Ten things you need to know before buying land

Since the COVID-19 pandemic struck last year, market reports from Leechiu and Associates, Colliers Philippines and Lamudi have repeatedly shown a strong and continuing interest in buying land for residential purposes.

Among the areas that benefited from this positive development are the Calabarzon provinces south of Metro Manila, Bulacan and Pampanga in Central Luzon, and selected areas in the Visayas and Mindanao.

But selecting where and which land to buy is not as straightforward nor is it easy.

Here are some of the most important things one needs to know:

Reason for the purchase. Are you buying land for your own use or are you buying it for commercial gain, like going into buy, develop and sell, or generate regular rental income? Knowing your objectives will help you identify how to proceed with your planned purchase.

The neighborhood. Have you heard your broker say that the most important criteria in choosing land is Location, Location and Location?

Location is a very important consideration as it determines whether your life will become more relaxed or stressful! Are you looking to build within a gated community where safety, peace and order are the default advantages, or are you comfortable living in front of a freely accessible street where any person or car can traverse? Is the property you are buying adjacent to existing industrial areas that produce constant noise, smoke or foul smell?

Size. How big of a land you buy depends on your personal desire or commercial requirements, in addition to your financial capacity. Most high-end gated residential communities have lot areas of at least 350 sq. meters or a low-density of 20 or less lots per hectare. Middle-end developments have lot sizes between 100 and 200 sq. meters while lots within economic and socialized housing subdivisions are usually below 100 sq. meters.

Market competitors. In the past decade, numerous developers have sprouted across the country to join the bandwagon and cash-in on the burgeoning real estate industry. But when the pandemic hit last year, many of them stopped construction due to funding difficulty. Thus, it is important to know the reputation and track record of developers including their competitive market share and projects.

More than the land price, knowing how dependable your land developer/seller is is vital to ensuring that your hard-earned money does not get stuck in uncompleted developments. Meanwhile, prices of lots undertaken by prestigious developers tend to appreciate faster too.

Accessibility. How accessible is your targeted property? Will it be convenient for you to move around to meet up with or be visited by relatives and friends? How far and long would you have to travel to the office, schools, and heaven forbid, a health or emergency care facility? Will you have to pay a toll regularly or periodically just to reach your destination?

Infrastructure, utilities and amenities. How wide are the streets around your pinpointed property? What is the traffic situation? Are you required to put up your own septic tank and be contented with hiring a “malabanan” periodically or will your lot be connected to a communal sewerage system that relieves you of those extra work and expenditures?

Today, with work from home (WFH) and tele-education being an integral part of the new economy, is there excellent broadband/wired-connectivity available or will you have to be dependent on cell sites and intermittent signals for your internet connection? Do you want to regularly use community facilities like the club house, swimming pool, parks and playgrounds? Unless the lot you intend to buy is within a gated subdivision and/or constructed by a developer, it is unlikely that you will have access to them.

Environmental and site considerations. Do you want to live on a flat area, a valley, on gentle or steep slopes? While varying terrains have their own advantages and disadvantages, these considerations could impact your site’s availability to have better views, adequate sunlight, good quality air and ventilation, year-long pleasant weather conditions, refreshing climate, perennial or no flooding, natural vegetation covers like trees and shrubs, among others. Weighing them according to your desired objective/s will help you decide with ease.

Land titles and legal documentation. Equally vital are the papers related to the land that you are buying. Is the Certificate of Title named under the seller or a different person like his father or grandfather? Is the property “clean” or is it used presently as collateral and mortgaged with a bank? Are the documents complete and correct?

Buyer should understand that once money is paid to the seller, it takes more time or considerable effort to get it back should there be any issue or problem associated with the property.

Laws, zoning and taxation. Does the planned use conform with the zoning ordinance and land use plan of the host city or municipality? It is also practical for the buyer to know what are obligated in the government building-related Codes and developer/subdivision association-imposed Deed of Restrictions such as easements, setbacks or maximum height allowed.

Current national and local government regulations require clearances and permits to use or construct. Failure to comply with or conform to governmental edicts may affect the permitting application and in turn, delay the start of house construction. Knowing how much the selected lot’s real property tax is will also be helpful. Remember, once the land is purchased, the new owner is now obligated to pay the yearly “amilyar.”

Financial consideration. Finally, and certainly not the least of the considerations,  the price and the mode of payment. While most sellers will ask for cash payment, not all potential buyers can afford to fully pay them outright. Thus, it is important to know your budget, accumulated savings, future income and expenses, among others.

Should personal funds be not enough, try to negotiate with the seller for an easier installment payment plan such as an initial down payment, with balance to be paid over several months. Alternatively, you can consider borrowing from a bank to cover for the shortfall, with earnest intention to slowly pay the bank over a reasonable period of time.

There are indeed numerous factors that you need to consider before embarking on that major decision of which land to purchase. While it may appear to be daunting, a systematic and purposive way of going over these factors will facilitate your decision-making process toward purchasing that dream property.

Happy hunting everyone!

* * *

Henry L. Yap is an Architect, Environmental Planner, Real Estate Practitioner and former Professorial Lecturer.