Given that real estate involves some of the biggest investments buyers will make, it is natural for home-owners to debate the pros and cons of buying plots versus ready to live in flats/houses. The major deciding factor is of course, what the investor wants. Investors come in all shapes and sizes and everyone wants different things!
For example, first-time investors may be eager to move into their own home and prefer a readymade property, whereas others may insist on a plot so that they can design their dream home from the ground up! Financial and time considerations are also important when making these decisions. Ultimately, every investor will make the decision based on their own unique set of circumstances and what works best for them.
Pros and Cons of Investing in Plots:
- Buying a plot offers more flexibility in terms of design and structure. Investors can design their dream home as per their requirements.
- Plots do not offer immediate rental income but their value-appreciation is generally faster than that of flats.
- In general, plots offer higher resale values as compared to flats, since space is at a premium in India and many wealthy investors are on the lookout for large plots of land.
- Typically plots offer minimal tax benefits.
- Getting a loan for a plot is generally harder than getting one for a flat.
- Illegal encroachment can be an issue with plots, especially those located in remote areas. This risk can be minimised by investing in plots within gated communities where there is security available to safeguard against such issues.
Pros and Cons of Investing in Flats:
- It is much easier to finance a flat than it is a plot.
- Home loans on flats are eligible for tax exemptions.
- Flats offer an immediate source of rental income in the short term, should this be needed.
- Legal issues to do with flats are generally dealt with by the developer. However investors must ensure that all legal documents to do with ownership are in place before signing a deal.
- Ready-to-live-in flats offer less flexibility than a plot, in that the basic structure and design of the property is decided by the developer and his architect. Although interior renovations are possible, these can be cumbersome and expensive requiring special permissions.
- Resale value of flats can be affected negatively by building damage and general wear and tear.
As a rule of thumb – plots are great long-term wealth-generating assets while flats offer better short-term gains. Investors must decide what their needs and goals are and invest accordingly!