Make Your Land Investment a Wealth-Building Tool with These Steps

Land investment has long been one of the most reliable ways to build lasting wealth. Last year, Century Textiles shelled out ₹110 crore per acre for Nusli Wadia’s leasehold land in Worli, Mumbai. That is more than ₹25,000/sqft for an empty land! News like these certainly makes investors ponder how to invest in land and multiply wealth.

Land as a Wealth-Building Asset

Land deals, such as the aforementioned Century Wadia deal, have always been in the limelight. But for anyone thinking about buying land, the positive indication is that land deals are increasing both in numbers and value.

Between January and September last year, more than 1700 acres of land were traded through over 100 land deals. With only 60-odd deals in the year before during the same period, it was a jump of more than 65%. The fact that 75% of these deals are for lands in Delhi NCR, Mumbai, Bengaluru and Chennai is further proof that land investment in urban and suburban regions has strong growth potential.

A Shift in Mindset

Smart land investment starts with a mindset shift from emotional to strategic decision-making. Rather than romanticising land ownership, you can consider it as a serious wealth-building vehicle.

Methodical land investment tips would include the adoption of steps such as –

• Selecting the Land Type Carefully - It need not necessarily be a plot to build your dream home. You can capitalise on land’s wealth-building capabilities by investing in commercial or agricultural land as well.
• Well-rounded Research of the Target Location - Analyse land demand in the area, upcoming infrastructural developments and other growth prospects to assess investment viability.
• Weeding Out Encumbrances - The legitimate ownership of the land must be verifiable. It should not be disputed or subject to any legal encumbrances.
• Conforming to Compliances - Land can be subject to various zoning laws, usage restrictions and other local regulations. The investor must always ensure that their land ownership is hassle-free and aligned with investment goals.

The Due Diligence To-Do List

Gearing Up Financially

Unlike apartments and villas that are concentrated in urban centres, land is bought and sold everywhere. If you want to know how to create wealth most simplistically, land investment is the answer. Much simpler than financial investments that need in-depth product know-how.

This also means that there are plots that fit almost any budget. Be it the acres of rural land available at a few thousand rupees or a few square yards in tony Greater Kailash or Malabar Hills. Therefore, self-funding your land investment is a realistic option.

For anyone looking for finances, plot loans are also available from financial institutions. Plot loans are typically –

• A secured loan with the plot as the collateral
• Generally, the loan amount is a percentage of the land’s market value
• Plot loans allow longer repayment tenure of 10 to 30 years

Staying Put

To maximise the return on your land investment, you should apply the following tactics –

• Strengthen Your Holding - Complete the legal mutation from the sub-registrar office, fence the plot and ensure protection against trespass or fraud.
• Review Periodically - Review the local plot sales to understand the prevailing market price. Keep track of infrastructural developments in the area.
• Monetise - Depending on your usage plans, open up interim income flow through sources like parking, temporary construction, commercial rent, etc.
• Exit Strategy - Keep an eye on the price appreciation vis-à-vis your expected return. Disinvest in a planned manner without engaging in panic sales. Consider the capital gain tax implications on your sale proceeds and plan accordingly.

Conclusion

Rather than looking at your land purchase as a romantic and throwback idea, you can plan it smartly like any other modern investment. Your land investment can become the most assured way of building wealth and your generational legacy.