Investing in Property & Land in India

A schematic map of the Indian Railway network
A schematic map of the Indian Railway network (Photo credit: Wikipedia)

I am of Indian origin myself.  I have traveled there a few times now, watched a lot of movies, mainly old ones.  And I hear stories about the place all time.

There is a lot of detailed homework that surely needs to go in before investing your money anywhere in the world, but especially so in India.

My grandfather bought land outside Delhi in the early 1980’s.  On his death in 1992, his children, my uncles and father, decided to sell this land and share the proceeds accordingly.   My father and uncle went to Delhi, but things were not easy.   After about two hard weeks of knocking doors, people not turning up to appointments and a lax attitude, he found out that there were two other would be owners of the land that had already been fight over this land for years!  To spend thousands in court cases and about a decade fighting the battle or to do an out of court settlement were the choices.  The documents that the other two would be owners had, were forged, but my family, with the best will in the world had no choice in the matter, our family lost a lot.   Things have improved now.  If you want to invest in property in India, my opinion remains the same and in line with the moral of the story:

1.  Go there often and keep an eye on your property.  Squatters rights kick in if you do not take care.  The greater the time between your visits the more the risk.  If you know a local in the area to look after the property and guard against squatters then this does make a difference.

2.  Buy your property with a loan from the bank, even if it is a small one.  The problem of forged papers becomes the problem of the bank also.   The banks provide an added assurance that will make it almost impossible to let the problem of multiple owners happen.

3.  Close off your land.  Build a wall around your land if that is your investment.

4.  Any agents that you deal with might take or give bribes, where transactions are not recorded.  If you do not agree with this concept, do not invest, turn the other way or do not accept it.  Each option comes with consequences.

5.  Buying with cash will knock down the price by about 10-20%.

6.  Make sure you have a good and trusted conveyancing lawyer in place to do all the work for you.

7.  Get the opinion of multiple agents and dealers.  Speak to the locals residents and get their views.  DO NOT rely on the view of just one agent since they will usually skew their recommendations to favor their own financial advance.

8.  Research, research and when your tired……research some more.    I have seen the boom and bust of bubbles so often in my life that it is best avoided if you can see through to the fundamentals.

Watch out for my EBook on investing in India.  Register your name.

Mr. V. Nanda

http://www.vnaccounting.com

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