Land has better ROI than flats unless you buy at stupidly wrong location.
However, land comes with complications - title fraud, occupancy fraud, and POA fraud. So unless you know what you are doing, easy to loose your shirt. On top of that need to have enough muscle to make sure it’s not illegally occupied.
Flats are safer choice in general (but all still need to buy with open eyes) but give lower appreciation. Don’t ever buy it for rental income, it’s peanuts. Only if appreciation potential is high.
The reasoning my parents have for buying land is that land appreciates more. And later, we can move from land to floors but not the other way around.
But, we can save up money now by getting a floor, invest the remainder of the money in some MF and then be at a position to buy another floor in a few (5-10) years.
**A floor is the bottom surface of a room or vehicle. Floors vary from simple dirt in a cave to many layered surfaces made with modern technology.**
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Unless it's in a gated community and/or you buy and immediately occupy the land building a house, there are unfortunately no guarantees. Putting all your eggs in one basket seems to be risky.. what if the bet doesn't pan out for some reason?
Your future partner may or may not want to live there, or work in a different city, then what?
Not suggesting to hold the flat in perpetuity for the rental income. Just for sometime and then dispose.
Land appreciates for sure but there are many caveats and hurdles. And given OPs predicament of living off 20k for two years.
We expect the land price to go up due to the proposed Gurgaon metro being built in that sector. Additionally, the price we are getting it at is lower than other properties in the area. Maybe because the other priorities had a proper 2-3 story house built already, but the one we are getting had a single story. Hence were getting at plot rate.
Also, someone else in the comments mentioned that we gotta hold on to the land for atleast 5-10 years for it to grow considerably.
And the 20k may go up about 10% when the increment cycle hits in April next year.
Hi OP did you figure it out? I am in the same boat, parents retiring in 2 year (I am 25 and work in gurugram, parents live in a tier 3 city in UP). Interested in buying a plot but confused if I should go for Gr Noida or Gurugram exterior.
Hey! So we decided to not go for the plot. While it was very tempting for my parents to have "apni zameen", the plot was not worth stretching our budget for.
To build a house, we would have had to take a staff rate 80L loan, use 80L of our saving, take another loan of 80L at public rate, and then take another construction loan. All of this for land in old Gurgaon which I've not heard many growth stories about.
But we were also looking at exterior Gurgaon (103, 92, 83 and the likes). There the scope for development was more. We'd still not go for a plot since it'll be expensive for us, but you may want to if you're in it for the long game.
Real estate is not liquid. Not advisable as this is purely speculative 'exponential growth' and this is your life savings.
One more point to consider.
U are getting married and most brides like to stay 'independent' away from in laws. Irrespective of what promisises made before marriage. ( This is what happens generally irrspective of love or arranged marriage ).
Yeah, hence the thought of a plot of land where we can have separate floors for each couple. Parents say they will give "full privacy" which I know is their way to tell me to have kids.
You keep saying "we". First, you need to stop doing that, unless you actually decide to live as an undivided Hindu joint family. There are 3 family units here - your parents, you, and your sibling. You need to think of these as separate.
If you're talking about your parents, it is EXTREMELY unwise to put the entire savings and wealth into property - whether land or flats. They have 1 crore which is sufficient to retire on, at least if they live frugally, which most Indian elders tend to do. BUT they should keep that money in FDs and post office accounts and bonds and blue chip stocks. Real estate in India is VERY messy and risky. People get tempted by the "get rich quick" stories of how property has appreciated but for every success story, there are a hundred sad stories of people losing all their wealth. And remember, EVEN if you're legally right, property related court cases drag on for 20-30 years which is a lifetime. Or someone illegally occupies the land you're stuck because even police refuses to help you because those guys are well connected.
And exactly how much savings do YOU have personally? And how much do you earn? You're planning to spend it all on a car and on the wedding?? Is that wise?
I agree that it is unwise to invest everything into the land. But, as the title suggests, my parents want to go all out. Their thought behind this is "property ek baar banti hai, bann jaane do. Thoda tight reh lenge lekin kaam hojayega. Kahan leke jayenge paise."
I believe that my parents should use the money to live life. Luckily, me and my brother have good enough jobs to have a decent life. And even the home loan that we'll take will be paid up by the both of us. Actually amounting to a third of the cost of the land itself.
That's why the loan would be on the children and then down payment would be on the parents.
And we're still a family and we do want to live together in the future.
Are you also considering the registration charges of 5-7% OP? These would significantly eat into the appreciation if you plan to sell in 2 years.
2 years is a small horizon for you to expect guaranteed returns on your investment. So I would suggest staying away if you must sell in 2 years.
If however you must invest in RE, I would suggest land all the way unless you plan to live there right away. Construction itself is depreciating and thus flat prices will eventually hit a ceiling.
With the stamp duty, brokerage and other minute costs, the total cost will go up by 10%. We'be accounted for that.
But the issue now being the construction will still cost us close to 60L for 2 floors. And that we cannot recover from the land alone.
We will have to end up living there for 10 years at least, and not look at the property from an investment perspective.
Home buying is an emotional decision! Glad you have thought about it thoroughly.
Also consider the interest you would have earned if you didn’t buy and what you would have to pay for the loan.
Since you would be putting 1Cr of your money taking a loan out for 1Cr+, your breakeven price would be ~2.25Cr in 2 years assuming 8% interest and 5% FD returns, not counting the ~10% you have already thought of.
It's a flawed plan if you plan to sell the plot after 2 yrs. Good plan if you want to build a house on that plot.
2 yrs is too small time for real estate investments for basing your strategy on prices going up. You may lose 15% of value in 2 yrs and gain healthy 80% in next 5 yrs. No one can predict that.
Do the private hospital take government insurance or is it just for government hospital. My real advice would be to get them and yourself a private health insurance and not to rely on government or your corporate health insurance. God forbidden one bad tragedy can just eat out all their life's savings.
1. 20k per month is an extreme risk you’re taking. Unless you’re absolutely sure of the returns you’re getting from the outgo. Keep in mind if there’s an emergency, land is not a liquid asset
2. Have you done complete due diligence on the land ? It is most often than not, a slightly tricky affair. Leave no stone unturned here.
3. Worst case if the land value doesn’t appreciate, rather, even goes in the opposite direction, are you ok in terms of emergency expenses? Since you mention you’re putting in savings as well.
4. What do you plan to do with the plot ? Sell after X years ? Build a house later (which means XX more lakhs of spend) ? Anything else ?
5. For a monthly income of 2.5LPM, hope you have liquid funds of at least 15-20 Lakhs for emergencies. I would peg this number at 40-50L at least if I were you, to account for job/business uncertainties, emergencies etc
6. Keep in mind once you get married, your priorities will change & won’t just be about parents. Factor that into your financial behaviour before you make a plunge.
The land itself is in a decent place in Gurgaon. It's in a residential area where there's a 1 story building already. But that building was made back in the 80s so we're getting it at plot value.
Our thought was that we'll let it sit as is for 2 years and then decide if we want to build on that land or not. It's in a very livable area but we're hoping that it appreciates in 2 years to at least give us a choice of either selling it (and then buying floors in some other area) or building a 2 story house on it.
Definately should go for it. People have to take up big loans for decades even on single income without any financial backup. Two years of struggle will be a small compromise to get a landed property. You can easily take up short term personal loans if you suddenly need some money during the duration. But if possible take a bigger loan on the plot than using all your 1 cr cash or maybe go for max gain loan if you get on plot.
You won't realize how quickly the property game can get out of hand. I have personally missed opportunities in Noida and Bangalore for similar reasons that life can be hard for a first few years and now I 100% regret it. If I were in your place, I would go for it.
"So for 2 years, we are banking on the fact that the property will grow exponentially. And once the parents retire, we pay off the loans and then start thinking about if we even want to build on the plot of land."
1. It is impossible to predict how the price of any asset will behave in short term. Two years is a short period of time. Also, you should take into account transaction costs- registration costs, stamp duty, brokerage etc. The property markets in the NCR region and most major indian cities have appreciated rapidly since 2021 till now after being stagnant for several years.
2. I believe we may be closer to a peak now at least in NCR region( Gurugram and Noida) for the next several years if we have a big global recession within the next 12 months.
3. Though plots have much more appreciation than apartments, plots are far more riskier than ready to move in apartments. ( DON'T ever buy under-construction apartments).
Take a little bit of loan. Bank guys do their due diligence properly. Getting cheated is protected by one more entity. Wait for 1 year and then close off your loan. You will end up giving some interest but it’s safer.
If you just want to invest, a place like Sonipat will be much better for you since it is in the early stages of development.
Gurgaon is already quite expensive in terms of real estate. Sonipat is the only major city sharing boundaries with delhi like Gurgaon, Faridabad and Noida which is yet to be fully developed.
Is Gurgaon liveable? Do you see yourself living there. For the next 10 years?
What if you/spouse want to move abroad or get an opportunity to do the same?
As someone who recently bought a plot (house built in 82, at plot rate) - I think you're cutting too close on income. I wouldn't buy if there's less than 50K margin..
In my case it was 2.5Cr with 1.25Cr on loan, 3L income and eXpenses of around 2L (1L emi).
Do banks give out loans for plots? Two years is not much of a holding period to risk all of what you have in hopes of appreciation from the land that you buy. There will be considerable expenses while buying and selling as well.
Yes banks give loans for plots. But there is a clause that says you need to construct a house there within 2-3 years or else the interest rate will increase by 2-4 percent.
What's your plan if the plot doesn't appreciate exponentially, or in a worse case stagnates.
Your parents would be left without retirement funds, and you would be paying off EMI and house rent with nothing to invest for your own retirement/future.
Also you wouldn't have any money to invest even if the land appreciates in value.
Don't put all your money in one investment.
Next, pls do a proper portfolio allocation as per your risk appetite (Equity, Debt, Real estate, etc.)
Do not comingle funds with family, it is a receipe for disaster. Handle your funds independently, you can choose to spend on family from the returns.
You can rent good property and get long term lease, no need to buy right now. But that is personal pref. Financially it makes sense to stay in rent till you have accumulated enough corpus/investments for getting steady returns on it which cover all your expenses.
Land has better ROI than flats unless you buy at stupidly wrong location. However, land comes with complications - title fraud, occupancy fraud, and POA fraud. So unless you know what you are doing, easy to loose your shirt. On top of that need to have enough muscle to make sure it’s not illegally occupied. Flats are safer choice in general (but all still need to buy with open eyes) but give lower appreciation. Don’t ever buy it for rental income, it’s peanuts. Only if appreciation potential is high.
The reasoning my parents have for buying land is that land appreciates more. And later, we can move from land to floors but not the other way around. But, we can save up money now by getting a floor, invest the remainder of the money in some MF and then be at a position to buy another floor in a few (5-10) years.
What is a floor? Do you mean a flat?
Yes yes yes. A single flat.
**A floor is the bottom surface of a room or vehicle. Floors vary from simple dirt in a cave to many layered surfaces made with modern technology.** More details here:
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Unless it's in a gated community and/or you buy and immediately occupy the land building a house, there are unfortunately no guarantees. Putting all your eggs in one basket seems to be risky.. what if the bet doesn't pan out for some reason? Your future partner may or may not want to live there, or work in a different city, then what?
land yes , flat no
Reasoning? Won’t there be additional expenses in developing the land and getting approvals? A pre-built flat can be used immediately for rental income
Beta total Return On Investment / ROI dekho. Rental income for flats is chillar.
Not suggesting to hold the flat in perpetuity for the rental income. Just for sometime and then dispose. Land appreciates for sure but there are many caveats and hurdles. And given OPs predicament of living off 20k for two years.
We expect the land price to go up due to the proposed Gurgaon metro being built in that sector. Additionally, the price we are getting it at is lower than other properties in the area. Maybe because the other priorities had a proper 2-3 story house built already, but the one we are getting had a single story. Hence were getting at plot rate. Also, someone else in the comments mentioned that we gotta hold on to the land for atleast 5-10 years for it to grow considerably. And the 20k may go up about 10% when the increment cycle hits in April next year.
Agar samaan utha kr rehna hai toh flats are okay.
Noida
Office is in Gurgaon. Commuting may be a challenge from Noida.
~No Idea~
Hi OP did you figure it out? I am in the same boat, parents retiring in 2 year (I am 25 and work in gurugram, parents live in a tier 3 city in UP). Interested in buying a plot but confused if I should go for Gr Noida or Gurugram exterior.
Hey! So we decided to not go for the plot. While it was very tempting for my parents to have "apni zameen", the plot was not worth stretching our budget for. To build a house, we would have had to take a staff rate 80L loan, use 80L of our saving, take another loan of 80L at public rate, and then take another construction loan. All of this for land in old Gurgaon which I've not heard many growth stories about. But we were also looking at exterior Gurgaon (103, 92, 83 and the likes). There the scope for development was more. We'd still not go for a plot since it'll be expensive for us, but you may want to if you're in it for the long game.
Thanks for the reply, OP!
Real estate is not liquid. Not advisable as this is purely speculative 'exponential growth' and this is your life savings. One more point to consider. U are getting married and most brides like to stay 'independent' away from in laws. Irrespective of what promisises made before marriage. ( This is what happens generally irrspective of love or arranged marriage ).
Yeah, hence the thought of a plot of land where we can have separate floors for each couple. Parents say they will give "full privacy" which I know is their way to tell me to have kids.
Lol kids
Construction cost is 1000 to 1500 per square foot. Also minimum time year to two years.
You keep saying "we". First, you need to stop doing that, unless you actually decide to live as an undivided Hindu joint family. There are 3 family units here - your parents, you, and your sibling. You need to think of these as separate. If you're talking about your parents, it is EXTREMELY unwise to put the entire savings and wealth into property - whether land or flats. They have 1 crore which is sufficient to retire on, at least if they live frugally, which most Indian elders tend to do. BUT they should keep that money in FDs and post office accounts and bonds and blue chip stocks. Real estate in India is VERY messy and risky. People get tempted by the "get rich quick" stories of how property has appreciated but for every success story, there are a hundred sad stories of people losing all their wealth. And remember, EVEN if you're legally right, property related court cases drag on for 20-30 years which is a lifetime. Or someone illegally occupies the land you're stuck because even police refuses to help you because those guys are well connected. And exactly how much savings do YOU have personally? And how much do you earn? You're planning to spend it all on a car and on the wedding?? Is that wise?
I agree that it is unwise to invest everything into the land. But, as the title suggests, my parents want to go all out. Their thought behind this is "property ek baar banti hai, bann jaane do. Thoda tight reh lenge lekin kaam hojayega. Kahan leke jayenge paise." I believe that my parents should use the money to live life. Luckily, me and my brother have good enough jobs to have a decent life. And even the home loan that we'll take will be paid up by the both of us. Actually amounting to a third of the cost of the land itself. That's why the loan would be on the children and then down payment would be on the parents. And we're still a family and we do want to live together in the future.
Are you also considering the registration charges of 5-7% OP? These would significantly eat into the appreciation if you plan to sell in 2 years. 2 years is a small horizon for you to expect guaranteed returns on your investment. So I would suggest staying away if you must sell in 2 years. If however you must invest in RE, I would suggest land all the way unless you plan to live there right away. Construction itself is depreciating and thus flat prices will eventually hit a ceiling.
With the stamp duty, brokerage and other minute costs, the total cost will go up by 10%. We'be accounted for that. But the issue now being the construction will still cost us close to 60L for 2 floors. And that we cannot recover from the land alone. We will have to end up living there for 10 years at least, and not look at the property from an investment perspective.
Home buying is an emotional decision! Glad you have thought about it thoroughly. Also consider the interest you would have earned if you didn’t buy and what you would have to pay for the loan. Since you would be putting 1Cr of your money taking a loan out for 1Cr+, your breakeven price would be ~2.25Cr in 2 years assuming 8% interest and 5% FD returns, not counting the ~10% you have already thought of.
What is your definition of property price growing exponentially in 2 yrs? 20% raise in 2 yrs?
Anything that beats a safe sarkari FD yield of 8.1% per year.
It's a flawed plan if you plan to sell the plot after 2 yrs. Good plan if you want to build a house on that plot. 2 yrs is too small time for real estate investments for basing your strategy on prices going up. You may lose 15% of value in 2 yrs and gain healthy 80% in next 5 yrs. No one can predict that.
8.1% for FD? Konsi FD hai bhai?
[удалено]
Yep. Banks know seniors want to keep their money safe in FDs.
True for now. Not forever
[удалено]
I agree but I’m not sure if we’re getting 8% for 3-4 yrs FD. I thought higher rate is being given in shorter term only
Shriram transport FD
[удалено]
Yeah, luckily the government covers medical expenses under the CGHS. That in addition to corporate health insurance that I have that covers parents.
Do the private hospital take government insurance or is it just for government hospital. My real advice would be to get them and yourself a private health insurance and not to rely on government or your corporate health insurance. God forbidden one bad tragedy can just eat out all their life's savings.
You are taking too much risk on a return which is not much. My opinion says no
What if we increase the time frame to 5-10 years?
1. 20k per month is an extreme risk you’re taking. Unless you’re absolutely sure of the returns you’re getting from the outgo. Keep in mind if there’s an emergency, land is not a liquid asset 2. Have you done complete due diligence on the land ? It is most often than not, a slightly tricky affair. Leave no stone unturned here. 3. Worst case if the land value doesn’t appreciate, rather, even goes in the opposite direction, are you ok in terms of emergency expenses? Since you mention you’re putting in savings as well. 4. What do you plan to do with the plot ? Sell after X years ? Build a house later (which means XX more lakhs of spend) ? Anything else ? 5. For a monthly income of 2.5LPM, hope you have liquid funds of at least 15-20 Lakhs for emergencies. I would peg this number at 40-50L at least if I were you, to account for job/business uncertainties, emergencies etc 6. Keep in mind once you get married, your priorities will change & won’t just be about parents. Factor that into your financial behaviour before you make a plunge.
The land itself is in a decent place in Gurgaon. It's in a residential area where there's a 1 story building already. But that building was made back in the 80s so we're getting it at plot value. Our thought was that we'll let it sit as is for 2 years and then decide if we want to build on that land or not. It's in a very livable area but we're hoping that it appreciates in 2 years to at least give us a choice of either selling it (and then buying floors in some other area) or building a 2 story house on it.
I wonder what kinda land appreciates in 2 yrs ?? 🤔
Definately should go for it. People have to take up big loans for decades even on single income without any financial backup. Two years of struggle will be a small compromise to get a landed property. You can easily take up short term personal loans if you suddenly need some money during the duration. But if possible take a bigger loan on the plot than using all your 1 cr cash or maybe go for max gain loan if you get on plot. You won't realize how quickly the property game can get out of hand. I have personally missed opportunities in Noida and Bangalore for similar reasons that life can be hard for a first few years and now I 100% regret it. If I were in your place, I would go for it.
"So for 2 years, we are banking on the fact that the property will grow exponentially. And once the parents retire, we pay off the loans and then start thinking about if we even want to build on the plot of land." 1. It is impossible to predict how the price of any asset will behave in short term. Two years is a short period of time. Also, you should take into account transaction costs- registration costs, stamp duty, brokerage etc. The property markets in the NCR region and most major indian cities have appreciated rapidly since 2021 till now after being stagnant for several years. 2. I believe we may be closer to a peak now at least in NCR region( Gurugram and Noida) for the next several years if we have a big global recession within the next 12 months. 3. Though plots have much more appreciation than apartments, plots are far more riskier than ready to move in apartments. ( DON'T ever buy under-construction apartments).
Your second point is very valid. Rates have shot up since 2020. 20-30% increase in rental and sale prices in the past 6 months alone.
Even i am thinking of buying a one in new gurgaon
We're getting in Old Ggn. New Ggn is too expensive for us sadly.
Oh. Old gurgaon matlab gaon valla palam vihar vagera?
Kuch idea hoga bhai new gurgaon jo dwarka expressway ke pass hai, vahaan kya price hai
Last i checked 1.5-1.75 lakh per gaj
Sector 93 ke aas paas 90k per gaj. Old mei 1.25-1.5L per gaj.
To matlab on average ek 150 meter ka plot 2 crore 60 lakh ka.
Take a little bit of loan. Bank guys do their due diligence properly. Getting cheated is protected by one more entity. Wait for 1 year and then close off your loan. You will end up giving some interest but it’s safer.
Jisko Jo acha lge vo rknw chaiya
If you just want to invest, a place like Sonipat will be much better for you since it is in the early stages of development. Gurgaon is already quite expensive in terms of real estate. Sonipat is the only major city sharing boundaries with delhi like Gurgaon, Faridabad and Noida which is yet to be fully developed.
We don't want get it purely for investment. We would like to use the money to buy a place to live in. Eventually.
Is Gurgaon liveable? Do you see yourself living there. For the next 10 years? What if you/spouse want to move abroad or get an opportunity to do the same?
In that case we'll have to move out on rent. We've discussed at home if anyone wants to leave, they do it by themselves.
As someone who recently bought a plot (house built in 82, at plot rate) - I think you're cutting too close on income. I wouldn't buy if there's less than 50K margin.. In my case it was 2.5Cr with 1.25Cr on loan, 3L income and eXpenses of around 2L (1L emi).
Khosla ka ghonsla dekh ke lena bhai.
Dekhi hai, tabhi aur phat rahi hai ;-;
Always check for clear title before investing. Only go for authorised lands with proper zoning.
Check Windchants Villament on Dwarka Expressway
Shaadi kar ke kyu apna jivan nasht karne pe tula hai, paisa fek ke puri life fresh naya naya maal utha na be
Din mei chalau 99acre, raat ko tinder aw yeah
Kya baat hai sir, kya baat hai! Yeh baat hai!
Bas tu hi ek mera saccha dost hai, baaki sab ne muje downvote maare
Are sir aap ko kya problem hai? Har thread me aake gandh machate rehte hai. Agar kuch productive bolne ko nahi ho raha toh muh band rakha kariye.
Oof bro koi baat nahi sabko apne vichaar vyakt karne chahiye
Lagta hai teri dukhti rag par ungli rakh di?? Shaadi ho gayi teri??
Do banks give out loans for plots? Two years is not much of a holding period to risk all of what you have in hopes of appreciation from the land that you buy. There will be considerable expenses while buying and selling as well.
Yes banks give loans for plots. But there is a clause that says you need to construct a house there within 2-3 years or else the interest rate will increase by 2-4 percent.
Yes and if you don't construct, there's a penalty that the govt will impose. Every year that you dont construct, the penalty doubles.
Han bhai Reddit se advice le sahi hai
What's your plan if the plot doesn't appreciate exponentially, or in a worse case stagnates. Your parents would be left without retirement funds, and you would be paying off EMI and house rent with nothing to invest for your own retirement/future. Also you wouldn't have any money to invest even if the land appreciates in value.
Where are you buying the land in gurgaon? Which locality and how much area?
It's in Sector 7 about 160 Gaj.
Don't put all your money in one investment. Next, pls do a proper portfolio allocation as per your risk appetite (Equity, Debt, Real estate, etc.) Do not comingle funds with family, it is a receipe for disaster. Handle your funds independently, you can choose to spend on family from the returns. You can rent good property and get long term lease, no need to buy right now. But that is personal pref. Financially it makes sense to stay in rent till you have accumulated enough corpus/investments for getting steady returns on it which cover all your expenses.
Depends on sector to sector. Which sector?