Flat or land: What should people in small towns buy?

 Buying flats is an easier choice for those who live in big cities as compared to those from small towns who can also opt for land available at much affordable prices. But constructing your own house is not simple. It is a complex process both in terms of finances and legalities. Real estate companies are building multi-storied apartments in many Tier-II cities across the country, putting buyers in dilemma on whether to invest in land or in a flat . So, here are a few points that should help you decide.
 
Bank loans: The thing to remember is that while several banks offer loans to buy a flat, not many offer loans for plots.
 
Constant monitoring: Also, building your own home demands not only money but constant monitoring of the construction process. Ashwinder Raj Singh, CEO, Residential Services, JLL India, says, "When you buy a plot, you have to regularly monitor the construction activity and there are chances of a project going over budget since a common man does not have the experience and expertise of constructing properties on a regular basis. But with a flat, a fixed amount is to be paid to the builder for the basic set of requirements that are pre-decided as per the agreement."

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Legal formalities: Besides, converting a plot to a residential area requires several permissions and clearances from civic bodies. "Unlike in the case of flats where the builder is responsible to get all these in place, you would need to secure this yourself if you plan to build your house in your plot. This is time-consuming," adds Narasimhan.
 
Selling price: When you construct your own home, you do it as per your liking and taste, which may not necessarily appeal to a potential buyer when you decide to sell it. He will then have to either invest more in renovating it or pulling it down altogether to build a new one. This can impact the selling price of the property to a great extent. This disadvantage is absent in the case of apartments because they come with a fixed structure that's part of a building and, hence, easier to sell at the market price without much bargaining.

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Higher resale value: Amenities impact the resale price, too. "Prices of flats rise higher and faster given their limited number compared to independent houses which may not boast extra facilities that a housing society provides. The only advantage plots have is that the buyer gets to own the land and can construct a new house or an entirely new building to make profits," Singh says. Narasimhan believes that houses have a higher resale value than flats, "primarily because the person buying the house also becomes the owner of the plot of land on which the house has been constructed".
 
Multiple floors: A flat's worth keeps increasing consistently since it is always in demand due to its affordability factor. However, the owner of a plot can make profits on his investment if he plans wisely by constructing multiple floors and renting them out. Also, as lesser number of houses is being built on plots, their demand is rising amongst those who can afford them. Purchasing plots purely for investment purposes can yield healthy profits, too.

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Risk of fraud: It is imperative to be sure that the plot one is investing in is free of all legal complications; that the seller has all the required deeds and documents in place to sell the land and there is no dispute - criminal or civil - associated with that piece of land. "A lot of frauds happen where the buyers are duped into buying government-owned lands or plots under legal scrutiny. This is normally not the case while buying a flat, as necessary permissions are in order from the municipal authorities and a builder only constructs and sells the property after undergoing due diligence in most cases," Singh says.

Security: The other factor is security. A housing society is well-protected and guarded round the clock and has state-of-the-art security systems and a lot of families around, which means the probability of something untoward happening is low. Living independently means investing in security from your own pocket.
 
Appreciation: Choose the best option after analysing your needs, financial abilities and liabilities. If you are merely looking to invest your funds for a few years until you are ready to invest in a flat, a plot in a location that will see appreciation in the future would be a good idea. However, if you are looking for regular returns, you may want to consider investing in a flat.

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