More and more people are looking to invest in real estate in India but people are also perplexed whether to invest in a plot or in a flat. Both choices have their own advantages as well as disadvantages.
Although the flat/apartment culture has taken over the residential market in major cities of India, but there are still many people who cherish the desire to buy a plot of land and build their own home. If you are also considering to buy either a flat or a plot then it’s important that you must gauge several aspects such as the cost of building, appreciation, financial assistance and income very carefully.
However we can assist you in making your choice based on the below mentioned parameters :
- Flexibility to modify : a plot will always give you a higher flexibility in terms of modification as you can put your choice to use and expand and design to your preference while if we consider a flat or an apartment the modification and expansion is very limited and sometimes not even possible.
- Returns : if we consider a period spanning anywhere between 20-25 years then a plot will give you a return between 15-20% p.a. especially if the plot is bought in areas like economic corridors where new industries and companies are coming up while in case of a flat or apartment the return would range between 8-12% p.a. also depending upon whether it is a ready to move in properly or an under construction property.
- Risks :in a ready to move in flat there is no risk involved while in a plot there are risks of litigations, title deed an encroachment if the plot is situated in a remote location.
- Rental Income : buying a ready to move in flat will help you to increase your income and put it on rent but in case of a plot renting out isn’t possible.
- Tax : when you buy a flat you are able to take a loan for it known as home loan, so the monthly repayment you make to the bank helps you save tax under section 80C and Section 24, but in case of a plot there are no tax exemptions or savings, its only there if you construct something on the plot.
- Bank Loan : banks do not give loans in the purchase of a plot while in case of buying a flat home loans are easily available according to your eligibility at very low interest rates, in case of down payment too you are required to pay a meagre amount rest everything the bank takes care of.
- Security : flats are in gated communities so they are secured by 2-3 tier security guards and cameras but same is not the situation in plots where security is less.
If we consider these points then both plots and flats have their pros and cons but if you are someone who wants higher returns and can compromise on the risk part then go for the plot but if you want peace of mind and avoid risks with less returns then obviously go for a flat.