Real estate Taking a loan to buy land as investment

Alexandoy

VIP Contributor
A few years before I retired I had a plan of taking a loan to augment my savings for buying a lot in our residential village. Unfortunately my wife did not approve because the loan would be payable for 10 years and I would retire in 3 years time. She was afraid of a loan to be paid that long because it is a big financial responsibility. Besides an investment in a lot cannot earn because you cannot rent out a lot.

I did not argue because what my wife said was true. The lot would be a non-earning asset that would just give us the worries in paying the monthly installment. Looking back maybe my strategy should have been the duplex or apartment. That I would take a bigger bank loan to buy the lot and build a structure that can be rented out. Well, just a food for thought.
 

Sammyesx

Active member
I personally don't think getting a loan with the Intension of purchasing a land is a good idea. If someone wants to aquire a loan then it should be for the purpose of earning unless you are very positive that in a very short period of time the value of the land will be double or more than the amount you intend to pay for it.
 

sincerem

VIP Contributor
To me I'll say, not nice enough to take a loan just to buy piece of land. Land doesn't appreciate over night, it takes some time to see it on that profit side. What if the loan term expires and the value of the land we bought with the borrowed funds doesn't climb up. What will be the fate of the investor who borrowed money to buy it?? That's a burden that calls for concern, i wouldn't encourage anyone to venture in such kind of bargain.
 

Cinderella

Member
If I would purchase a property, say a land, I want it to be bought in cash. That is why I am saving so that if anybody with a property would sell it, I can buy it if I have cash. Oftentimes, people sell their properties at a low price during emergencies. So those with cash on hand can have the opportunity.
 

funmi

Verified member
Well, taking a loan to buy land as investment is not a bad idea. But one thing any one who wants to take this decision should have at the back of his or her mind is that the location of the land you want to purchase must be good. Land appreciate everyday depending on the area where the land is located. So the idea is a good one for me.
 

Mika

VIP Contributor
land loan or house loan is very popular here. However, in order to be eligible for this loan, you already should have something that you can give as collateral, a house, gold, or land. You also need to show your income source. If you are government-employed or draw a huge salary, you can easily get house or land loan.
 

Abigael

Valued Contributor
Taking a loan to buy land is a good idea of that land will start giving you profits that will enable to pay the loan. One of the best ways this can happen is when you build apartments on that land. This way, you can rent it out and that gives you passive income each month. This investment will feed you for so long even after you have paid back the loan.
 

Alexandoy

VIP Contributor
land loan or house loan is very popular here. However, in order to be eligible for this loan, you already should have something that you can give as collateral, a house, gold, or land. You also need to show your income source. If you are government-employed or draw a huge salary, you can easily get house or land loan.
My wife is still working but that plan of getting a loan is already moot and academic because she is retiring in 2 years time. My plan now is to use her retirement pay to buy land in a rural area where we can build our retirement home. Our present home in the suburban town can be rented out for additional income.
 

A K Rao

Active member
Getting a loan to invest in the land looks to be a risky proposal. The lands which are cheap they require a lot of time to get their prices appreciated and the lands which are hot cakes in the market are not easily available for small investors like us. It takes a long holding period and this is the frustrating thing. I purchased a piece of land some 30 years back and I have given the same for development last year. I of course got three flats or Apartments in return for the land, but the waiting period was too long. So don't recommend investing in land after having the Loan from any Financier.
 

Sherman198

VIP Contributor
Before taken a loan you need to have a deep a thought about how you will pay the loan back.

I know you can take a loan to buy a land but land is not bringing money back to you to pay up the loan. Unless you are willing to sell the land, if it's appreciate then sell and return the bank loan

Before collecting a loan you need to have a business you want to run it with, so you can have a way to pay it back.
 

Augusta

VIP Contributor
For me it isn't a bad idea to take a loan to buy a land. For me land is more viable than even getting a car for the family. You would need a home to call your own as you journey along in life. If there's any way to get a loan for such it is a good financial decision. I will go for it
 

Jasmine

VIP Contributor
I know a lot of people who have taken loan to buy land. Some people have made money, and others have made a huge loss. When you buy land, you will not profit from it immediately. You will have to rent the land to earn income or sell of to recover your investment. However, you will have to wait for many years before you can sell for larger profits. IN the mean time you will also have to pay back your loan. I do not think this is a good investment strategy. making money from investment mainly depends on the market.
 

Kingsley

Valued Contributor
When you access loans for the purpose of acquiring a land without haiving any other motive as to what to use the land for, it might amount to a waste of time. Since you are going to access a loan to buy the land, you must certainly need some sought of benefit coming from the land to pay back the loans.

Else one will be seriously indebted, it is always better to think of other things you can do on the land, maybe one can use the land to farm and realize some profits and payback the loan. Then wait for sometime for the land to appreciate before reselling it to acquire more profit on the land.


If otherwise I wouldn't consider it a very profitable venture because the interest on the principal will keep Increasing with the passage of time, and if there are no other sources to pay back it will amount to a huge problems. And you wil be forced to sell the land for something far less than what you bought the land initial, because it will be a panic sell. Before making such a decision make sure you have other plans on ground to cover for the loan.
 

Rachael

Verified member
I will never take a loan to buy a land as an investment property. There are other ways I could raise capital by taking and tasking myself to engage in more part-time jobs which will help me in saving more. It is mostly pressurizing to take loans and some challenges impede the success of repayment. At times, no one can predict the future because there are lot of cases where a land is purchased and all of a sudden. the environment becomes hostile in such a way that it is prone to security challenges and this affects the investment and it depreciates instead of appreciating. In such situation, it would be very unprofitable for the loan collector because it would be very difficult in finding a buyer for such property and also it would be difficult for you to utilize it for any other activities, this is because everyone values their existence to any cheap property. If your personal savings was used for the purchase, although you would still run at a loss but it is much better because there will be no pressure in outsourcing on how to refund the money. If you insist on taking loans, then be sure to have other repayment options.
 

anil02

Verified member
A few years before I retired I had a plan of taking a loan to augment my savings for buying a lot in our residential village. Unfortunately my wife did not approve because the loan would be payable for 10 years and I would retire in 3 years time. She was afraid of a loan to be paid that long because it is a big financial responsibility. Besides an investment in a lot cannot earn because you cannot rent out a lot.

I did not argue because what my wife said was true. The lot would be a non-earning asset that would just give us the worries in paying the monthly installment. Looking back maybe my strategy should have been the duplex or apartment. That I would take a bigger bank loan to buy the lot and build a structure that can be rented out. Well, just a food for thought.
Only 3 years left in your retirement, so if you can earn with this land or you can earn enough after retirement than you can take this loan other wise forget it. If you will get money after retirement than you can pay loan amount with this money. It better for you to buy building on loan so you get some earning from it after retirement.
 

Shigobad2020

Active member
First and foremost , you have a good wife that has a good thinking ability to reyou that that augmenting the money you have with you at that particular time with a loan will be disastrous because she realises you are retiring in three years time and the loan must be paid for ten years which makes you to be in a disadvantage situation .
Though There are some situations whereby we can get loan to buy to a land , but we must think of a proper way of paying back the loan in such a way that will not affect you negatively , if at least you can be renting the land out and be getting rental payment for it each year , you can be using the rental fee to pay back the money you borrowed which will be a win win situation in my own candid opinion .
 

anil02

Verified member
It is not easy to rend a piece of land. If piece of land is enough large that it is possible to earn some with farming. If you are want to buy piece of land with loan than calculate your earning after retirement and than decide how much you can spare for installment. Other wise you will face problem and you may have to sell land.
 

anil02

Verified member
I also have taken a loan to invest in real estate and in my case it was worth it.
Congratulation, that you earn in real state business. Indeed most of banks of more interested is financing against a property. It is more safe foe them. Here in my country interest rates on home loan is lowest one.
 
Top