Things to ensure when buying land

When it comes to investing in real estate, land is the most preferred form of property.

July 09, 2017 03:00 pm | Updated 03:00 pm IST

When it comes to investing in real estate, land is the most preferred form of property. However, when buying land it is important to keep certain important factors in mind, without which your purchase might not be that sound an investment as you wanted it to be. Regardless of the location of your plot, keeping the given factors in mind will ensure that your investment turns out to be a logical income-earning decision.

Approvals and licenses

Paperwork. Paperwork. Paperwork. Often a nightmare but a necessity nevertheless. The following documents are a must if you want to spare yourself a splitting migraine later one.

Title deed : If you want undisputed legal ownership on land for sale, you must insist on a clear title. Whether it is an agricultural land, residential plot or a commercial investment plot, always make sure that there are no unclear deeds. Any deeds where the transfer of the land to you is questionable must be addressed, well in advance. It would help if you can consult a lawyer over the title deed.

Release certificate : This is valid when buying a property that has been up for resale. Make sure that the bank has given a release certificate, indicating that loans, if any, on the property have been paid.

Encumbrance certificate : Another one to add to your roster, the encumbrance certificate ensures that the plot or the land is not tied down by any legal debt.

Property tax receipts : No one wants to be on the wrong side of the tax man! When buying a property for resale, it is prudent to ask for previous tax receipts from the seller.

Local approvals : Check and ensure that local authorities have given the all-clear on the plot of land.

The key to large capital gains through land purchase is to get a plot for sale that is free of encumbrances. That usually means land that has just the right papers for your peace of mind.   

Look at the biggest investment picture

When you are investing in a plot, it is important to understand its financial landscape and have a look at the bigger picture. You are looking at capital gains, after all. Do your research and look at plots that offer good value right now and significant appreciation in the years to come. In the stock market, this would be called value investing – picking undervalued stocks and waiting for their appreciation. 

So, while properties located inside the city limits have higher escalation value compared to properties located far away from the city or on the outskirts, this may not remain the same. As cities expand, outlying areas start to appreciate.  

Check the potential of the plot

In addition to plot location and its growth prospects, another very important factor to keep in mind while purchasing a plot is the potential of the plot in question. For example, if you want to make a villa in the plot you are purchasing, the plot must be located in an area that is suitable for villa construction. Land alongside the beach may be too marshy to be considered as a villa plot. Similarly, if the land is located alongside a hilly terrain, it should not be too uneven to constrict the construction in the property. Check if the plot is on flat land or a slope. Also, check for arrangements such as water and other basic amenities.

Therefore, it is important to evaluate the potential of the plot before making a buying decision. If you have any specific plot project in mind, evaluate the land based on that.

Once you take care of the above-mentioned points, you are in for a perfect investment on a land for sale!

This article is contributed by RoofandFloor, part of KSL Digital Ventures Pvt. Ltd., from The Hindu Group

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