A few weeks ago, in an advisory session with a saver from the banking system, he asked me the question about the convenience of changing his investment from the bank and acquiring one of the so-called Investment Lands.
My immediate response to any option that represents an opportunity for the investor is the word “risk”.
It may be that the word risk has a negative meaning, but many times the positive part is left out. This will depend on the profile of the investor himself.
Trying to break down the subject of Investment Land or Investment Lot, I share some important points to be considered by the investor:
TIP-IRVING.- Investment land is an option that
should be analyzed in light of the investor’s profile and risk tolerance.
You should seek professional advice and compare it with other instruments of
investment to avoid falling for misleading advertising (which abounds).
In a previous article, What is the investment horizon, I mentioned the details of the investment horizon. An investment in land has a return like that of other instruments. An advantage is that, if you take care of the details in the acquisition, you will have a guaranteed return. The difficulty lies in the ease of converting the investment into liquid money. In addition, time plays against the investor if he is an elderly person since these investments are long-term.
It is an issue that has many twists and turns, especially if it is ejido land, which is in litigation for mortgages, for irregular occupation, if it is within the territory of Mérida or in neighboring municipalities or conurbations, we must know that not all the municipalities of Yucatan have the infrastructure to manage its territory (Municipal Laws and Regulations, Ejidal, Cadastre, Land Use, Territorial Planning, etc.), also that the investment land is perfectly located geographically. Another detail is, if the person selling the investment land has it in his name and if it is registered in the public property registry. There are many types of frauds in this sense that appear to be legal transactions but the details are left aside, as we said.
Even if you live in the city of Mérida, you can be deceived into believing that you are buying land within the territorial limits of the capital and in reality, the investment land is in another municipality.
Mérida is a city that is 8 meters above sea level. And the sea is to the north. How far north are you going to invest? How far south from the Port of Progreso or another point on the Yucatecan coast are you going to place your investment? There have been events in which an investment land or lot may be in a flood zone. According to the Territorial Planning of Yucatan, the strip of the coast, not only corresponds to beaches but there is also an area of wetlands with great ecological value.
Another aspect that must be considered regarding the location of the investment land is if it is located in an area that, even if at the time you acquire it has a land use authorized by the city council, it is not exempt from the fact that in the long term remains in a protected area or cannot be developed. Remaining in a future conflict zone.
Beware of Misleading Advertising
One last and no less important point is the publicity that surrounds this type of investment. There are areas in the north of Mérida, after the peripheral ring, that are more than 20 years old and remain abandoned. That at the time, like today, other “Investment Opportunities” built a porch or entrance and marketed themselves as “future real estate developments” with fabulous amenities. I’m not saying that the entire offer is rigged, but I do warn that you have to be careful.
I considered it important to talk about this topic since some news published in local media warn of new forms of deception in Yucatan in the sale of investment lots. It is important to be well-advised since there are investment lots that can be attractive, despite the risks. If you are a saver in the banking system, I recommend that before making a decision motivated by friends, you approach recognized and prestigious financial advisors.
by Irving Alberto Escalante Castillo
Irving is a Public Accountant from the Autonomous University of Yucatan. Master in Business Administration with a specialty in Finance from the Tec Milenio University. He has more than 20 years of experience in leadership of planning teams and execution of business projects, crisis management, and corporate finance. He has collaborated with companies such as MEGAMEDIA where he served as Director of Administration.