Buying property has long been considered one of the most significant investments in the market. Plot investments have long been seen as an excellent method to generate wealth in India. Plot investments are still seen by many as a dependable alternative, despite the abundance of investment options and several technological improvements. It can help guarantee your future by generating money over time. Given that purchasing a plot remains the most important financial objective for Indians, let’s examine the benefits and drawbacks of doing so in more detail.
Advantages of buying a plot:
Cheaper compared to other investment options in the real estate market:
Real estate itself isn’t necessarily cheap compared to other investment options. There can be significant upfront costs associated with buying a property. However, there are some ways to invest in real estate that might be considered cheaper than traditional methods:
- REITs (Real Estate Investment Trusts): These are essentially shares of companies that own and operate real estate. You can buy REITs like stocks, and they offer the benefit of diversification and potentially lower investment minimums compared to buying a whole property.
- Fractional ownership platforms: These allow you to invest in a portion of a property, sharing the potential profits and risks with other co-owners. This can be a way to get started in real estate investing with a smaller amount of money.
You can get more from it:
You’re right, real estate can offer more than just lower upfront costs compared to some investments. Here are some ways you can “get more” from real estate:
- Passive income: Owning rental properties can provide a steady stream of rental income, while REITs often distribute dividends. This can be a great way to generate additional income.
- Potential for appreciation: Over time, property values tend to rise, offering the potential for capital gains when you sell.
- Tax benefits: Real estate investors may qualify for certain tax deductions, such as depreciation and mortgage interest.
- Hedge against inflation: Real estate can act as a hedge against inflation, as property values often rise with inflation.
- Tangible asset: Unlike stocks or bonds, real estate is a physical asset that you can see and touch. This can provide some investors with a sense of security and control.
You will get higher returns on your investment:
You must pick the perfect location if you want to increase the returns on your investment. Numerous variables influence the pace of appreciation, which varies depending on the location. Plots in the real estate market, however, will appreciate more quickly than other possibilities as building quality declines with time. The entire cost may also be affected by the infrastructure development initiatives that the local government has started.
Lesser Maintenance:
“Lesser maintenance” describes the decreased amount of maintenance or repairs needed for a certain item, system, or procedure. It means that the item in question is made or functions in a way that reduces the number or difficulty of maintenance duties, saving money, time, and effort. This holds for a variety of objects, including infrastructure, software, hardware, and even natural systems. Using long-lasting materials, putting in place effective designs, carrying out routine inspections, and applying preventative maintenance methods to deal with problems before they worsen are common strategies for attaining minimal maintenance.
You can get it faster.
In general, real estate investing is not a good way to get rich quickly. Real estate investing is a long-term endeavour; while there are strategies to maybe turn a profit more quickly, these strategies frequently include higher risk. Let’s face it, folks:
Market Appreciation: Real estate often makes money through appreciation, which is a time-consuming process. If you want to see major value gains, you’re probably looking at years, not weeks or months.
Fix and Flip: This tactic involves purchasing a home for less than it is worth, making fast repairs, and then reselling it at a profit. Even though they can provide profits more rapidly, effective house flips need extensive remodelling experience, an excellent eye for inexpensive houses, and the capacity to move swiftly in a market that is advantageous to the seller.
Disadvantages of buying a plot:
Most cities are running out of plots.
In many places, there is a tendency toward a shortage of land, particularly for cemeteries. There are several reasons for this:
Urbanization: As cities expand and engulf surrounding territory, fewer areas are set aside for cemeteries.
Growing Population: As more people live in cities, more funerals and cremations will need to be performed.
Cultural Preferences: Historically, a lot of civilizations have preferred burials over cremations, which need less space.
Risks of encroachment in some cases:
Even with the rules in place to stop invasions, these kinds of actions nevertheless happen in some places. In India, reports of land seizures occur every year. This demonstrates the dangers associated with plot investment. However, by using surveillance techniques, you may significantly lower the chance of incursion.
- Disturbing Human Remains: Construction or development activities could accidentally disturb buried remains. This can be disrespectful to the deceased and their families, and may also violate laws protecting burial sites.
- Property Damage: Cemeteries often contain headstones, monuments, and other structures. Encroachment could damage these historical or sentimental markers.
- Safety Hazards: Unearthing burials or disturbing the ground can release harmful materials or create unstable areas, posing safety risks for workers and the public.
- Emotional Distress: For families with loved ones buried in the cemetery, encroachment can be emotionally distressing. It can feel disrespectful to their memory and disrupt the peacefulness of the cemetery.
Non-liquid asset:
Real estate: Selling a property may be a drawn-out process that frequently entails inspections, negotiations, and intricate legal issues.
Private equity: It may be difficult to sell investments in privately owned firms rapidly due to the absence of a public market.
Collectables: Certain products, such as rare coins, artwork, or antiques, may have a specialized market, and it may take some time to locate a buyer ready to pay the asking price.
Securities that are restricted: Until specific requirements are fulfilled, securities that are subject to resale restrictions—like those obtained via private placements—may have restricted liquidity.
Due to lock-up periods or redemption limitations, some investments in alternative assets, such as hedge funds or private real estate funds, may also be non-liquid assets.
Finance-related problems:
- Loss of employment or insufficient income can be a big obstacle, making it hard to pay for necessities.
- Unexpected expenditures: Unexpected charges like auto repairs, hospital bills, or other fees might throw off your finances and cause disruptions to your budget.
- Too much debt might hinder your capacity to save and invest for the future. Examples of this include high-interest credit card debt, school loans, and personal loans.
- Overspending or not sticking to a budget: A lot of people find it difficult to regulate their spending patterns, which makes it difficult to save money and forces them to live paycheck to paycheck.
- Lack of emergency savings: If you don’t have an emergency fund, you may find yourself in a difficult financial situation when unforeseen circumstances occur.
- Not saving enough for retirement: To prevent financial difficulties in later life, it is essential to save a sufficient amount for retirement.
- Financial illiteracy: Making wise decisions regarding debt management, investing, and saving can be challenging if one is ignorant of personal financial principles and resources.
Infrastructure development plans:
Market analysis: To get insight into price patterns, supply-demand dynamics, and average time on the market, examine recent sales data for comparable homes in the neighbourhood.
Examine any planned or current neighbourhood infrastructure improvements, including new roads, extensions of public transit, schools, parks, and commercial developments. The general appeal of the neighbourhood and property values can be greatly impacted by these improvements.
Potential for Neighborhood Growth: Assess the neighbourhood’s future growth by taking into account variables including employment prospects, demographic patterns, and the neighbourhood’s closeness to commercial districts, dining options, and cultural landmarks. You should also take into account the neighbourhood’s crime statistics and educational standards.
