For new investors, the debate between buying houses or land can be quite complex.
Though, what the majority of people fail to realize is that investing in empty land can be quite profitable than the alternative. However, it remains a generally overlooked investment opportunity.
Whether you are purchasing land to construct a house or as an investment, the following are some of the things you should know before you make any big decisions of a lifetime.
Plot Land is Much Easier to Maintain
Plots, without any doubt, are much easier to maintain than flats or houses. Of course, it does not mean you can purchase a piece of land and then completely forget about it. But compared to other types of commercial and residential properties, having a plot is relatively hassle-free.
For novices, there are a lot of things to look after when it comes to houses and apartments. Though both of them require a lot of maintenance, if you intend to rent out your house for a quick return on your investment, keep in mind, you would have to deal with everything ranging from wiring issues and minor plumbing to major remodeling and renovating rooms.
Then there is the matter of dealing with tenants, some of whom can be really difficult to negotiate with. While many people take care of their rentals like it is their own place, others may not be as courteous. As a landowner, if you decide to rent out your property, you will be responsible for fixing the water damage, peeling paint, discolored wallpaper, scratched floors, worn out carpets, and other necessary issues that are bound to occur with time.
Meanwhile, if you are purchasing land for investment purposes, then you do not even have to visit it often. There are no such utility bills to pay, and property taxes on plots are also comparatively low. Further, if your plot is in a secure location, which means there is a boundary wall in a housing society, you only need to check it out once in a while to be sure there are no illegal encroachments or any other prominent damage – like a burst pipeline. If everything appears fine, you are pretty much good to go.
Plot Land Has a Higher Resale Value
If you are doubtful about whether to invest in a house or land, just remember more often than not, it is quite easier to sell a plot than it is to flip an apartment or a house. The reason is that the resale value of buildings depreciate really fast, whereas the value of land progresses with time.
While you might be able to instantly rent out an apartment or a house for a steady flow of cash, your property will lose its value with time. Its market value will decrease on account of old construction style, outdated design, and usual wear and tear. Construction of new, latest modern projects in the area offering better facilities could also have a negative effect on the price of your residential unit.
While, compared to flats and houses, the value of land appreciates rather swiftly. That is particularly true if it is located in a popular area though there is always a large number of affluent customers who prefer buying land before building a house that meets their needs.
Not to mention, selling a quite older house could be a bit of a hassle. The reason being most house owners have to spend money and time fixing major problems and making it look presentable to potential customers. This is seemingly the most important point in buying a house vs. land debate.
Though there is no proper cash flow right away, getting land is an excellent choice for those interested in long term investment. Although a plot may just sit there for a while without getting any profit, the high resale value will makeup for it.
You Can Call Your Own Shots
If you are acquiring land to build a house, you have full liberty to do as your heart desires. Regardless of its size, it is up to you whether to purchase and hold land as an asset. After all, it is up to you to either sell it or construct a building on it. Not to mention, it is usually cheaper to purchase land and build a house.
Of course, you will have to be cautious about not going over your budget, getting permits, and ensuring the rules and regulations laid out by the authorities.
Though, you would still have an opportunity to design your home based on your personal choices. For instance, if you want to build a double story house with a front garden, you are free to do so. Furthermore, if you have a particular floor plan in mind or want a pool in your backyard, you can include that into your design.
Although, if the size of your plot is somewhat small, you can construct a multi-story building. As a fact, you can even rent out a unit or two while living there yourself.
Furthermore, as you will be able to call your own shots, you will not have to think twice about using many expensive but durable materials. The same goes for fitting solar panels to save up on your electricity bill. Though getting a solar energy system is a big commitment, most homeowners may not agree to making such major changes to their property. But, if you own the property, you can consider making this Eco-friendly one-time investment without much interference from others.
Plots are Relatively Easier to Sell
Aside from having a significantly higher resale value, plots are also comparatively easier to sell. That is essential because the inspection process is much simpler and a lot less complicated. A potential plot customer would only check the location of the plot, availability of certain facilities such as water and gas along with any outstanding payments. They may also confirm if there are any ongoing criminal or civil litigation issues that they need to worry about.
However, if you try to sell a house that was previously occupied either by tenants or you, the client would most likely do a thorough inspection of the structure’s foundations, electrical wiring, flooring, plumbing, and so on.
Of course, investing in an empty land has its own pros and cons. You would not be able to make money through it instantly. But you can actually earn a lot more profit if you just let it sit there for a while.
Nonetheless, the winning argument in the buying house vs. land debate lies in the reason you are purchasing the property. If your intent is to construct a house and rent it out, it may save you some cash and time if you just go ahead and purchase a house rather than a plot. While, if you are looking to make an investment, purchasing a plot might be a much better option.