Reprinted from Shiriam Properties
There is no doubt that real estate is one of the most fruitful and stable forms of investment. While residential homes have become almost synonymous with real estate investments, they aren’t the only option available. If you are considering making a real estate investment, here’s why purchasing a plot of land should top your list.
1. It offers greater flexibility
When purchasing an apartment, buyers are often limited to the architect’s vision of the home. They can only make a few customizations to the property and changing the layout of the home is completely out of the question. A plot of land, in contrast, is like a blank canvas to build your dream home upon. You can design your home from scratch, add elements that are important to you and even use your choice of materials. A house lasts you a lifetime, therefore it’s important that you have the power to design it in a way that matches your personality and lifestyle.
2. Initial investment is low
Residential homes, even the most affordable ones, are typically priced much higher than a plot of land. Because of this, most potential investors use a home loan to finance their purchase. A plot of land, on the other hand, is much more cost-effective. They have low entry ticket size means that even young investors can purchase them without any financial obstacle in their way. Many investors, in fact, choose to purchase land early in life and build a home on it later, when they have more savings. This can work out to be much cheaper than purchasing a home and paying EMIs for it.
3. Land is appreciating quickly
The most attractive feature of real estate investments is that they are almost guaranteed to appreciate. But while land and residential homes both have this in common, investing in a plot might give you an edge. Over the last few years, land has been appreciating much faster than residential property. The value of land is also dependent on the surrounding infrastructure. Improvements in the latter will guarantee a direct increase in the former. When clubbed together with the low investment required to purchase it, land offers much higher returns in a shorter period.
4. No gap between purchase and possession
When investing in a home that is under construction, individuals need to wait until it is fully completed to take possession. Depending upon the stage of construction the project is in, the final handover can take a year or even longer. With a plot of land, there is virtually no possibility of a delay. Since land doesn’t require any construction, owners can take possession of their new asset almost instantaneously.
5. Lower property tax
Property tax is a recurring expense that property owners have to account for, regardless of whether they own a house or plot of land. But in the case of land, the property tax tends to be much lower than it is for a house. In Bangalore, for example, property tax rates on residential houses can go up to Rs. 5/sq.ft. for tenanted homes and Rs. 2.50/sq.ft on self-occupied homes. The property tax on vacant land, in comparison, starts at just Rs. 0.12/sq.ft and goes up to Rs. 0.50/sq.ft. This means that you will not just be saving money when you are making the initial purchase for a plot of land, but also in the long run while paying taxes.
6. No maintenance costs
Whether you plan on living in your purchased home or not, you will still need to pay a certain amount for maintenance. Some of these charges are constant, for example, the maintenance fees issued by housing societies. Many times, however, they can be unplanned, as it is in the case of plumbing issues, electrical problems, renovations, etc. With a plot of land, there is virtually no maintenance required. Even the most hands-off investor can purchase land without having to worry about regular upkeep.
7. It is a finite asset
One of the biggest advantages of investing in land is that it is a finite resource. New residential high-rises will continue to be built, but there is only a limited amount of land available for ownership. Because of this, owners can be certain that their investment will constantly be in demand as a result of which, its price will continue to appreciate.