Flat vs Plot Investment in India - Hindi - YouTube

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Namaskar, my name is Mukul, and welcome to Asset Yogi.

Where we unlock the knowledge of financial and real estate.

In this video, we'll discuss that which investment is better among Flat or Plot.

We'll see a comparison.

Many subscribers have already requested this topic

So in this video, we'll see the returns and risks involved.

And I already made videos on documents and processes

If you haven't watched my video on 'How to invest in plots' then do watch it.

Otherwise, you can also watch videos on How to invest in 'Ready to move' and 'Under construction properties'

So in this video, we'll not go into documentations and processes.

We'll focus on the risks involved and returns on flats and plots.

So stay tuned with this video till the end

Let's switch to the blackboard.

Now let's compare Flat as an Investment and Plot as an Investment.

Which one is better?

If we talk about flexibility, you don't get flexibility in flats to modify or construct according to your choice

Because if you will buy ready to move property,

then you have to accept the construction and interiors as it is

You don't have much scope to change anything.

Whereas in the case of plot, you can construct or modify according to you

because it's your plot and you can design its layout as per your choice

But even if you go with builder flat, builder construct it according to his convenience

And you don't have much scope to change designs as per your wish in ready-to-move properties.

Now let's talk about returns.

In flats, the returns are very moderate but definitely better than FD.

Now I'm not saying that you'll get better returns every year.

We're talking about an average of 20-25 years.

If we see the average of the last 20-25 years, then you get 8-12% returns

It depends on the area. In any city, it might be high and in another, it might be lower.

Returns are better in the cities where there are more jobs,

good economic corridors, and better infrastructure.

So you get an easy return of 8-12% per annum in the case of ready to move properties

If you get delivery on time in case of under-construction property,

Then you may get good returns even up to 15%.

Because in initial years, the returns are good.

Now let's see the returns in the case of plots.

In plots, you get better returns over 15-20% per annum

But here also, you won't get these every year

It is an average of 20-25 years.

Like if we talk about stocks, we say that there are average returns of 17% in the last 30-40 years.

So it's not like that you'll get these returns every year

So in any year, you get returns of 25-35%,

in any year you may get returns of 5% and in any year, you might be in loss.

So similar scenario is there in flats and plots as well.

So since real estate is a cyclical industry

so sometimes the returns may be flat or in any year it may go up to 20-25%.

So overall, returns in the case of flats are less than plots.

In flats, you'll get returns of around 8-12% and 15-20% in the case of plots.

But be a little careful in the case of plots

because you'll get good returns where there are plans of economic corridors

And you shouldn't invest in any economically backward area

Because there may not be any growth for several upcoming years.

I also made a detailed video on 'How to buy a plot' so you can watch it.

And I also made detailed videos on 'Ready To Move' and 'Under Construction Properties

So I am not going into much detail about what is the process, what are the risks you should avoid?

We're only talking about returns, risks, and benefits of both.

Now let's discuss the risks involved.

The lowest risk is in Ready to move properties

because there's no involvement of any builder and you can do due diligence on your own.

But risk increases in Under Construction properties and the risk is mainly delay in possession.

So if you took a home loan, you have to bear interest cost + the rent of your current place.

So this is the risk involved in under-construction properties

But if you want minimum risk, then you can buy ready-to-move property.

The risks involved are more in plots in fact more than Under Construction Properties

Because the biggest risk here is of title.

Many times, it's not clear that whether the title of the property is clear or not.

If the builder didn't take approval and sell you plot on agricultural land in the name of residential land.

One more big risk is encroachment.

If you bought a plot in any area and you cannot visit there regularly

Then there may be any land mafia who can encroach your land

So if you cannot handle these types of risks then you should not invest in plots.

Let's say you are too busy and you cannot manage plot investment,

Then flat investment will be better for you.

So I discussed all these risks in detail and how to avoid them.

I discussed ready to move and under construction properties in these videos

And I made a video on 'How to buy a plot' so you can watch that as well.

In which I discussed all these risks and how to avoid them.

Now let's move on.

Let's discuss Rental income.

If you want immediate rental income then you should invest in flat

In plot, rental income is not possible

Or if you construct that plot and then give on rent then it becomes plot + construction.

But here we're only discussing plot investment

Because if you will construct on the plot then the cost becomes higher.

So that is like investing in a flat and that becomes a built-up property.

Now let's discuss Tax Benefits.

You get 2 benefits in a flat.

If you borrow a home loan,

then you can claim principal repayment under section 80C and interest payment under section 24.

But if you invest only in a plot, then you don't get any tax benefits.

You will get tax benefits in case of the plot only when your construction will be completed.

You get tax benefits only after completion

So it becomes the same thing if you did construction and it becomes a built-up property.

So you won't get any tax benefits in the case of the plot.

Now let's move on.

You get a bank loan very easily in the case of a flat and at the lowest interest rates.

At the lowest interest rates of home loans.

And because you get a loan very easily and up to 90% cost of the property,

That's why you don't need upfront capital.

So if you are buying a flat of Rs. 50 lakhs, then you will get a loan of Rs. 45 lakhs.

So you just need to add Rs.5 lakhs from your pocket

But in the case of plot, you don't get an easy loan,

and even if you get it, you get a maximum up to 60-70%

That's why your interest rate is charged high

because the plot is considered as a riskier investment

And you need high upfront capital.

Let's say you want to buy a plot worth Rs. 50 lakhs

then either you have to pay Rs. 50 lakhs from your pocket

Or by chance, if you get a loan, then you'll get a maximum loan up to Rs. 30 lakhs.

So you have to arrange Rs. 20 lakhs on your own.

So if you have less amount and you are in a working-class then it's better for you to invest in a flat

But if you want to take a risk and expect better returns then plot investment is better.

Now let's talk about Security.

Security is high in the case of flats because there is 2-3 tier security, guards, cameras, etc.

But in the case of the plot, security is less and that's why chances of encroachment increases

And secondly, if you do construction over there

and the place is at a non-gated community,

Then the risk of security is always there.

So keep all these points in mind.

If we simply say, 2 points are very important here.

Return and Risks.

So if you want to avoid risk and you expect moderate returns

You don't want much returns but less risk

Then you should invest in a flat especially

if you are in a working-class and you cannot take care much of it

Otherwise, if you want more returns and you are ready to take risks

then you should invest in the plot.

So that's it in this video.

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