Blogs

Flat VS Plot

Real Estate is hands down one of the most promising investment choices an individual can ever make. Once the investor picks his assets, he enjoys the fruits of his investments for the rest of his life.

Especially, in a country like India where the economy is fast-growing and labour is at everyone's disposal- buying, maintaining and selling real estate properties is convenient and cost-effective.

Real estate investors can make money in several ways. The other interesting perks of investing in real estate include passive income, stable cash flow, tax benefits, portfolio diversification, and leverage.

But here comes the tough part – as a real estate investor or even an individual who's looking to secure his future, choosing between buying land and a plot is a challenging task. Even though this choice is very subjective to everyone, it is recommended to understand the pros and cons of both plots and flats to be smart with your investment.

Flat Vs Plot – Which One Has the Best ROI?

Here's a walkthrough of the comparison of a flat and a plot/land. We are certain that by the end of this article, you will have the perfect solution for your big question- Which is better, a Plot or a Flat?

The Health of Your Wallet

A flat always costs you more than a plot. This is because, when you buy a plot, you pay solely for its value. But when you buy a flat, you pay for the service charges too. On top of that, flats seldom come in the shape and size you want and therefore you will end up spending more money in renovating it.

Plots are comparatively much cheaper. A lot of young investors use this to their advantage and buy land at a very early point in their life and develop it later when they have the right kind of finances.

However, it is easier to get a bank loan for buying a flat.

The Appreciation

When it comes to a flat, you mostly end up getting buyers who would pay lesser than the original price. Because once used, a flat is no longer considered new. Especially in a country like India where "Second Hand" is not as prestigious as new, the value of your flat would keep falling with time.

But when it comes to plots, a "new plot" is always a "new plot", unlike pre-loved flats. Their prices depend on location, size, and available space. Prices of land parcels appreciate much faster. Once the buyer identifies the potential of your plot, you will surely get the best ROI.

The Flexibility Game

A flat limits your flexibility of how you make money with it. Especially because the investor would lose ownership of the space with the buyers coming in. Another big disadvantage with a flat is that the preoccupancy influences its prices to a large extent.

On the contrary, a plot gives you the flexibility to use it the way you want. And that is why it has the potential to make exponential money for you. You can either sell it as it is, give it for development, or even start your own construction.

Your Ownership

A flat always comes with a long list of terms and conditions attached to it. Because when you buy a flat, you are not just buying the space but a part of a residential area. It is in fact a shared ownership. Firstly, you will never be able to modify the exterior of your flat. Second of all, you may not always enjoy your surroundings. The common areas are to be shared, and a protocol is to be followed in the area. The chances of having unpleasant neighbours are also high.

On the contrary, owning a plot gives you the satisfaction of independent ownership as it is always entirely yours until you sell it. You can develop it the way you want or just have your own, sweet garden. The possibilities are endless.

The Occupancy

Here's a myth breaker. Even though you might want to believe that a flat is the one that is readily available for occupancy, it is in most cases not true. A flat would need some kind of extra labour in the form of repairs or renovation or woodwork before you start residing in it. It costs you a lot of money and time even after buying it for a fortune.

But a plot is yours the moment you buy it. You can grow your farm, park your vehicles, or build a home set up for your labour, or even make it a playground for your kids. In a nutshell, a plot is fully functional even before you begin your construction.

Cash Flow and Liquidity

Be it a flat or a plot, liquidity is anyway very low in real estate when compared to other investments. One needs some time to convert their assets. But this lack of liquidity is beautifully compensated by the inflow of cash that the field promises.

However, the delivery time for plots is much lesser than that of flats. Like mentioned before, finding buyers for a pre-loved or even a new flat is a challenge. The buyers tend to get extremely sceptical and calculative. On top of that, your flat may not be readily available for sale, costing you some more time before you sell it.

But plots are instantly ready for possession and once there's a "sale" tag on the plot, buyers flow in.

The Verdict

Flats are bought by people who want a home and some minimal returns. They take huge loans from banks and pay EMI for almost half their life. The flat then remains a liability until you pay the entire loan.

Investing in plots has a low entry ticket size. You can buy it at a fair price and then make a lot of money out of it. It helps you secure your future and lets you use your intelligence to earn profits.

Smart investors invest in plots that are currently priced at cheaper rates but have the potential to see appreciation in the future.