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What’s the best way to invest in Real Estate: Buying a Plot or a House?

Posted by vbvr on August 6, 2022

People planning on investing in real estate often face the dilemma of choosing between buying a plot or a house. Vacant land is often considered a less profitable investment than alternatives. However, in reality, investing in land can be much more profitable and can be a very lucrative endeavour. 

One of the most important factors that investors should consider when it comes to diversifying their portfolios is a land/plot investment. Investing in land can be a wise decision for several reasons. First, the land is a physical asset that can be held onto for years. Second, the value of land typically increases over time. Third, it can be used as collateral for loans. Fourth, there is less competition in the land market than in the housing market. Finally, it can be a hedge against inflation. Below are a few more reasons to prefer land/plot over a house.

Easy maintenance

Compared to houses or even flats, having a plot is much easier to maintain and doesn’t need insurance. It doesn’t mean that you can just forget about it once you buy it, but it’s easier to maintain and is hassle-free. Houses and flats require a lot of upkeep and may have to deal with issues related to tenants. When it comes to land, the maintenance expenditure on a piece of land is almost zero as there are no utility bills and the property taxes are also on the lower side. And if the land piece is located in a secure location then you don’t have to worry and spend on its safe-keeping. A simple boundary wall will keep the illegal encroachments and any other major damages away. 

A substantial asset

You’re less likely to experience loss when you invest in vacant land as opposed to stocks. With land, there’s no such thing as suddenly disappearing or losing its value. In the event of global economic instability, the value of land still won’t drop. In fact, it often increases. When you put your money into vacant land instead of stocks, you’re investing in something with much less risk. The value of land can’t disappear overnight the way stock values can. And even if there’s a worldwide economic downturn, the value of land usually goes up, not down.

Higher resale value

If you are considering investing in land, remember that it is generally easier to sell a plot than a house. The reason is that the value of buildings tends to depreciate quickly, while that of land tends to increase over time. Your house/flat will not keep its value even if you can rent it out constantly. The value will go down because of the old construction, a design that is not trendy anymore, and regular wear and tear. Additionally, it may be tough to sell an older home as you might have to put money into repairs and sprucing it up to make it more appealing to buyers. Coming to land, the value of land appreciates more rapidly than that of houses or flats. This is especially true if the land is located in a desirable and populated area. There will always be many buyers who would rather purchase land and build a custom home to their specifications. While there may not be any immediate income from the land, it is still a wise investment for the future as the resale value will more than makeup for the initial cost. 

No complicated Government rules and regulations

You don’t need to stress over Government guidelines to keep up with the safe ownership of the property. As a landowner, you don’t have to worry about following rules and regulations to maintain risk-free ownership of your property. This means that you also don’t need to hire lawyers to help you ensure compliance with government requirements.

Easier to sell

It is easier to sell a plot of land than a house because there is less inspection involved for the buyer. A potential buyer would only have to do a few things before they can actually purchase a plot, such as check the availability of water, gas, and other essential services. They would also check if there are any outstanding payments and criminal or civil litigation issues about the land.

Despite the multitude of investment options available, land/plot is the best choice for many investors. Depending on your strategy, the return from land investment can vary. For instance, if you are planning on using it as a rental property, make sure that it has various features that will attract potential tenants. Before you buy land, it’s also important to consider other factors such as its proximity to a business hub or an urban center.

If you resonate with our article and are planning to buy a piece of land, do contact us to check out the options available with us.

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