Plot vs. Flat which makes a better investment


There are some who argue that real estate investments have a little variety. But if you delve deep you would understand that it is this simplicity that makes it simpler to take better decisions in real estate investments. You first choose between investing in a commercial property and a residential property. And then there is the process of choosing between a new property and a resale property.

If you have a plan to invest in residential real estate any time soon, there is one big question that most people have – Should you buy a flat or a plot when you think investment?

If you are planning about your first home, for your own use, the situation is a lot different. Buying a plot and building a house gives you the freedom of designing your house from the scratch. But if it is an investment decision that you are making the considerations differ.

Appreciation of cost

This is one main reason why people choose to invest in a plot of land. Even if you already own a flat if you have a plot at hand you would be able to resell it and earn good returns. The key is to pick an area where real estate value has a bright prospective. In general, the value of a flat or a building for that matter appreciates and then saturates. Then there is depreciation in the property value. But with the land, there is always an appreciation value no matter where you choose to buy the land.

Rental income

Unless you buy a piece of agricultural land, a plot yields no income on a regular basis. A flat, on the other hand, would fetch rental income. The rent would depend on the locality where the property is situated as well as the furnishing status of the property.

Ease of resale

Without a doubt, a piece of land can be sold much more quickly than a flat. On a flat, there is very little scope for rework and a majority of the renovation would have to be done after the demolition of the existing property. But with a land, the flexibility of building a property is higher.

The choice of plot vs. flat thus depends on your investment goals:

  • If you are looking for short-term benefits, in the form of rental income then a flat would be a better choice
  • If you are planning for a long-term investment say for your retirement, then buying a piece of land would be better. When you sell if after several years you would be able to get a bulk amount in one stretch.