Real Estate

How to decide between buying a plot or house

Yes! Real estate investments are going to be among the largest purchases you make as an investor. That's why having a systematic approach will work wonders for you.

Often we hear buyers ask...

Should I buy a plot or is an apartment a better investment for me?

As a cautious investor, that's a pertinent question.

And today we would like to help you answer it.

Understand your investing journey

Each of us is at a different stage of our investing journey. And for some of you, this may be about moving into your very first home. For some others, it could mean earning a good livelihood from the investment. And finally, for some, it could be about leaving a legacy behind for their grandchildren.

Makes sense?

So the answer would vary in each circumstance.

And that's why we’ve put together a guideline that will help you make rock-solid buying decisions. Here are six important factors you should be considering before making your next investment.

Financials and taxation benefits

First things first. You want to make sure your finances are in place before you plan the investment.

Key fact: Acquiring a loan for a plot is more difficult as compared to getting your flat financed.

An empty plot of land offers minimal tax benefits. But when you take home loans for an apartment, you'll be showered with a bounty of tax exemptions.


Flats or apartments are sort of limited, in the sense that they already have a well-defined structure. A plan that is decided by your developer and his architect well in advance.

But, if you're interested in building a villa or a bungalow, then, plots are a good way to go. And you'll enjoy the flexibility to create it as per your unique needs and preferences.

Earnings from your real estate investment

As an investor, you want to be clear on your investment returns.

Be sure to ask -

What kind of monetary benefits does the investment promise to offer in return?

Key fact: Plots cannot offer rental income. But their value appreciates faster than flats.

In contrast, you could rent out flats and apartments for immediate returns.

So, if you're looking for short-term gains, a flat is ideal because of its affordability factor.

One way to make your plots more profitable in the short term would be to construct a few floors and eventually rent them out. But you should choose this approach only if you're aware of the risks involved in the construction process.

Just as with flats, when buying plots, remember to take note of the surrounding neighbourhood, infrastructure, and locality.

Resale value

When compared to plots, the value appreciation of flats/apartments is slower on account of building damage and general wear and tear.

Contrary to flats, plots in preferred locations appreciate very rapidly as there is a huge demand of wealthy buyers, who prefer to build horizontal homes.

Thus plots are an excellent choice when it comes to the high resale value on your investment.

Safety and legalities

The issue around plots is that these could be illegally encroached upon. So, ensure that your land is a gated community. This way, you won't be burnt out dealing with constant encroachment issues.

Also when sealing the deal on your plot, ensure that there is no land dispute - civil or criminal - associated to the piece of land.

With flats, these issues are dealt by the builder on behalf of you, so you're protected from them. But flat buyers must remain vigilant in verifying all the documents of the sale.

What's right for you is what matters

When all is said and done, it comes down to your personal choices to decide what works best for you.

Having a plot means you'd have to take care of a few extra things that are already done for you in the case of apartments. But then, the rewards for plots can also be much higher. And you'd have complete control on the quality of construction.

With apartments, they are hassle-free since everything is all set and done for you and earning money is straightforward. You’re entitled to enjoy tax benefits as well.

Here's a deciding line that could help you make the right decision.

Are you a short-term investor or are you in it for the long-term?

If you're thinking long-term, plots are your best choice in creating wealth generating assets. But if short-term gains are what you're after, then apartments are unquestionably the best way to go.

There you have it. A comprehensive guide to making the right investment.

This article is contributed by RoofandFloor, part of KSL Digital Ventures Pvt. Ltd., from The Hindu Group

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Printable version | Jan 20, 2022 1:50:16 PM |

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