Planning to invest in land? Here's a checklist
Investing in land
Identifying a piece of land that is in close or reasonable proximity to future market drivers is the first important step in investing in land.
Depending on which city one has chosen, it is possible to identify the future location of scheduled infrastructure projects, educational institutions, hotels /resorts,townships, residential and business complexes. Inquire into the legal status of the land and establish if it is for sale.
Locate the owners and make a purchase proposal. For maximum future returns, its important to make one's investment while entry costs are low.
Location is equally important if one wishes to buy land to use in a retail venture or a manufacturing unit, since such ventures are dependent on the immediate access to a customer catchment and manpower sources.
Things to keep in mind while buying land
The piece of land may be under litigation or may be earmarked for a government project. It may be categorised as forest land or can be in a coastal regulation zone.
It may also lack basic facilities such as water and power supply, or fall in a politically or socially challenged sector. It may also be in a zone notorious for encroachment.
Any or a combination of these factors can subtract from or nullify its investment potential. All negative possibilities should be covered before the purchase.
One should also consider the total cost of acquiring the property, whether the space the land provides is adequate, what other businesses are active around the site, transport options, shopping etc. and the history of the site.
Documents to be checked in land purchase
1) The title deed (a legal document proving a person's right to the property).
2) The encumbrance certificate (which proves that the land is not under some sort of legal dispute).
3) The release certificate (in case the land was previously pledged to someone else).
4) The surveyor's report (to establish its exact dimensions ).
5) If the owner is an NRI, the power of attorney that gives his representative the legal rights to act on the NRI's behalf.
Profitability
Profitability depends entirely on one's choice of the location, the entry level (cost of the property) and one's holding capacity.
The market in most known growth sectors will improve within 2-3 years, so the holding period should be at least that long.
Identifying a piece of land that is in close or reasonable proximity to future market drivers is the first important step in investing in land.
Depending on which city one has chosen, it is possible to identify the future location of scheduled infrastructure projects, educational institutions, hotels /resorts,townships, residential and business complexes. Inquire into the legal status of the land and establish if it is for sale.
Locate the owners and make a purchase proposal. For maximum future returns, its important to make one's investment while entry costs are low.
Location is equally important if one wishes to buy land to use in a retail venture or a manufacturing unit, since such ventures are dependent on the immediate access to a customer catchment and manpower sources.
Things to keep in mind while buying land
The piece of land may be under litigation or may be earmarked for a government project. It may be categorised as forest land or can be in a coastal regulation zone.
It may also lack basic facilities such as water and power supply, or fall in a politically or socially challenged sector. It may also be in a zone notorious for encroachment.
Any or a combination of these factors can subtract from or nullify its investment potential. All negative possibilities should be covered before the purchase.
One should also consider the total cost of acquiring the property, whether the space the land provides is adequate, what other businesses are active around the site, transport options, shopping etc. and the history of the site.
Documents to be checked in land purchase
1) The title deed (a legal document proving a person's right to the property).
2) The encumbrance certificate (which proves that the land is not under some sort of legal dispute).
3) The release certificate (in case the land was previously pledged to someone else).
4) The surveyor's report (to establish its exact dimensions ).
5) If the owner is an NRI, the power of attorney that gives his representative the legal rights to act on the NRI's behalf.
Profitability
Profitability depends entirely on one's choice of the location, the entry level (cost of the property) and one's holding capacity.
The market in most known growth sectors will improve within 2-3 years, so the holding period should be at least that long.
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