Pros and Cons of Investing in Land

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Pros and Cons of Investing in Land
November 15, 2017 Real Estate Investing in
Land, Investing land pros and cons, property
blog, Pros and Cons of Investing in Land, Real
estate blog, real estate property blog 1 Srishti
Chandola
Land as an investment option has been pretty
popular in India. The popularity has not
retreated, irrespective of the availability of
numerous financial products like equity shares
and mutual funds. You should, however, be aware
of all the pros and cons of land
investment. Limited supply Other than some
reclamation cases, land supply is pretty limited
and the possibility of creating in more which is
quite impossible. Due to ever increasing need and
limited supply, the demand for land parcel has
consistently gone up. The continuous demand,
however, has made sure that the rates of land
have not experienced unstable changes such as
other assets like equity and gold. Big ticket and
illiquid investment The money that is required to
invest in land is pretty substantial. Those
having fewer savings cannot really afford to
invest in land. They, instead, should go for
financial assets like units of shares, mutual
funds, recurring deposits or gold. Investment in
land, however, is comparatively illiquid and one
cannot dispose this investment as and when one
wants to encash it. In some cases, the time taken
for sale to happen may run into years, defeating
the purpose of making any investment in the first
place. Risk of acquisition and encroachment We
have come across stories of the encroachment of
land causing the sink investments. In scenarios,
the legal right over land jeopardized which
results in litigation and unnecessary legal
costs. The auxiliary expenses at times outweigh
the appreciation in value of your land. Also,
there is a risk of land being taken over by the
government by way of obligatory acquisition. The
received compensation may not be always
satisfactory. The major instance of the scenario
is the achievement of land in Noida Extension
case.
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Non-availability of finance
To construct or buy a house, loan seekers can get
u to 80of property value. If you want to
construct a property on land plot, you can get a
composite loan that covers the cost of plot and
construction of cost. No bank, however, will lend
money to buy a land plot, unless similar is
bought from endorsed as well as reputed
government development authority such as MHADA or
DDA. Tax benefits In event of home loan, one can
claim the benefits of tax with respect to the
interest payment and repayment of principal under
Section 24 and 80C of Income Tax Act. The
provisions exist for interest that is paid on the
money that is borrowed for the land investing.
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