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 Planning to Invest In Land Heres a Checklist

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PostSubject: Planning to Invest In Land Heres a Checklist    Sat Jul 07, 2012 1:24 am

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 ones 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



The title deed (a legal document proving a persons right to the property)
The encumbrance certificate (which proves that the land is not under some sort of legal dispute)
The release certificate (in case the land was previously pledged to someone else)
The surveyors report (to establish its exact dimensions )
If the owner is an NRI,the power of attorney that gives his representative the legal rights to act on the NRIs behalf.

PROFITABILITY


Profitability depends entirely on ones choice of the location,the entry level (cost of the property) and ones 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.Depending on the location and its current and future market dynamics,it may be feasible to shorten or extend this period for optimum profitability.In a growth sector with new market drivers coming in,a plot of sufficient dimensions makes a lot of sense since it has equal potential for developers from the residential,retail,office and hospitality sectors.As an area attains more or more market drivers and begins to saturate,plots increase in value manifold and can be sold in a sellers,not a buyers market.

BEST LOCATIONS FOR BUYING LAND IN THE CURRENT SCENARIO


Every metro and tier II city has its growth corridors.In terms of residential land,one should consider areas beyond the currently favored residential zones (such as the suburbs or far suburbs ) that are scheduled for residential development in the future.The NCR region is a good bet,owing to a lot of future industrial and commercial growth.However,the necessary holding period would be a minimum of 5-7 years.In Mumbai,where affordable housing is now the new mantra,developers are on the lookout for land to establish no-nonsense residential projects,so suburbs such Vasai,Virar,Kalyan,Dombivli and Panvel make a lot of sense.Tourist spots such as Goa,Dehradun,Nainital,Mussoorie as well as religious places such,as Haridwar,are suitable for long-term investments.

LAND PRICES

Land prices in many locations will come down as developers who have been holding on to it for future development release it to the market in order to generate funds for completion of their ongoing projects,or to ease their debt burden.Demand will also sink as the lack of liquidity among potential buyers makes itself felt.
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