How to invest in land?

21.10.2010 00:07
Articles about real estate | How to invest in land? The land market provides the private investor is not less opportunities to earn than the housing market.
For the private investor, there are three basic ways to make money on the ground

Transactions on buying and selling land long are not uncommon, however, this market is just emerging. Until now, no single inventory of land, leaving pricing in this segment opaque nebula remain in the laws that significantly increases the risks of transactions. On the one hand, it reduces the confidence and interest of private investors to buy plots of land, on the other - the return on the market right now can at times exceed the profits from deals with urban housing.

Related article: The bill about the land market saw the People's Deputy «solicitation ward number 2»

Three Ways to Wealth
For the private investor, there are three basic ways to make money on the ground. The first - direct speculative investments, that is the acquisition of land for resale at higher prices. According to calculations the Managing Partner at Blackwood Konstantin Kovalyov, the yield of these operations is around 25-30%. But, according to experts of the Criminal Code "Scale", today land speculation is meaningful only in western areas of the Kaluga to the New Riga highway at around 30 km from Moscow ring road (Ring Road). According to their forecasts until the end of 2007 the cost of weave in these areas will grow by 30-40%. At the same time, the price of land in the east, and beyond 50? Kilometer area will increase much more modest pace. "As unpopular directions (Egorievsk or Gorky) for another two or three years is nothing to actively develop and build will not be because there are plenty of undeveloped land in the 50-km zone and further to the more prestigious areas such as the Kaluga and Novorizhskoe" - believes Head of Marketing Analysis Department of Marketing Analysis UK "Zoom" Igor Lebedev. However, Konstantin Kovalev's a completely different view on the situation. In his view, the price of land near the ring have already reached their maximum psychological and almost no interest from the standpoint of investment. "On the contrary, in the third ring lands region (30-50 km from Moscow, depending on the direction of) the market is characterized by low liquidity, respectively, the price is often tens of times lower than the cost of a similar area located 20 miles closer to Moscow. Consequently, a person invested money in buying land here can expect to increase their investments in hundreds of percent for the past three or four years "- he predicts.

According to specialists RIGroup, this option is suitable for professional investors, since it presupposes a good knowledge of the market and a flair for undervalued assets. "Under this option you can get a great return to 100% per annum and above. We can recommend investors to monitor the development and reconstruction of highways near Moscow. For example, we expect rapid growth in land prices on the Kiev highway renovation will be completed in 2009," - says head of residential real estate company RIGroup Alexandre Vinokourov.

In any case, experts believe that the very speculation in land receding into the past and are becoming less profitable.

"Due to the law, which allows you to build on agricultural land, most likely, their value will grow, and the price for land settlement - to fall. Moreover, if the land tax will be increased, it is very hard hit by the big landowners. Many of the They will either have to develop and acquire land that they have, or get rid of them. If they choose the first option, it would increase supply and, consequently, to reduce the cost of specific objects. If they decide to sell, it will lead to glut in the market and reduce the value of the land ", says Igor Lebedev.

The second way - to buy a plot with a house in an organized township in the early stages of construction and then resell it at a higher price. If a segment of the urban housing purchase apartments at the stage of excavation is the most common schemes, in the case of country houses and townhouses, it is rarely used so far: it was a shortage of high quality and low cost settlements, and those that have are dealt with customers instantly, often for their own needs. "This path is the least risky investment. The threshold for entry of 200 thousand dollars for the village economy class, from 400 thousand - for the lower segment of the business class. The most promising targets for such investment are the homes and lands in Kiev and Kaluga areas," - says Alexandre Vinokourov. "We should look at the trend, transportation accessibility, infrastructure and many other factors that influence the price. Error in the choice of an investment may lead to losses, whereas a successful investment will provide up to 20-30% of the profits", - assured the participants of the market.

Construct yourself
The third way - purchase of land without a contract. That is acquired land in an organized cottage and then on it's own funds and built the house, which was subsequently sold at a higher cost. According to experts, the most high-income investor to bring just such a scheme.

"Independent contractor to attract investors to build a house will cost on average 20% cheaper than the contract work from the developer of the village, - said Head of the suburban real estate company" Relight - Real Estate '"Basil DAC. - Savings can be up to 40%. In , it is important that the costs are spread over time. Generally speaking, today you buy the land, and tomorrow put money into building a house. " Land with a contract and without the same costs, profits, according to experts, obtained by optimizing the construction costs. "You can choose a less costly projects, while developers economy class townships offer a limited selection of options for homes and, as a rule, somewhat larger in area than the customers expect," - says CEO Alex Vesco Consulting Averyanov. "For example, the weaving of land in 30? Km zone is about 10 thousand dollars, and a 15 hectare site you will pay 150 thousand, construction will cost another 200 thousand dollars. Selling a home can be over 500 thousand dollars, however, demand will depend on the liquidity of the direction (the most in demand at home and sites located on Novorizhskoye, Kaluga, Rublevo Assumption, Dmitrov and Kiev directions), the location of the house and the village itself, the quality of the project. A successful scenario the investor earns about 30-35%, although here we do not consider inflation and taxes, which will have to pay with the proceeds from the sale of the house, "- adds a head of the country real estate real estate agency MIAN Svetlana Kondachkova. At the same time, if the house design is chosen poorly, this instance can be unsuccessfully to sell two or three years, in this case, the investor profits instead of losses will count. "Increasingly, consumers want to have a house in the village organized a unified concept. Time architectural halophytes in the villages where every house built in accordance with their own ideas about beauty, gone," - say realtors. In addition, the potential buyer may not like the fact that he would not live in a tidy and completely built-up village and adjacent to the "eternal" Construction site - because in areas without a contract the construction of houses can last for many years.

What, where, how much?
The most scarce and popular products on the market suburbs - home economy class. According to the Criminal Code "Scale", 70% of consumers expect to purchase real estate in this category. Most of the land for such settlements are located on the northeast, southeast and east, in the repartition of the 30-kilometer zone from Moscow, as well as on the west and north-west (60 km from the capital). According to an analyst at Villagio Estate Roman Popov, the share of villages where the buyer has the opportunity to purchase plots without a contract - no more than 15-20% of the market. Prices are starting from 5-6 thousand dollars per hundred square meters on the east and south-easterly direction and may reach 70 thousand dollars and above on the west.

As told in the UK "Zoom", the cost of land in the weave of organized cottage village is now leading Novorizhskoe direction (30 thousand dollars per hundred square meters), second place is shared by Minsk and Kaluga highway (20.4 and 20.2 thousand dollars, respectively). Them with a little lag should Dmitrovskoe and Kiev highway - to 18 thousand dollars for a hundred. The cheapest offer on the land Egorievsk highway average prices here are about 1.7 thousand dollars for a hundred. The main factor affecting the price of land in the first place is the direction in which lies the village and the remoteness of the site from Moscow. Depending on the category of land is also going correction in prices. Today the cost of land, belonging to the land settlements, may be twice the price of agricultural land. Be taken into account and additional communications in the presence of which (electricity, gas, television, water, etc.) the price of land increases. The cost of land in the village depends on the natural features - the presence or absence of water bodies, forest parks, and industrial enterprises.

It should be remembered that the degree of risk in acquiring the land is much higher than the purchase of residential property.

In the course of the transaction should check legal purity of documents: a certificate of state registration of ownership or lease documents land use case. Necessary to establish the validity of all prior transactions: registration of contracts of sale, gift, inheritance, etc. If you find any violations of the transaction, as well as in the case of a lawsuit by a new owner, the deal could invalidate. According to specialists' Relight - Real Estate, high risks for the transaction of sale of land of former collective or state farms. "Be careful when buying stations previously owned by government bodies and having a different intended purpose. Prosecutors may consider that at the time state agencies have ordered the land illegally, and to challenge the law's new owners", - said Konstantin Kovalev.

Land Mortgages
Buying land has always been considered safe investments. So that-that, and the land will not burn, will not get into an accident, will not be destroyed by a hurricane, it is not stolen and not stealing. "To invest money in the ground is very advantageous. You know, my grandfather always said: "Earth - it's gold." Another may be cited as an example, the words of Mark Twain: "Buy land, it will not do" - says about the reliability of investment Andri Stavrou Teoharus, director of the Moscow office of the Cyprus LaikiBank. Therefore, the credit for the purchase of land may seem like a very profitable investment, but you can buy land with a mortgage or consumer loan.

Specialized loans for purchase of land will cost the borrowers much cheaper than a consumer loan in cash, since specialized loan interest rate is lower because the bank to minimize risk by collateral. These programs have their advantages: low interest rates, high debt, long-term lending.

The list of documents required for the loan - the standard set in the form of a passport and statement of earnings, as well as documents on the ground: copies of passports of the owners of land, copies of certificates of identification number site owners, the State act of ownership of land, Help on normative monetary evaluation of land issued by the public authority land, and an extract from the State Land Cadastre of the lack of (any) restrictions. Some banks may also ask for marriage certificate and a copy of the employment record of the borrower, and a document certifying the payment of land tax in the past 12 months. In addition to the large number of documents will have to pay attention and evaluation.

But at the moment in Russia are not so many banks that provide such loans. Land mortgage offer Savings Bank, Raiffeisenbank, Societe Generale Vostok ", Moscow Credit Bank, and several other banks.

Banks are wary of the existing problem of land mortgage because of inadequate legislation. But the possibility of lending on the security of land is attractive for the banks for their reliability. Land does not wear out over time as other properties, and its cost is constantly increasing.

"In general, for Russia, such a loan product is very promising, but not to Moscow, where there is a transport problem, therefore, the road from home to work will take a long time - answers the question of RBC loan Irina Radchenko, president of the group of companies" Laurel. " - In regions of the same building his own house as a solution to the problem of housing can be a way out for many families, so that loans secured by land there will be demanded. "
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