Retirement is a significant point of transition in the life of every real estate investor. Weaving a thoughtful and memorable investment experience during this phase can lay a deep impact on your life ahead, not only in terms of money but also by ingraining a deep sense of security. You might, however, wonder as to which type of property would be the best to invest in.
Should I buy a residential plot or go for an independent house instead, you may ask? Read on to understand!
Should You Buy a Residential Plot in Kolkata: Opportunities and Obstacles
- Flexibility to Design
Investing a handsome amount in a residential property makes little sense if you do not have the flexibility to modify it as per your desire. Unlike a built house, a residential plot allows you to develop a property that you and your family have always dreamt of. You get to choose whether you want an island kitchen, a study room, a garage, or an attic, free of restrictions.
- A Promising Appreciation Potential
Hard-core real estate investors prefer to buy a residential plot over a ready property primarily due to its high appreciation potential. In addition to Rajarhat Newtown, the value for properties located in other regions of the state, including Garia, Howrah, and Madhyamgram have shown a remarkable spike in recent years, and are only expected to rise over time.
- Considerably Low Initial Cost
The price per square foot of a residential plot is generally lower than that of an independent house, which makes it a great choice for retirees seeking to save for a secure life post-retirement. This is because a residential plot only accounts for the land’s worth, without any construction or added features.
On the other hand, an independent house factors in the cost of construction and any existing amenities, in addition to the land value. Once you buy a residential plot at a lower initial cost, you can develop the property by-and-by as it deems suitable to your pocket.
- Tax Implications
When you take a loan to buy a plot, you won’t receive any tax exemptions unless you construct a house on it, in which case you’ll be eligible for tax deductions on the loan amount for construction after its completion.
Plus, plots above specific configurations require you to pay wealth tax for it if it remains vacant.
- Additional Responsibilities
Purchasing a residential plot necessitates planning, designing, and constructing, which can be an overwhelming affair to handle, especially after retirement, when you may lack the energy and time for tedious processes, such as gathering labour, procuring raw materials, and looking after the complex paperwork.
Merits and Demerits of Buying an Independent House
- Strong Potential for Passive Income
Renting out capacious properties is a great way to earn passive income. If you have a larger independent house, you may decide to rent out a portion of the property. This additional income can assist to supplement your pension or savings.
Besides, it will ensure that the house is well-kept and secure even when you are out of town. Additionally, you can always make aesthetic improvements in the property, or incorporate an amenity or two to fetch a greater rental value.
Pre-built homes provide owners with the unparalleled convenience of moving in immediately, free of responsibilities, so they can enjoy the second inning of their lives without any exhausting delays.
- Ready-to-use Amenities and Infrastructure
Independent houses often come with established infrastructure and amenities, such as water supply, sewage, and electricity connections. In contrast, if you were to build a house, you must take care of all the technicalities, including efficient electricity and water supply, which can be a hassle!
- Design and Structural Constraints
When you buy an independent and ready house, you have to settle for whatever features the property comes with, whether it is layout, structure, or overall interior decoration.
So, if you are not happy with the marble flooring that it offers and want a vinyl or hardwood flooring instead, you can barely help. The extreme way out could be replacing the flooring altogether, however, that’s not a cost-efficient option.
- Higher Maintenance and Ongoing Costs
Unlike a bare residential plot, independent houses are seen to have larger living areas, gardens, and other amenities, which require more time, effort, and money to maintain. They also have flamboyant interior designs, and obviously so because the owner/developer wants to reap a higher value from the deal. This also results in higher initial costs.
Furthermore, as the property ages, uninvited repairs may pop up, which can be harsh on your hard-earned money and peace of mind – an unwelcome situation in the life of a retiree.
- Depreciation of Value
Typically, the value of land appreciates faster than that of a ready house because the structure and design of the latter may get outdated and lead to heavy duty repairs in the future.
So, weigh the pros and cons of both the investment choices and take your time to decide whether you want to buy a residential plot or purchase an independent house.
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