WHAT ARE THE PROS AND CONS OF INVESTING IN PLOTS?

Introduction

In India, real estate investment with a view to multiplying income and securing one’s future is a critical goal. As investors, the big question that always comes forward is whether to invest in plots or apartments. Both options are attractive investment options. Both enjoy certain benefits and have certain drawbacks that need to be considered. The key factor that makes investing in the land a stand-out option is the resale value of land. It appreciates faster and is generally preferred over residential properties. However, this is not to say that residential properties are not suitable. There are a number of factors that should be taken into account before taking the big leap.

Pros and Cons of Investing in Plots

So what tips the scale in favor of buying plots rather than properties?

Pricing: The most basic reason why plots are preferred is the low rates of land compared to property. Even property tax and the overall maintenance of plots are much more affordable compared to residential, fully developed properties. So for example, as an investor, if you have a low budget, then plots are a popular option to consider.

Appreciation: In general, land enjoys a much better rate of return than apartments. The price of plots is also determined by its location, plot size, and the development in the surrounding environment. The rate at which the value of land appreciates depends on how these factors impact each other. However, overall it cannot be disputed that land always enjoys a faster rate of returns than developed properties.

Diverse use: Another big benefit of investing in plots is the flexibility to customize the plot to suit your needs. You can choose to construct a home, or if the soil is fertile, probably consider having a farm, or even build a farm house. In an apartment, you cannot add additional rooms or modify the space since space is a constraint. Further, you may have limited permission or no permission at all to make any change. This is not the case with plots. When you invest in plots, you enjoy the freedom to construct and modify your home in the manner you like.

Ease of purchase: Land or plots can be easily purchased with cash and does not require any collateral or mortgage.

Even though the investment in plots sounds like a lucrative option and easy to handle, as an investor, you must do complete research on the plot you plan to buy.

Look into an aspect of any land fraud, legal wrangles if applicable, that makes it a risky option. Understand the reasons why the land has been vacant, how long it has been vacant, and how many hands the land has changed. Imagine buying a plot for development only to realise later that the land is unfit for use! You not only lose a lot of money but also suffer emotionally for a long time. Check the rate of taxation to verify if it is within norms, else that is a red flag!