Does buying land for your children make the best investment ? | Mediumspot

Does buying land for your children make the best investment ?

investment

In India, it is very common and inherent to think that buying land in children’s names is like spreading a comfort blanket over them. It is considered a responsible investment that a parent can make for their children for their future’s betterment.

In addition, real estate is the second largest after agriculture and the safest sector to invest in, and that continues to be on an upward trajectory, regardless of the temporary fluctuation.

So land is the most preferred form of property to bring in more returns.

But how does it become the best investment?

Fixed assets:

Lands are categorised into fixed assets. Unlike other assets, the land is not depreciated to reflect the wear and tear of using the asset. It acts as an asset that your children can use that land for any purpose, like constructing their dream home, or getting loans from the bank, to sell at a greater profit. It can be passed on from generation to generation.

Creation of long-term wealth:

As lands are assets, buying property on behalf of your children is a long-term investment that helps your children in the longer run when they grow up. Also, as the population continues to grow, the demand for land continues to grow and drives the price up in the market. Hence, if you buy a land, then the value will no doubt double or triple, or quadruple as your children age.

The more the value of the land, the greater the benefits will be and the more independent your children will be financially.

So investing in real estate is reasonably a profitable investment that you can make for your children’s future.

Builds income in multiple ways:

Investments in the land are beneficial as it brings fortune in many numbers of ways. Selling a property is not the only way to earn money. A lot more ways are there to make a passive income out of vacant land, like constructing commercial complexes, building houses to rent or sell it out, and leasing out to construct cell phone towers or warehouses.

For an instance, leasing your land out to construct cell phone towers earns you merely around 7k to 10k monthly in India. Although investment differs from area to area, it will make a stream of money flow through your purse effortlessly.

In any aspect, buying land in your children’s name will load your children with great returns and profits in the future.

Loan against the land:

Loan against land is easy-to-access and highly acceptable. When your children need a large amount of money to build a house, expand the company/factory, buy machinery or pursue higher education, pay off your debt, or for medical emergencies, the property you buy in their names will save them.

Now how to buy the land? What to consider before buying the land?

When you purchase a property, chances are high there for you to get lured by the deals and offers by the sellers. Hence, take into consideration some key elements like location, value, FSI, soil quality, and road access, before signing the agreement.

Location:

When you are buying a property, you are more likely to be lured by the deals and offers of the sellers. Rather than focusing on getting the best deals while buying, pay attention to the location of the land.

Today, you are unaware of what your children are going to do with the piece of land in the future.

In the future, your children would probably build their dream homes or residential apartments or use them for business purposes like commercial complexes or warehouses. The land you buy today must meet their needs in the future.

If it is for residential purposes, then the land should be in the closest access to important areas like hospitals, airports, educational institutions, malls, roads, etc…

If it is for business purposes, then it should be nearer to the potential customers.

So prioritise the location of the land first.

Value of the Plot:

The value of the plot is another thing to be considered before buying land for your children. The value of the land should be in line with the growth of your children. Never buy land of no value, even if you get it at the lowest price. In the future, when your children try to take out a loan on that land or try to sell the land, worthless land will be in vain.

It is worth taking ample time to research the current value of the land and the estimated future value.

Getting advice from realtors reduces the risk in the future. If you’re a beginner or experienced and don’t know how to approach a realtor or looking for experts to drive you on the right path, consider checking ThreeBestRatedⓇ, a legitimate website to find the highly renowned realtors around you.

FSI

Next comes the FSI, as it very much hinges on the location and value of the land. FSI simply means calculating how much land can be used for construction. It differs from region to region.

Suppose your land is around 3000 sq ft. You can use the entire plot for construction, only when the FSI is 100%. On the contrary, if FSI is 50%, then you can use only 1500 sq ft for construction.

Experts advise that the price should be finalised only after getting the documents having proper FSI mentions and not by the area.

Area of the Plot:

The land you buy today will only benefit them when they grow up, right?

And again, it is up to your children how to use the land.

Take into account the various aspects of the area of the plot like the topography, type of soil, form (slope or plain land), and availability of water, and most significantly compare your plot in the brochure with that in reality. Because you may find some changes between these two.

Finding the neighbouring landowners and communicating with them also could be a great way to save you from any problems that arise in the future, as you may come to know about illegal disputes related to that land if any. Once again, you can rely on realtors to communicate with your nearby neighbours.

Surveying:

After verifying the above-said things, get your land surveyed properly as one last step. With the help of the authority, survey the entire land to have clarity about the size, dimensions, and also the nearby land that borders yours. This will reduce any confusion when your children in the future handle the land.

Don’t forget the paperwork!

Land purchase is incomplete without the paperwork. So always inspect the title and the ownership of the land before you decide. Always ensure that documents bear the seller’s name and that he/she has all the right to sell the property. To be smarter while buying, check the previous title deeds of that land.

Notably, accept no photocopy of documents for any reasons. Otherwise, you will land your children at risk. So you can ask your lawyers for a risk-free transaction.

Then proceed with getting approvals from local bodies for registration.

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