Choosing Between Plot And Apartment? Check Which Investment Strategy Reigns Supreme

Prospective investors should weigh considerations such as capital appreciation potential, customisation freedom, and workload against immediate rental income, security amenities, and loan convenience

Real estate investment: Investing in a plot may not offer immediate tax relief, but constructing a house on the plot can provide tax benefits. ( Image Source :Getty )

Investing in real estate often boils down to a choice between purchasing a plot and an apartment, each offering unique advantages and challenges. Here we delve into the intricacies of this decision-making process to help prospective investors make informed choices.  Prospective investors should weigh considerations such as capital appreciation potential, customisation freedom, and workload against immediate rental income, security amenities, and loan convenience.

Ultimately, making an informed decision requires careful evaluation of individual preferences and financial goals. The decision to invest in a plot or buy an apartment hinges on various factors. In the following, we shall discuss about the advantages and disadvantages of investment in plot or apartment.  

Workload and Construction

Buying a plot entails extensive work, including hiring civil engineers, architects, masons, plumbers, and electricians to build a property from scratch. Conversely, purchasing an apartment involves minimal construction work, mainly focusing on interior furnishings and potential electronics if rented out furnished.

Appreciation Potential

Plots generally boast a higher appreciation rate compared to apartments because of their limited supply and enduring value. Unlike apartments, which may depreciate over time, plots tend to maintain or increase in value, particularly in emerging areas.

Freedom of Modification

Investing in a plot grants investors the freedom to design and modify properties according to their preferences, whether it's a single villa or a multi-unit rental building. Apartment owners, however, have limited options for modification, primarily confined to internal changes.

Financial Considerations

While securing a loan for an apartment is typically easier with lower interest rates and longer repayment periods, plot loans involve more paperwork, higher interest rates, and shorter repayment periods, covering only 80 per cent of the cost.

Income Potential

Generating rental income from a plot requires time for construction before yielding returns, whereas apartments offer immediate rental income potential.

Delivery Time and Risk

Plot delivery is almost immediate, while apartment possession may be delayed by several months or even years, posing a level of risk for investors.

Tax Implications

Investing in a plot may not offer immediate tax relief, but constructing a house on the plot can provide tax benefits. Apartments offer tax breaks on loans, including principal, interest, and additional costs.

Legal Considerations

Both purchasing a plot and buying an apartment within a building come with legal challenges. Plot buyers may encounter hurdles in the transfer process and verifying ownership, while apartment buyers face the risk of future disputes or issues, highlighting the importance of thorough due diligence.