Often investors need clarification about whether to invest in a plot or an apartment. Let's take the case of Mahesh*. An MNC employee, he just got married, and the couple is looking for an investment. As they are looking to invest in something that will help them immediately, in Mahesh's case investing in an apartment makes sense. It will help him acquire a property in his own name, and he need not have to pay rent.
However, if he is going to invest in a plot, it's a good idea. But a plot may not give him any immediate return. While apartments can be bought in EMIs and plots, the interest rates are a bit higher. Hence without any immediate utility, he will be blocking his money if Mahesh chooses to buy a plot.
Consider Venaktesh’s story. He already has an apartment and is looking for an investment that he can use later. He also wants to live in a posh independent house. If Venkatesh invests in an apartment, he will likely get a passive income through rent. But when he wants to build an independent house later, he may or may not get the land in his preferred location, and also, the rates should have gone very high. Hence, for Venkatesh, investing in a plot makes better sense.
As described, there is no one size fits all. Investing in an apartment or plot depends on various factors. Let's see the pros and cons of investing in apartments vs. plots.
Realtors vouch for the appreciation of plots and say that plots appreciate faster than flats. It is because; plots are relatively less in supply, especially in metros. Contrary to apartments, plots appreciate with age. Though the appreciation depends on location and infrastructure, a plot can appreciate manifold in a stable market.
Also, exiting your investment in plots is easier as many consider developing a plot is easier. However, if you are looking for a regular income, investing in assets like apartment and commercial spaces are better.
Simply put, if you have a long-term outlook, buying a plot is worth it. For shorter terms, you can opt for medium size apartments. In both cases, location, infrastructure, and the neighborhood play a major role in increasing the value of your plot or apartment.
If getting a regular rental income is on your mind, you should invest in a ready-to-occupy flat. An apartment can be rented out to receive a good income which may not be the case with plots.
An apartment in a developing area or a gated community is a safe and gainful investment.
A buyer can raise money to buy a plot of land, but there are some differences. In the case of home loans, a buyer can get up to 80-85% of the property value as a loan, and the same can be repaid in EMIs. The tenure of the loan can go up to 30 years.
In plots, the residential plots should have the local authority's approval, and if it is a resale, land banks offer only 50% of the loan to value as funding. And the maximum tenure for a plot loan is 15 years.
When you avail of a home loan to buy an apartment, the repayment allows you to save on tax. You also get a deduction of 1.50 lakh in a financial year for the interest you've paid on the loan, and one lakh can be claimed for principal repayment. For plots, tax deduction on interest is given only when the construction is finished.
Investing in an apartment or a plot is both lucrative investments. A plot offers you the benefit of customization and a luxury feel. A plot can be taken possession of immediately, whereas apartments that have just launched may take time for completion and handover. While apartments are constructed based on the common needs of buyers, you can develop and create your own space when you buy a plot. Over time, apartments will require maintenance, whereas such issues won't arise in plots.
