Tips about buying your future house: 3. A land for a house is an investment as well, so treat it accordingly

Investment in a new house (some call it a villa too) is more difficult than an apartment inside the city. It requires more personal involvement and the resolution of many problems which at first glance appear as "easy". After the "first wave" of investors in this segment (2000 – 2004) and the second one (2005 – 2008), during 2010 the market clearly heads to a new direction. People are more careful and "opportunities" are analyzed thoroughly by everyone. Even when we feel determined to invest in a land in order to build our future home there, things may always change. This is why this property can become an investment as well, something we might sell in the near future. So we have to treat it accordingly.

"Why to treat the land for my home as an investment"
The long economic crisis (longer than most people expected it to be) taught us several lessons:

• Our plans should always be flexible, in order to adjust to a sudden change. The new environment for business,investments and life in general has nothing to do with the one 2 years ago. So something that was probably "very big opportunity" for our life standards back then, now it can become "something to get rid of".
• Time showed that even rich people got blocked and tried to sell properties without success, exactly because they could not have a wide target group for a very "exclusive" property.
• There is always the possibility to find a bigger opportunity and decide to sell the property you bought as "ideal".
• If life turns to be difficult for you (I wish you not) you may need to liquidate fast a property of yours, maybe the land you bought too.

Make sure that this land would be attractive for many people
Ok, you want to build your home and you wish the land to be exactly as you imagined. But don't exclude the option of selling it (as explained above). So, before you buy it, sit down and think carefully: Is this property attractive for many others too? Or when you will attempt to sell it, noone will like it (for 1.000 different reasons).

Example: You want to buy a land next to a small lake, in order to fish there. Make sure that this property can be sold to others as well and that you won't be searching for another fisherman, in order to offload it to him.

What is your entry price?
When we buy our home or the land in order to build it there, we tend to pay more than we should. We are subjective and we consider that it worths to give something extra for a better life during the years to come. It is correct and normal up to a point. But don't exaggerate. If you invest too much for "the land of your dreams", you actually make it difficult to resell it in the future without losses.

Experts say that your land should represent 10 – 20% of your overall investment. Exceptions simply confirm the rule.

What is your exit plan?

"I will buy this land now…"

• "… invest in utilities and sell it again".
• "… obtain the authorization to build and then sell it".
• "… wait for the new public infrastructure projects in the area to be concluded and then sell it".
• "… take advantage of the low price and resell it when the market will rise again.
• "… build my home and sell the whole project, if something goes wrong".

(Or you will follow the old golden rule  "I will buy this land now and I will hope to sell it at a higher price in the future".

When we buy a property, ANY property, there should always be a question: "How do I exit from my investment?" Try to find reasons why someone would pay more to you and you will have the answer if the property is good to buy it today.

Utilities, location and more. Never forget them!
You should never forget about them. They are very important factors in order for you to choose the right property, but also to help you resell it.

Read more about them here

Close to hill, lake or forest?
There are hidden added values to properties close to these landmarks, but there are many advantages and disadvantages you should have in mind.

To refresh your memory, please access the link here

Legal or urbanity issues
You may decide to purchase a property with legal problems, or uncertain urbanity status. Never forget that if you attempt to sell it, you will not find many investors willing to get involved, except if you will really offer major discounts. So, you should better avoid this kind of properties from the very beginning, even when they appear "attractive".

Overall: Treat the land for your future house as an investment and you will not regret it.

PS. If you are so wealthy that you don't care about losing some money here or there, then you can ignore all the above. But if something wrong happens to you, please don't blame Romania, the buyers and God knows whom else.

Coming up, every Monday:

• Quality of construction: A… "painful" story…
• The "map" of Bucharest: Where is good for what

• Can we consider a land located on a plain agricultural field as "a land in the center of nature"?
• Major public infrastructure: An urban myth
• "Land next to golf pitch or other facilities"… Yeah!