When it comes to investment, there’s a popular saying: “Don’t put all your eggs in one basket.” I’m sure you’ve heard this proverb or perhaps even explained its meaning to someone. Typically, this saying is used in the context of investments, particularly in the stock market, but it can also be applied to real estate investments.
In the realm of real estate, the primary investment options generally fall into two categories: residential and commercial properties. Residential properties include flats, condominiums, plots, apartments, or floors, while commercial properties mainly consist of office spaces or retail outlets.
However, if you already own a home and are looking for investment opportunities in real estate, and if your budget is substantial, you might consider commercial properties. In addition to these, in recent years, the trend of purchasing agricultural land has also gained momentum. There’s no denying that the prices of land have been steadily increasing. In major cities, agricultural land, and the houses built on such land, are commonly seen as farmhouses. Therefore, you might consider agricultural land available in tier-two and tier-three cities as an investment option. Let’s explore the benefits of such an investment and the precautions you should take:
Ensure the Property is Dispute-Free
“The first rule of investing in the real estate sector is to ensure that the transaction is free of any ownership disputes. It’s possible that the agricultural land you are considering was inherited by the seller from their ancestors. In rural areas, Wills are not commonly made, and property is automatically transferred from one generation to the next. In such cases, you can obtain information about the actual owner of the property from the tehsil office. You might also consider enlisting the help of a local lawyer,” suggests Pradeep Mishra, CMD, ORAM Developments.
Additionally, to avoid any future claims on the property, you can publish an advertisement in local newspapers stating that you are about to purchase the land and are inviting anyone with objections to the deal to contact you within a specified period. Once you have made the down payment, don’t delay in getting the property registered in your name and taking possession of it.
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If You Plan to Build a Farmhouse
If you plan to purchase agricultural land with the intention of building a small house on it, it’s essential to check with the tehsil and planning offices beforehand to see if any construction is allowed on that land. In some places, zoning regulations may only permit temporary or non-permanent structures. If you find a piece of agricultural land where construction is allowed, you could potentially convert it into a motel or banquet hall in the future. This would not only increase the capital value of the land over time but also provide a significant monthly income from commercial use.
Use It for Tourism
There is a growing trend among city dwellers to spend some time in a rural environment, away from the hustle and bustle of urban life.
“You could develop your agricultural land into a rural tourism destination, incorporating activities like agritourism or homestead farming. Looking at the NCR (National Capital Region), cities like Greater Noida, Sonipat, and Gurgaon have seen the development of weekend destinations on agricultural land. These places not only allow urban residents to enjoy seasonal crops and flowers but also offer various recreational activities such as archery, shooting, and horse riding,” informs Mishra.
Other Options
Investing in agricultural land doesn’t necessarily mean you have to engage in traditional farming. You could use the land for flower and fruit farming. Flowers like marigolds and roses are in demand year-round, with even higher demand during festive seasons. You can also earn a good income by growing medicinal plants like basil and aloe vera. Planting fruit trees such as bananas and papayas is relatively easy and can also yield good returns.
Tax Benefits
“An interesting aspect of investing in agricultural land is the potential tax benefits. Income from agricultural activities and gains from the sale of agricultural land are generally tax-free. This makes the financial returns from such investments even more attractive,” says Mishra.
Traditionally, the upper-middle or middle class has limited its investments to savings, stock market, or flats in the real estate sector. However, for long-term investments, agricultural land can be an excellent option.
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