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The Checklist for buying plots

December 3, 2012 1 comment

There has been a renewed interest in investments in plots near the peripherals of the city.Here are a few parameters you need to keep in mind while investing in a plot

INVESTMENT HORIZON

Purchasing land as an investment usually pays off only as a long-term venture,with a minimum holding period of five to ten years.

SAFE PURCHASE PARAMETERS

In general terms,it is definitely not safe to buy land without thoroughly acquainting oneself with the local market,and the legislative dynamics of that area.
Buying land situated near a housing scheme calls for extreme caution,since one may inherit the covenants and restrictions applicable to the housing scheme.
While buying a plot as an investment,one should ensure reasonable proximity to key roads and access to water and electricity.
One should also acquaint oneself with the development plan for the chosen area – this can be established from the local administrative body.

One should be very clear about what taxes one will incur and whether the plot has a permit for the raising of residential/commercial structures.Raising large structures is not an option on agricultural plots,which are cheaper and have a lower tax burden.If the plot is agricultural land,one should establish whether its status can be converted for construction purposes later on,or not.
Before any land purchase,one needs to investigate into possible multiple ownership issues and zoning restrictions.

LAND PURCHASE – ASSURED ROI

The value of a plot of land in any particular location depends on what the Government will permit to be done there,and on the success dynamics of the society in which the land is situated.
You cannot add to the value of land as you can to a structure – value derives from the dynamic community that makes the land desirable.Therefore,a plot’s value will appreciate if there are developments in the vicinity to make this happen.Sometimes,investors purchase land based on anticipated value – such as if something like a mall,multiplex or office block is scheduled to come up nearby.If the anticipated development fails to materialise,or if the location does not receive water or electricity supply,the plot will fail to appreciate.

Land will also fail to appreciate if it is in danger of being taken over by the Government.No matter how good a plot looks,or how reasonable the price is,one must check everything.

As Published in Times of India, Property Times – December 2, 2012