DO’S AND DON’TS IN BUYING LAND
With strong and continuing interest in developing residential and commercial projects this new year, there remains a high demand for buying vacant land or lots across the country.
MAJOR REASONS FOR BUYING
Fixed asset. Land is a physical property. This tangible asset can be managed and provide buyers with more control on when it will be used.
Wide potential, greater opportunities. By buying land, you have more flexibility in considering what type of project to develop, such as residential like houses, apartment units and condominium units; commercial and retail like offices, malls, shopping centers and shops; or hospitality and entertainment projects like hotels, resorts, events places, theme parks, etc.
Better profit margin and return. Land seldom depreciates in value, and has lower holding and maintenance costs when compared to a house or condominium unit. Moreover, projects that are undertaken over raw and or vacant land provide better profits, and higher returns over time.
Unfortunately, deciding which land to buy is not that easy and simple, given the concerns on the amount of money that you need to put into such an investment.
DO’S TO CONSIDER Reason for the purchase.
Are you buying land for your own use or are you buying it for commercial gain, like going into build and sell? Are you after regular rental income?
Accessibility and utilities. How far is the land from the main road? Is it easily accessible, regardless of the weather condition? Are the streets leading to the property narrow and as such, take more time to navigate because of heavy traffic? Is there broadband/wiredconnectivity or Wi-Fi available in the area?
Neighborhood and lay of the land. Location, location, location. Are you looking to build within a gated subdivision where safety is of prime importance, or are you open to the idea of buying land across an open street where anyone can pass by?
Do you want to live in a flat area far from natural hazards, or are you comfortable building along a steep slope to take advantage of that scenic view, good quality air, refreshing climate, away from flood prone areas?
Consult a professional. As a new buyer, you will quickly realize that purchasing land is not an easy walk in the park. Given the many considerations, do consult an experienced broker or agent to help you with your choice.
DON’T FORGET TO CHECK THE FOLLOWING:
Land title and survey of the property. Is the land title under the name of the seller? Is the property considered “clean” or is it mortgaged with a bank? Have you surveyed and checked the lot area visà-vis the size indicated in the title?
Zoning regulation and other restrictions. What type of project or improvement do you intend to develop on the land? Is your planned project in conformity with the city’s zoning ordinance? What building-related codes, developer and/ or subdivision associationimposed restrictions do you need to comply with? Failing to check them may affect your project’s permit application which in turn could delay your proposed construction start.
OTHER FACTORS Developers’ reputation.
If you are buying a lot that is still in the pre-development stage, check how dependable the property developer is, to ensure that the property will be ready when you’re done with that installment payment. Prices of land sold and undertaken by experienced developers may cost a bit more, but it tends to appreciate in value faster.
Financials. Know your budget and planned mode of payment. Should your money be insufficient for cash payment, negotiate with the seller for a lower down payment and easier installment term. Alternatively, consider borrowing from a bank.
EVERY SITUATION IS DIFFERENT
There are numerous things to take note of before deciding to buy land. While it may appear to be unnerving, a systematic way of evaluating these considerations will simplify your decisionmaking process.
As a potential buyer, be warned that once you’ve paid your seller, it will be more difficult to get back your money.
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