A Flat or a Plot: Which is the Best Investment Option in India?

So, in the morning, Mrs Sharma rang and gave the news that she was about to retire soon. The call was not limited to this news but was also about a serious issue that she was facing! Mrs Sharma was in a dilemma as to where to invest her lifetime of savings so that it would provide her with a good return on investment. With a limited budget on the one hand and a dilemma over buying a plot or flat on the other, she sure was in a pickle. Whether big or small, investing in something requires a large heart and a strong decision-making process. 

Whether in a plot or apartment, investing a large amount of money is not an easy task for Mrs Sharma. This situation is not just for Mrs Sharma but for many others. If you are one of them, you need to set your mind on the basis of your requirements, lifestyle preferences and other factors like taxation or bank loans. 

When you invest your time and money on land means building a house as per your requirements and legally approved layout. In contrast, a flat is a construction where there is no freedom to change the layout or the size of the construction. 

If you bought a plot, that means now you are responsible for the construction and the security of the built-up home, but in the case of apartments, you will have the benefit of security, location, accessibility and amenities. 

So, did it ease out? What's the better option for you, a flat or a plot?

No? Worry not. Keep reading to know what better investment is, a flat or a plot! 

1. The Amount Of Effort 

While you are on your way to buying a plot, your work is not completed once you buy it, but you will also have to plan construction on an approved layout. For that, you might further go ahead and hire an architect in order to execute the plan. Once the layout is in hand, you will also have to monitor the construction growth over a period of time. If we talk this much about hiring and executing, we surely cannot leave behind the finance part. You have to arrange your finances wisely. The time will come when you will have to deal with contractors or laborers that, my friend, is surely a lot of leg work over little things. 

But in the comparison of a flat or a plot, if you decide to go ahead to buy an apartment, then, in this case, the developer will be in charge. The real estate developer of your flat will provide you with possession upon completing the flat. Your work will only involve furnishing the house and worrying about the whole construction part in this scenario. You will also be provided with amenities in the form of power backup, water supply, maintenance and security. If you wish to buy a lavish apartment, you might end up receiving some additional amenities like a clubhouse, swimming pool, gym etc. 

So, in between a flat or a plot, if you decide to go with a plot and build a lovely home on it, you surely would have to make all the arrangements on your own, and that will involve a lot of effort. 

2. Delivery Of Your Home 

Possession of a flat requires a lot of time and involves some months and, in some cases, even years. At the same time, plots are generally ready for possession. But in case the choice of the plot is a part of a township, you are more likely to get it than a flat. 

3.  A Flat Or A Plot That Enjoys Better Returns?

Real estate experts tend to believe that the plot appreciates better and faster than apartments. The reason behind such a claim is that plots are less in supply in the market. Age factor does not affect the choice of investment in plots, but it does affect the case of flats. The appreciation factor is based on big infrastructure projects' location and proximity. With time the price of the plot rises at the time of stable market conditions. If you want something to benefit you regularly, you can go for an asset form like commercial, office, retail, etc.; if you have some long-term plan, you can buy a piece of land considering its worth and go for a shorter-term, relatively smaller flat unit. 

Factors like location, infrastructure, connectivity, and neighbourhood quality provide an edge to apartments as they do for lands. 

Also Read: Renting vs Buying A House

4. A Flat Or A Plot Which Involves A Tax Treatment?

The concept of tax treatment for an apartment and a flat is completely different. When you wish to take a house loan in order to buy a flat or a builder's floor, the monthly loan payment will allow you to save a good amount of tax. Whereas in the case of plots, the tax deduction on interest is set only at the time when the construction work is fully completed.   

5. Which Is An Easy Way Of Income- A Flat Or A Plot?

If you have set your mind that you wish to earn a regular rental income, then you must invest in a built-up flat. As a flat can be put on rent easily and will allow you to fetch a very reasonable amount of income, such a case is not possible in the case of plots. Plots cannot provide you with an income until and unless it is fully constructed. 

6. Funds 

A buyer has the authority to raise funds to buy a flat or a plot. Although it does require certain conditions, Nitin Singhal, a relationship officer at PNB Housing Finance Ltd, stated that one could get a loan for buying residential land if and only if the concerned authority has approved the land. 80% Loan-To-Value is allowed, but in the case of resale of the plot, only 50% LTV is allowed. 

If you have limited funds and are stuck in a situation to choose from a flat or a plot but want to enjoy returns, then a flat is the best option as it will offer better opportunities for investors. The land is also an expensive choice, but a flat can easily be bought on EMIs.