Risk
Bengaluru’s real estate market is riddled with delayed projects. Even reputed builders miss deadlines. If your project completes in 3 years instead of 2, not only is your capital locked longer, your expected 10% CAGR becomes less meaningful. Meanwhile, you may continue paying rent elsewhere or pre-EMIs if financing the rest.

3. Appreciation Isn’t Guaranteed
The 10% CAGR assumes a linear, upward trajectory. But markets can stagnate or dip. Overbuilt areas like Sarjapur, Whitefield, or Devanahalli are susceptible to oversupply. If the property appreciates only 4–5% a year, you’ll barely beat inflation — and may lose after accounting for costs.

4. Liquidity & Exit Risk
Even if the property appreciates, there’s no guarantee of finding a buyer at ₹121. You may need to wait months, offer a discount, or pay brokers to close the deal. That delays your profit realisation and increases exit costs.

5. Financing and Opportunity Cost
You may plan to pay the final 80% through a home loan. This brings in:

Loan processing charges

• High interest rates (especially if floating)
• Pre-EMIs in case of delayed handover
• EMIs even before possession, in some schemes

Meanwhile, the ₹20 you invested upfront could have generated returns elsewhere — mutual funds, stocks, even fixed deposits.

6. Legal and Builder Risk
Builders facing financial trouble, land disputes, or NCLT proceedings can derail your investment. Always verify:

RERA Registration

• Litigation history
• Past delivery timelines
• Construction-linked payment vs subvention risk
• RERA offers protection, but recovery is often slow and painful.

7. Taxation on Gains
If you sell within 24 months, short-term capital gains tax applies (as per your income tax slab).

After 2 years, long-term capital gains tax at 20% with indexation is levied. This tax significantly reduces your net profit.

8. Sale Transaction Costs
Apart from brokerage, consider:

• Legal fees for sale documentation
• Discounting pressure if you’re selling in a slow market
• TDS deduction if the transaction crosses ₹50 lakh

This leverage-based return calculation is valid — but only on paper and only in a perfect scenario. In reality, once you account for taxes, hidden charges, financing friction, project delays, market volatility, and liquidity risks, your net profit may shrink to 20–30%, or worse, disappear entirely if the market sours.

If you’re still confident after modeling all risks, verifying the builder’s track record, and preparing a plan B for market slowdowns — this strategy can be lucrative.