Why investing in land is better than buying a property?
Often people who intend to invest in real estate face the dilemma of investing in land or buying a property. Different investment is appropriate for different people. However, by comparing the two options we can provide some insight into what is better, investment in land or property.
Buying a plot of land is recommended investment options for young investors
Both the investments have their pros and cons. But in general, investment in land is considered better than property for people between the age of 30 to 45. Here are some reasons why it is so.
Price of land has been consistently appreciating and is expected to go up in future as well. The appreciation in the prices of land is double that of properties because of the demand and supply gap. The land would yield better returns than property.
A large initial capital must be invested to buy a property and this may turn into a bad investment if you would not generate good returns. However, capital investment in land is lower in comparison to property.
Maintenance cost of land is very low compared to properties. The building would age with time and result in higher maintenance costs. The return value of the property might decrease as its new look would disappear.
It is easier to sell the land when the prices are high because of the high demand of land but selling a property at the best price is not so easy because of the different demands of customers.
However, some care must be taken while investing in land
Do a basic check on the ownership and title. An investor must do a good and detailed research about the land and the owner before buying the land.
Buy the land by taking loan from the bank, this will keep a check on your monthly disposable income and force you to manage your cash flows. Moreover, inflation also favors borrower.
To avoid falling prey to land grabbers, make sure that you buy land in a place where either you or someone on your behalf can oversee the land.
Ensure the land is not earmarked for a government project or fall in a politically or socially challenged sector.
Even though investment in land is a good source of income, don’t make it your primary investment because it is illiquid or cannot easily be sold.
One thing you must not forget is that loan taken for buying a land have no tax deductions.
Buying a land is not a good option if you want income or return on investment in present.
