Should I buy a farmland? What is the purpose of owning a farmland? Is this a new fad going on? If you are plagued by these questions, then perhaps this post will be useful.
Reasons to invest in a farmland?
- Connect with the roots - Most of us have come from tier-2/tier-3 towns and now have settled in cities. It is an adjusted life, now a lifestyle, but somewhere in the back of the head, we miss the life of living amongst fields, away from the traffic. I remember my growing years were spent in a house which had a garden with large trees. Very low population, even less pollution. Let's admit, most of our weekend excursions are to get away from the city, we head to Coorg/Chikamgalur to enjoy trees, nature and some tranquility.
- Be a farmer - Not my reason, but I have heard folks say this. A variant of connect-with-the-roots, many folks come from farming families and this is their way to get back to it. Some do for commercial farming like coffee or arecanut. Others, want to grow their own food, completely organic they say.
- Retirement home - Where will you be once you retire? Existential life questions are more difficult to answer but having an option now does not hurt.
- Weekend getaway - After lot of weekend getaways, one realizes that it is not the destination that matters, it is the mindset. The ability to switch off your daily life, relax in nature, go for long walks, enjoy the sunrise, sunset, sound of birds, read a book and have a simple life.
- Financial investment - This is a new entry to the canon, managed farmlands is a growing industry and this may be another financial investment instrument.
No matter what your reasons are, it is eventually an emotional decision.
Being a farmer is a very idealistic notion, do one week of back bending farm work, looking at economics, water issues, rainfall etc, one realizes that in practice it requires 120% commitment to make it work. We are so inured in our city lifestyles - access to doctors, dentists, cinema halls, high speed internet connectivity that decoupling from this is like entering a de-addiction program. Can be done, hard at first but it is realizable.
So, one has to accept that it is going to be an emotional decision.
How much area do I need ?
Once the emotional decision is reached, there comes the next practical one - how much area (sq.ft / acres) should I go for. Typically, managed farmlands start with 0.25 acres (~11k sq. ft) and then go to 0.5 acres, 1 acres and beyond.
The answer to this is deceptively simple. You buy land that you can financially afford. There is no end to the area that you will need to make satisfy your needs. Similarly, your neighbors, friends will always have something that you desire - bigger areas, lake inside their plot, what not, what not.
So, stick to a decent financial discipline. One blessing in disguise here is that there are not bank-loans for buying a farmland, so you will have to dip in your savings/investments to buy this.
Keep in mind that legally, only 10% of the farmland can be used for residential purpose. Remaining has to be for agriculture purpose only.
Why should I go the managed route? Why not buy directly?
In my observation, a managed farmland is at-least 2.5x more expensive than buying directly. 2.5x is a fairly steep multiplier when it comes to real-estate. So, why bother going the managed route ?
- Authenticity of title - Buying land is fraught with so many title verification intricacies that it is very difficult to navigate this. Particularly, when you are not versed with local language / local laws. The company, which manages the farmland, plays a key role to validate the authenticity, get necessary approvals etc to ensure that it can not be disputed in any court of law.
- Maintaining the land - Let's be realistic. No-matter what happens, it is not that you will leave your city home and move to this farmland. So, in your absence, you need someone to maintain the place, ensure trees, crops are getting nutrition etc. A key part is water maintenance - in city you just assume that you will get water, rain-water drainage exists. In farmlands, water will accumulate in your plot, mechanisms are needed for harvesting, preservation etc. This is a fairly important part of this management.
- Security - Khosla-ka-ghosla situations are not uncommon, atleast the fear is always there. Having a company ensure security provides that comfort to sleep peacefully.
- Having a community - Sense of commune, group of folks agreeing to live by a common set of dreams and rules, having the social fabric to rely on each other is not only appealing but a key ingredient for happiness.
- Clubhouse and other amenities - Most managed farmland companies also maintain a clubhouse kind of setup, with few rooms to stay. This is needed to stay there, tend to your plot while you get it in a shape that you can enjoy. Some companies are planning to make this into resort-like setup with swimming pools, kids play area etc while others are keeping it minimal.
One more side-case scenario is when a bunch of friends come together to buy a large land and then divide amongst themselves. Then the management is split between the group instead of one. This is also a good option, provided you have such good friends who are aligned to this idea. In the absence of it, managed one seems like the next best option.
Managed Farmland considerations
Ok, so you have decided to buy a managed farmland. What are the other factors that should be considered?
Distance (or time) from your current place - There are options in Chikamagalur, Coorg, Kanakpura, North Bangalore, as far as Goa as well. However, they key factor is how much you are ok to travel to visit this farmland. A related question is how frequently you want to travel.
In our case, we know that the charm of traveling will wave off after few months and after that it would be a chore to visit. Hence, having so in close proximity to where we live is an important factor. A 2 hr commute to get to this place is acceptable. 4 hrs is not. 2-3 hr is manageable but not ideal.
Location of the property - Since we live in HSR, we explored options at Thalli, Denkanikottai and Kanakapura. Jain farms near Hosur was also an option but they didn't respond back in time.
The location you decide influences your cost of per sq. ft. Kanakpura is huge, the away you go from Nice road, the price decreases and you are more towards nature. Closer to BLR is expensive, it is simple.
One other factor is Hosur and south of it is actually in Tamil Nadu while Kanakapura is in Karnataka. State change have implications in registration charges, language and other laws. In Karnataka, up until recently, one can not buy a farmland directly, this rule was changed only in last 3-4 years. Tamil Nadu is more friendly but they have a higher stamp duty charges. For us, state boundaries were never a consideration. Price per sq. ft definitely was :)
Location of the plot within the property- Even within a community, plot location implies amount of wind, water that you get. Some are at slightly higher altitude leading to better air flow while others may have better options for lake etc. And just like any real estate, plots tend to sell quickly, so once you like it, make an offer as quickly as possible.
Quality of the management company - Just like in apartments, builder matters, similarly, the management company matters a lot. You can get early hints on how they are crafting the message, their brochure, their temporary setup, calls etc. We saw one farmland plot which is surrounded by hills on all sides, lush green and an amazing locale and we saw a really good plot. But, the management was not up to the bar. They didn't had drinking water available, local staff was also ill equipped to handle queries.
There are also some management companies which are ok for their plot owners to use more than 10% of the plot size for residential purpose. We visited one which was again looking like a concrete city type construction, just at a bigger scale. We also saw other companies which were little more pedantic on the farming side, very prescriptive on things like you can not have your own boundary fencing as it will destroy the aesthetic look. So there is a spectrum here.
Other important factor is who are the promoters of the company. Many real estate companies are venturing into this as a mechanism of financial instrument diversity. There are also few startup-ish firms who are trying to make this as first class lifestyle decision choice.
Amenities - My usecase of this place was that it should be usable as a weekend getaway. It is likely that we will not build any house immediately, so having a clubhouse with amenities like swimming pool will be helpful for us to visit this place as a weekend getaway. So, clubhouse rooms with kitchen setup and amenities became an important consideration for us to consider a commune.
The golden rule of any real estate buying is sabko sab kuch nahin milta (You do not get everything). The key is to know which trade offs are acceptable and which ones are not. Eventually, you have to make a decision.
Management companies that we explored -
It does not make sense to talk in terms of projects because most of them are selling out quickly. Each company has its philosophy and principles. Below is merely our observations and you may or may not agree to them. It is a biased subset with our prejudiced notions. Disclaimer shared to avoid any future defamation cases :)
Properties visited - Sambramha farms Denkanikottai, Dhanvi farms Kanakpura
Hosachiguru is very active in digital media - they have ads on Insta, webinars happening every weekend, largely on educating a farmland but targeting to the digital IT crowd of BLR. Hosachiguru can be credited for seeding this whole farmland idea to many IT people.
I liked Hosachiguru, they were more oriented towards the agricultural aspects. They had well defined water pathways that flow through their plots. They also had a more extensive brochure on trees and plantations. They were fairly limited on amenities though.
Properties visited - Bird berry Kanakpura.
Quiet a fancy website. Absolutely stunner of location in Kanakapura. Just the drive to bird berry was amazing. It is meant for a resort :) But quiet far from our place - their brochure says only "1 hour" from Nice road as if Nice road was city centre. They can definitely improve their on-site experience, when we visited it was looking deserted. Plus, didn't look like any agriculture thing was going on.
Properties visited - Vrindavan, Tapovan, Shivalik hills.
Offering a nice balance between real estate world and farmlands, Aranyakaa seems to be heavily betting on this space. Like a young start-up, they are moving fast and have invested in good onsite experience as well. Vrindavan for example has a igloo-like tent setup for stay as well. Each project has a clubhouse with food options. Some projects have more amenities than others.
Properties visited - Prakruthi farms, Nature senses.
Prakruthi farms seems to be more mature, didnt had an office. We took a trip in our car only. Nature senses is a huge project and they seem to be focussing on it.
We didn't explore north of Bangalore options because it would be too far and also, heard that water options on that side are limited. Other farms considered - Jain farms but did not get any revert. Sanvi Sandalwood - called them but never visited them.
Other things to keep in mind -
- Move fast :) - Plots will get sold out. Your interest may dwindle. So, once you have momentum, leverage it and then close at the earliest.
- Asking around may not help since everyone else is doing it as an experiment. This is a second-home concept. Most folks are unaware and those who have done so, have done it with varied reasons.
- Proximity to hospitals was a criterion that many folks shared but I have not included here. I think hospitals will develop over time, and nothing will compare to BLR facilities. Plus, I have a personal belief that life should not be governed based on proximity to hospitals. Rather live in nature and invest in health so that this becomes a moot point.
- Manage finances well - there are no home loans available.
- Get a lawyer to review documents.
For any interesting ideas, questions, you can reach out to me at arvindbatra@gmail.com
