A property purchase is one of the most significant investments you make in your lifetime. It is a long-term financial commitment and considerably impacts your finances. Not forgetting that we are all at different stages of our investing journey. Some of us are first-time homeowners, some others are looking for a second home, and others an investment that helps earn additional income.
But whether you are a first-timer or a returning buyer, there’s one dilemma we all have- to buy a plot or a flat – which is the better investment?
Market studies point out that more than 50% of home buyers prefer new, ready-to-move houses in Hyderabad. However, there’s also an equal percentage of buyers who look for plots and other older properties.
A few critical factors need to be considered before you choose between the two – easy financing, high returns, tax benefits, etc.
Let’s take a look at the Pros and cons of flats and plots based on a few pivotal parameters.
Plots offer a lot more flexibility when compared to flats. They allow you to build your dream house according to your preferences and taste. However, in the case of flats, you have no say in deciding the structure of the house.
- Appreciation rate of property:
Returns on your investment are higher in the case of open plots. Plots appreciate faster than apartments. This is mainly because plots are less in supply in the market.
Flats are also prone to deteriorate over time, which in turn, is likely to result in a decrease in their values. Land is an appreciating asset; hence, you’ll always get a better plot return.
- Financial assistance:
The Loan-to-Value (LTV), compared to flats, is less for plots in Indian cities. While the Loan-to-Value (LTV) is 80-85% for flats, for plots, only 80% Loan-to-Value (LTV) is allowed. In the case of resale land, this Loan-to-Value (LTV) is only 50%. Also, you can only get a loan for buying a residential plot if the local authority has approved the land.
Hence, arranging funds and capital for open plots is a bit more hassle. On the hand, financial assistance is easily available for purchasing flats, and smoother.
Unless you are buying a pre-owned flat, possession of an apartment may require months or even years. Plots are usually ready for possession. If you’re buying a plot in a township, you are likely to get possession of the plot earlier than a flat. This allows you to customise and build your home as and when you want.
To conclude, both plots and flats have their fair share of pros and cons. What to invest in depends on what fits your budget, your financial abilities and liabilities, and your family’s needs. If you are merely looking for an investment for your funds, a plot, however, sounds like a better deal. Investing in a plot in a location that has proposed development and will see appreciation in the future would be a good idea.
At TMR Group, our plots are located at the epicentres for development for thriving returns. TMR Green Meadows at Chegunta, just 30 min away from Medchal, is a plotted community spread over 50 acres for an investment that grows along with you. To know more, visit https://tmrinfra.com/