Not too long ago, the value of a man was determined by whether or not he owned his own home and the ground on which it stood. The majority of modern-day nuclear families opt to find housing in an apartment or flat because it is the most convenient option. They may be purchased for any amount of money, require little in the way of upkeep, and come equipped with a variety of amenities that are suitable for every member of the family. The habit of living in close quarters as part of a community has taken over the residential market in the major cities of India; nevertheless, many individuals, especially the elderly, still treasure the desire to acquire land and construct their ideal home on it. Before making any significant investment decision, it is necessary to evaluate a number of significant factors, including the expense of construction, the rate of appreciation, the availability of financial help, and the income. When one purchases a freestanding plot, they are granted the unrestricted right to construct a home in accordance with their own preferences and financial constraints. Because of this, the houses that are created are of varying sizes and shapes, giving them an appearance that is disorganised, which is neither inviting nor fascinating enough. On the other hand, a flat is a remodelled, multi-story building that provides the entire property with a certain degree of uniformity and symmetry, in addition to making it more aesthetically beautiful. This type of building is known as an apartment complex. The property offers sufficient space for designated areas and vegetation, in addition to the different amenities that are accessible, both of which contribute to the overall pleasant experience of living in apartments.
When it comes to real estate investments, apartments are preferable to plots.
When it comes to the resale value of a house, the majority of people choose to buy a plot and build their own house as opposed to purchasing an already-built house. This is because of the flexibility that comes with building your own home. On the other hand, despite the rising cost of construction and the climbing value of land, there are still customers interested in the construction of independent residences. In the case of a home, the value is proportional, both directly and indirectly, to the amenities that can be found within the home as well as the accessibility of the neighborhood.
In the case of flats, the value of the property rises as a result of an increase in the demand for flats in that particular location. This desire for flats is what drives the value of the property.
Rate of Return
The value of the land increases in the case of an independent house situated on a plot; nevertheless, the value of the asset itself typically decreases as a result of wear and tear. This is because of the value of the land. Due to the fact that space planning, building quality, and amenity quality all play a significant role in valuation, special attention should be paid to each of these aspects. Differences in demand and supply are another factor that contributes to the higher value of the land in contrast to the apartments. In addition, the owner of the house has the opportunity to apply for authorization to add floors to the structure, after which those floors might be rented out or resold.
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Costs of Missed Opportunities
Constructing a home from the ground up is an extremely difficult undertaking. Obtaining the raw materials, locating suitable labor, and engaging in creative problem-solving with the architects are all activities that require direct supervision. When one is employed, it is quite impossible to personally supervise everything that is going on. Although there have been advancements in building technology, these newer methods cannot be employed to create freestanding homes because doing so would be prohibitively expensive. When a person puts their life on hold to construct a house for their family, they incur significant opportunity costs as a result of this decision.
On the other hand, flats do not have any of these inconveniences. After taking possession of the property, one is free to move in and decorate it in accordance with their own way of life and aesthetic preferences without having to sacrifice their ability to continue working.
A buyer is able to secure financing to purchase a plot; however, the loan will only be granted if the land in question has been given the green light by the relevant municipal body. The maximum Loan-to-Value (LTV) that a bank will allow for a property is 80%, but for resale land, the maximum LTV is closer to 50%. There is a maximum of 15 years left on the loan after it is paid off.
Buyers of home loans are eligible for funding of approximately 80–85%, and the maximum loan tenure for a condominium can be as long as 30 years.
Pros of Using Plots:
The owner of the plot has the freedom to build their home in a way that is suitable for both their lifestyle and their financial situation.
The History of Land–
Land is in constantly high demand because of its scarcity and the high appreciation value it offers as a result of the fact that land does not lose value over time.
After the final payment has been made, the buyer is discharged from all financial obligations, including the obligation to pay maintenance fees. Both one-time and recurrent expenses are waived, and no one is allowed to meddle in the decisions made regarding the storyline.
The Downsides of Plots:
The Problems Caused by Litigation–
A greater potential for legal trouble is associated with plots. There is a possibility that the property will be unlawfully appropriated by encroachers or perhaps the land mafia if the buyer does not construct a border around the property or if they do not visit it on a regular basis. Or, even worse, it could already be the land of another person or be used for agricultural purposes.
Low rental income–
Plots typically result in a relatively meager income in the short term, therefore purchasing apartments is the better choice for anyone who wants to ensure they have a stable income in the near future. Only in the long run and under conditions that are advantageous to the market will one be able to realize the benefits of purchasing a plot.
It might be challenging to obtain financial help for the purpose of purchasing a plot because financial institutions typically avoid providing loans for the purpose of purchasing a plot. It is recommended that a first-time buyer have a financial backup for the initial investment and not rely only on banks and NBFCs for financial aid because purchasing a plot can be a tough endeavor for a person who is making their first real estate purchase.
The associated tax benefits of purchasing a plot are contingent on the completion of construction of the house that will be built on the plot; however, even if construction is completed, the benefits will only be available for the first year.
When compared to purchasing a flat, purchasing a plot requires a great deal more research and investigation. It takes a trained professional who is familiar with the system to decipher the land records in India because these records are convoluted and difficult to understand. In most cases, the most significant obstacles in real estate transactions involving land in India are land records.
Assistance from banks
Getting a loan from a bank to purchase an apartment is not difficult. The maximum loan term for someone looking for a home loan is thirty years, and they can borrow up to that amount.
Sources of consistent income-
If the apartment is rented out, the owner will start bringing in a healthy income from the very first day they take possession of it. With more recent laws in place, the likelihood of legal conflict is significantly reduced.
Because there is such a huge demand for apartments, their value continues to go up over time. Flats are becoming more expensive at a rapid rate since individual residences do not have access to the additional amenities that are provided by residential societies. Flats have a higher resale and rental value than single-family homes since modern nuclear families choose to live in them due to the convenience and safety offered by these dwellings, as well as the fact that they are better suited to their way of life. As an illustration, the rental revenue from a flat in the Yogeshwar group project will be more than that of an individual house located in the same neighborhood.
One should never pass up the opportunity to make an investment in a property that is being constructed by builders who have a history of meeting their deadlines. It is important to consider the worth of the property rather than simply searching for the one with the lowest price per square foot while evaluating it.
Low degree of flexibility
Flats are typically constructed according to a standard design that is intended to appeal to a specific demographic of purchasers. There are no options available to customers in terms of style and layout, which may be a deal breaker for some buyers who want to customize their home.
The apartment building’s homeowners’ association has the right to intervene in any internal conflicts that may arise involving ownership, usage, or upkeep.