Plot vs Flat – Should I invest in flat or plot?
Investing in plot vs flat, is a classic dilemma which every real estate investor faces especially when looking to invest in a second property. Both types of properties have their own set of advantages and shortcomings.
A plot provides you with more flexibility to build the house as per your liking while a flat offers better security and accessibility. In this article, we provide you with a detailed analysis and comparison of both types of properties so that you can decide for yourself whether to invest in a flat or plot.
Plot vs Flat – A Comparison
|Cost||In urban areas, it is quite expensive to purchase a plot and then build a house. However, in outer city areas you can get land at reasonable rates with chances of good appreciation.||Compared to a plot, a flat can be owned at all price points depending on locality, size and accessibility.|
|Value Appreciation||A raw plot in an urban or developing area appreciates much faster than a built up house or a flat as there is no depreciation of building to be factored in .||Since, the building depreciates over time, a flat does not appreciate as well as a plot.|
|Regular Income||A plot of land generates a very low or negligible rental income compared to a built up house.||After possession, a flat can beimmediately rented out and it will start earning income for you.|
|Value for Money||Since, you have full control on construction, a plot offers great value for money.||A flat offers lesser value for money because the developer loads his costs and profits in the property.|
|Bank Loans||Generally, it is difficult to get a home loan to buy raw plot. However, you can get loan for built up house or for construction.||A flat can be easily financed by any bank provided the title is clear.|
|Legal Verification||You will have to do your own verification as banks do not generally finance plots.||Banks have their own legal teams to conduct due diligence of projects and individual properties. You can safely rely on their expertise.|
|Tax Benefits||Tax benefits ar not available for a plot alone. You can avail tax benefits only after construction completion.||Full tax benefits are available from the time of possession of home.|
|Construction Quality||You can ensure best quality construction on your plot as you have direct control on products and the contractor.||In case of flat construction, developers often compromise on quality to control costs and meet deadlines.|
|Convenience||The whole process of constructing a house on a plot is cumbersome and involves personal time and commitment.||Investing in a flat is very convenient. It is constructed by the developer. You only need to get the interiors done when the flat is ready to move in.|
|Flexibility||You can construct and modify your house on a plot as per your requirements and available resources.||You cannot expand or make structural changes to a flat. You can only make limited modifcations internally.|
|Security||Unless your plot is in a gated community, you will have to invest separately in security.||Flats are generally within gated complexes and are very secured.|
|Amenities||Common facilities like swimming pool, gymnasium, club etc. are not easily available in plotted developments. It is difficult for an individual to invest in all such facilities.||Gated complexes have all amenities like swimming pool, gymnasium, club, shopping center within the complex itself. All costs are shared among residents.|
|Risks||Plots in an undeveloped or unguarded place face the risk of encroachment.||You can easily lock your apartment. There are no encroachment risks.|
Final Word – Flat or Plot?
Although it is a personal choice while choosing to invest in a plot vs flat, following guidelines may help.
Invest in a plot, if:
- you are looking at capital appreciation
- you want to build your house as per your own terms
- you have enough time to monitor your investment and construction progress
Invest in a flat, if:
- you are looking for regular rental income
- you do not have enough time at your disposal
- you want better security and common amenities like club, swimming pool, gymnasium etc.
- you are looking at bank financing
Over to You
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