What is a better investment option, flat or land?

Financial literacy is increasing among indians. Everyone is understanding the importance of investment rather than just keeping their money in savings accounts and watching it devalue itself. When we talk about investment, what could be better than real estate that gives you sustainable growth as well as amazing returns. But nowadays there is a dilemma between buyers and investors. What is a better real estate investment option, Flat or Land?

If I say frankly, both are the best investment option among other assets. If you have sufficient money, then invest in both. But as you have a limited budget and want to invest in only one of them, we will tell you the benefits of both and you can invest in the best between them as per your needs and requirements.

Investment In Flat Vs Plot

When you purchase a piece of land, you have to arrange everything from getting approval from the concerned authorities to hiring an architect and contractor to execute the task. You also have to manage your finances and have to deal with contractors and other local bodies. It is a time consuming task and will take your money and time.

But when you purchase a flat. You are free from all the headaches regarding construction of the flat. You just have to get your flat furnished. With a flat, you get exclusive amenities such as power back-up, water, maintenance, club house, swimming pool and security etc. 

But when you purchase land, you have to arrange all these facilities on your own. And it's not possible to build a clubhouse, swimming pool and all in a 200 square yard plot. You will need a good amount of space to build it and also a huge financial backup. Which is not possible in a low budget. But in a flat, all the residents share the construction cost of these exclusive common amenities. And it does not burn your pocket.

Possession

The possession of the flat may take 3 to 5 years and it can also extend in case the project is big and needs more time to be completed. But in case of a land, you can build a home whenever you want and can get it completed within an year.

What Is The Return Potential In A Flat?

According to Rahul Choudhary (Co-Founder, Commercial Noida), land appreciates faster than flats. Because the supply of land is much less than the supply of land. But a flat’s appreciation rate depends on location and its proximity to big infrastructure projects. In the case of a land, it is generally easier to sell because of the high demand and less supply.

It would be beneficial to invest in an asset such as a commercial, office, retail, etc. if you are searching for a consistent yield. It really comes down to your perspective if you want to use it as a store of value. Purchasing a plot of land is worthwhile if you have a long-term plan; if not, choose a reasonably small apartment. The location, neighbourhood quality, and surrounding infrastructure increase the value of apartments just as they do plots of land.

Earning Potential

If you want to earn regular income then investing in flats would be beneficial as it gives a rental income option. But in case of a land, until you construct upon it, there will be no returns.

Tax

Plots and apartments have separate tax treatment. You can save money on taxes when you take out a home loan to purchase an apartment or builder's floor because of the monthly loan payments. Also, you are eligible to deduct interest paid on your loan up to Rs 1.5 lakh every financial year. In addition, a deduction of Rs 1 lakh can be claimed for principal repayment. Plots are subject to a tax deduction on interest only from the completion of building.

Loan

A residential plot purchase can only be funded with a loan if the local government has approved the property. Bank permits 80% Loan-to-Value (LTV), but only roughly 50% of LTV is permitted for resale land. A buyer can receive between 80 and 85 percent of the cash for a house loan. Furthermore, a land loan's maximum loan term is 15 years, but a home loan's maximum loan term is 30 years. 

Conclusion 

Whether it’s flat or land, both have good potential to extract huge returns. Both have different purposes and usage. It depends on you what suits you better. Investment in a flat or land both will extract you huge return when initiated with the help of an authorised and experienced person or consultancy in real estate such as commercial noida. We can help you in getting dream deals at the most competitive price in the market. For further investment related queries, contact us at 7053707070