Investing in the plot is a very popular and oldest method of investment in India. Creating an asset by investing in a plot is a good idea of creating wealth for the long term. Individuals buy plots with an aim to create asset or property for their children.
Individuals such as NRIs or a senior citizen who find it difficult to maintain a flat or tenants prefer investing in plot. However, it has its own advantages and disadvantages.
Here are advantages and disadvantages to know before investing in land.
If you are planning to buy a plot in a city, land value is expected to rise quickly depending on the location. The land is believed to appreciate depending on the location and development in that area.
The value of the land can be different depending on the size you are looking. If you are planning to buy a plot in a prime location, the value of the land itself can be very high if it is available.
Purchasing cost of land is comparatively lower than flats and can be affordable. Individuals with a lower budget can also consider investing in remote and developing areas where there are chances of development in coming years.
Individuals can buy a land now and build a house later when he accumulates enough money for construction.
Resale value of vacant land is higher when compared to resale in flat or constructed home due to no depreciation.
Vacant land can also generate income if it is located in prime location. The land can be used as a parking area, Nursery etc.
There will be liquidity issues when you invest in land as there will be no buyers and sellers immediately available. Individuals can avail loan from banks and financial institutions for the purchase of land, but there will be no tax benefit available on it as it is applicable in case of buying a home, or flat.
Note that land is prone to litigation, and it is difficult to get out of it. Make sure you have secured your areas and checked the property documents before opting.
Land generates very low income when compared to flat or house which can give good returns when rented.