Flats or plots: Which investment has the highest ROI?
The age-old question in the real estate game: plots or flats? It’s a battle that’s raged in family dinners and investment meetings for years, each side armed with their arsenal of pros and cons. Today, we’re diving into the trenches, examining why investing in plots might just hand you the golden key to financial freedom.
As cities evolve, your plot / Land can transform into something even more valuable. Need space for a shopping mall? Go for it! Want to build a senior living facility? The sky’s the limit. Flats, however, are stuck in their concrete shells, forever limited by their initial design. Plots / Land hold the potential to become family heirlooms, passed down through generations. Conversely, flats lose their charm over time, often becoming outdated and less desirable.
Today let’s compare the risks and rewards between steady steam of passive income from real estate and investment in Land / Plots. And talk about the capital requirements from an investor’s point of view, risk and capital appreciation with some real time examples.
Scenario 1
A man bought a 2BHK apartment worth 50 Lakhs near East Tambaram, he purchased it in the year 2015, and received a rent of 10,000 per month, from the year 2015, the property would have had an annual maintenance cost of 20,000 which includes painting, electrical works, plumbing works and whatever requires to keep the flat in good condition. Let us assume an increase in maintenance cost by 5% per year for example.
Now in an ideal world, the tenants pay rent on time and we assume that the flat is constantly occupied but as we know the world is not ideal, the risks associated with leasing the flats are,
Scenario 2
A plot was purchased in Aura Space- 1( Ponmar) by a customer in the year 2014, for the price of 1,200 per sq. ft with a total amount of 50,40,000. The investor would have acquired 4200 sq. ft which is two grounds in his name which includes minimal maintenance. Also after ten years of his purchase, the value of land increased by 166% which is.
Original Purchase Price of Land/Plot in (2014) = Rs 50,40,000 (4,200 sq. ft)
Current Value of land (2023) = Rs 1,34,40,000 (4,200 sq. ft)
Therefore, the percentage of appreciation in the land value between 2014 and 2023 is 166%
3. Lower upfront cost: Land/Plots are often cheaper than Flats, leaving room for future appreciation value etc.
Conclusion :
Considering both options, buying a plot/Land may present more advantages than buying a flat. If you are looking for a long-term investment, buying a plot/Land can be a more beneficial choice than buying a flat. Are you ready to break free from the ordinary and build your dream home on your terms? By grabbing an empty plot of land and constructing your house from scratch. What do you prefer to have an open sky or a shared ceiling? Picture your ideal choice: a plot or a flat? Keep in mind what you like best “flats vs plot” Let us know Share your vision for your dream home in the comments below and let’s make it a reality!
