6 Points To Consider Before You Invest in Plot

Manu — Sat, 30 Dec 2023 07:25:00 +0000

Introduction- Invest in Plot

When you invest in plot, it always feels like there is a risk involved. I am sure most of you resonate with this thought.

What if the value doesn’t go up? What if you can’t sell it later?

While these are all valid concerns, doing nothing is always a risk too.

Why don’t people like taking risks? The answer is simple – because they are uncertain and the future is unknown. That’s why I want to talk about investing in plots and how it could help you in reducing your financial uncertainty.

There are many points we should consider before deciding to invest in plots/ land. But few of critical pointers are mentioned below:

1-We can’t create land.

The supply of land is limited. There is no way for more land to be created. This makes the demand for land higher than for other assets like gold, cryptos, equity etc, which experience volatile changes in price.

With limited supply of land and regular urbanization, demand and thus prices of plots are bound to increase in long-term.

2-It’s a big-ticket purchase and often illiquid asset

If you have substantial saving in your accounts, you can go ahead with investment in plots.

But in case you have not accumulated funds till now, please refrain from investing in cheap & sub-standard plots. Cheap is usually very expensive in long-term.

Instead, you can consider investing in financial assets such as mutual fund units, shares, recurring deposits, or even gold.

Furthermore, land investment is relatively illiquid, and you cannot sell it when you want to cash it out.

In some cases, time it takes for the sale to occur can take years, defeating the purpose of making the investment in the first place.

3-Lurking risk of loan encroachment

Land deals have sunk many a business. In some cases, your legal right over the land can be threatened, creating problems that can lead to litigation and unnecessarily high legal costs.

In other cases, a government agency can take possession of the land through compulsory acquisition. Compensation is often not enough to compensate you for your lost investment.

So, it is always advisable to take help of some reputed real estate consulting agency. You can consider our services as well. ( Call @ +91 85458 84804)

4-Difficult to get loan for plot purchase

To buy or construct a house, you can get up to 80% of the value of the property (the estimated cost of construction).

To construct a property on a plot of land, you can get a composite loan covering the cost of the plot and cost of construction. In banking parlance it is called as P plus C (purchase plus construction) loan.

However, no bank will generally lend money to buy a plot of land, unless the same is purchased from an endorsed and reputed government development authority like LDA ( Development Authority in Lucknow, U.P) or Awas Vikas.

READ MORE: Types of Properties

5-No Tax Benefit

When you borrow to buy a home, you may be able to claim tax benefits for interest paid on the loan (under Section 24) and for principal repayment (under Section 80C).

However, there is no such tax benefit exists if you borrow to invest in land.

6-Some more points to consider before you invest in plot

Before you purchase a piece of land, make sure you understand your goals for the property.

If you plan to develop the land for residential use, check to see if zoning permits this use or if additional permits or permissions are required.

If you plan to develop the land for commercial use, ensure that zoning allows for commercial development and that any necessary permits have been obtained.

If you plan to use the land for livestock-raising, farming, vineyard cultivation, or other purposes, find out what permits and licenses are required.

Land-use restrictions could curtail the manner in which you can use your property.

READ MORE: Top 8 Real Estate Myths

Review the deed and title to ensure that you have full access to your property. You may need to check for land-use easements, which may grant an unrelated party access to a portion of your property. For example, certain deed or title conveyances may grant someone the rights to extract and sell minerals from your property for financial gain.

Investors should consider the availability of electricity and water supply before buying land, in addition to its annual property-tax obligation. They should also consider how far the land is from their current home.

Conclusion

Investing in land or plots has been a favorite among investors for years. Whether you have land or a plot, it can be used as an asset, of course, and also an investment.

It’s an excellent money-saving investment because it will not depreciate, and you will get good returns.

However, there is only one condition: the plot or the land must be in a good city.

To make an informed decision, do market research and get in touch with real estate experts.

For more details, please feel free to contact us.

Call @ +918545884804

FAQs

Is investment in land a good option?

Is Real Estate a preferred investment destination for Indians?

Manu — Fri, 22 Dec 2023 12:14:53 +0000

Indians love to invest in Real Estate in the form of plots, villas, luxury flats, farms etc. The hype is equal among urban and rural India. Different asset classes are available for an average Indian: Fixed deposit, insurance, mutual funds, real estate etc.

As per statistics, an average Indian family holds around 77% of their total assets in the form of real estate. Some of them are typical investors having exposures to both commercial and residential investments targeting higher yields.

In urban centres, particularly metro cities, people tend to have two houses, one for self-use and other for earning rental income. Tax rebate of home loan is a big driving factor for people to have their own house instead of living on a rented property. This trend is more prominent post-covid (though, we are still out of it completely).

Real Estate being a big-ticket size product, is not suitable to small investors. But off-late problem has been addressed with product called REITs (Real Estate Investment Trust). REITs is, actually, a result of financialization of real estate industry. REITs are good tool for both builders and buyers. Builders get relatively easy capital from retail investors and buyers can have real estate exposure in their portfolio with just fraction of amount.

Will cover REITs in detail in some other article in coming days.

To explore properties in Lucknow, you can call Manu at +91 7800 207207 or, at +91 85458 84804.

The post Is Real Estate a preferred investment destination for Indians? first appeared on Trupaisa.

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