5 things to consider while buying plots under budget

November 21, 2022 |

There is a simplified structure for stepping into the real estate market. You need to follow the step-by-step procedure of investment strategy, locality analysis, land evaluation marks, legal documentation procedures, the loan process, etc.

1. Set up your investment strategy

Your real estate investment should have a specific objective in mind first. Do you want to invest in the plot for your own personal use, or do you want to use it to generate monthly income? Or perhaps you intend to resell the land in the future profitably. Once the idea of investment has been established, you can think about the total amount of investment capital needed based on current market pricing and the investment horizon that will take you to the ultimate objective.

Buying land gives you a wide range of options, depending on the location and implications. The land can provide you with an unexpectedly high margin and impressive profits if it is used to build the right facility at the right moment. It is one of the first things to consider while buying plots in your desired location.

2. Type of the land

You should consider using the investment plot before blindly embarking on the process of looking for an investment property. You have a variety of options when you purchase a plot, including the ability to build an apartment, a standalone villa, a bungalow, or a commercial property. As a result, you should determine your investment strategy’s primary goal before beginning your search for the ideal property in your preferred area.

The FSI Floor Space Index of the land you invest in should always be taken into account. The FSI Index is nothing but the maximum amount of construction that can be done on the property. The area’s local development authorities and municipal corporations set this FSI index. Therefore, before investing, it is crucial to confirm the maximum amount of construction permitted in that specific area and the plot.

3. Local authorities Analysis

One should conduct a thorough local analysis surrounding the investing plot to gain a good appreciation of the land they invest in. Determine the scope of any development plans that include significant infrastructure projects in and around the neighborhood; doing so will eventually raise the value of plots.

The surrounding facilities also play a significant role in the real estate market. Whoever lives on the property, whether you or someone else renting it, will need access to all the barrio amenities, such as water, electricity, transportation in and around the city, educational institutions, healthcare facilities, shopping malls, and supermarkets. Sports facilities, shopping centers, movie theaters, and other nearby amenities can be an added benefit to your investment plots and help the community’s residents grow economically and socially.

People don’t like to stay away from the major horizon, so a strong transportation connection to nearby commercial and residential areas should also be considered. It is one of the major things to consider while buying plots under your budget.

4. Land investment & growth analysis

When you have fixated your search on a single plot in your ideal location, you must conduct some detailed analysis to determine the investment plot’s current price and potential for future growth.

A. Comparative Analysis: To compare the proposed investment price of the plot, look for properties in the vicinity that are similar in size, type, and features. It will assist you in determining a fair price for your chosen land.

B. Extraction from builders: In this type, you get in touch with local contractors and builders to obtain a reasonable investment price viewpoint from their perspective. The depreciation of the built-in property must also be taken into account when using this land valuation method, which is typically used for constructed properties.

C. Methodology of allocation: The standalone value of the land and the total value of the property that has been built on it are correlated. To understand and determine the general value of the property you invest in, you can examine a number of properties and the value of the land they sit on.

D. Development Analysis: This analysis involves a thorough assessment of the land, considering its location, FSI, amenities, features, type of use, and much more. In order to calculate the property’s current investment and potential return on investment, other development plans in the area are also taken into account.

E. Belt Method: Here, the plot’s distance from nearby highways and major roads is calculated by segmenting it into a number of belts and arriving at a plot-wide total value.

5. Risk Assessment

Maintaining your composure is crucial as you complete all the legal paperwork for the transfer of ownership. It is crucial to confirm that the seller has full ownership of the property during the documentation transactions to prevent any further issues related to the property. You can check for title clearance quickly through due diligence.

Before making your final purchase decision, consider a few things while buying plots.

  • Verify that the property is not in a reserved zone; if it does, you can’t use it for any commercial, agricultural, or commercial activity.
  • Make sure the location you select has no liquidity risk; if the need arises, there should be a good chance that the property will be available for quick cash.
  • Until you build a building on the land, there won’t be any cash flow or monthly income. As a result, you should be ready for a period of no cash flow.
  • Consider the long-term investment horizon for the best return on investments because it will take time for any property to produce a high land appreciation value.
  • Make sure there are no encroachments or ongoing disputes involving the property you have chosen to invest in.

So above mentioned are the 5 things to consider while buying plots under budget. This extensive research will help you land on a very profitable property for a high land appreciation value in long-term investments.

Conclusion

The 5 things to consider while buying plots will help you minimize risks, determine an approximate ROI forecast, and help you choose the best location for your budget and requirements. Although this process is generally very time-consuming and tedious, you can always get assistance from real estate developers like G Square. We are south India’s largest and Tamil Nadu’s No. 1 real estate developers. We have successfully accomplished many families’ dreams by assisting them in investing in the property of their desires. Your dreams can be acknowledged and fulfilled too. For more details and to discuss your real estate investment plans, get in touch with us through the website.

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