A new DLF township is being constructed, and I was asked if I am interested in which of the three categories.
I could choose between any of the three options, because this is a pure investment. I do not intend to go and live there for the next 16 years. (After which I intend to retire and go to a recluse in the hills or a private beach.)
Apartment looked attractive in the sense that Bank pays not only the entire cost of the property, but also the move-in costs. Then one could lend it out and the EMI takes care of most of the purchase cost.
Plot of land on the other hand looks attractive in the sense that it appreciates the most. But it is an idle asset. It will do nothing productive; generate no rental income for me; and I will have to pay for its fencing and ensure that my plot does not get encroached.
So I decided to adopt the middle path and go for the house. Unfortunately, for the same budget, the independent house looked like a pigeon hole (because of the combined cost of land and construction). Rental income from that is also equal to the pigeon-hole apartment of a fraction of its cost. In fact people prefer the apartment over the tiny shack because of security and amenities it offers.
On doing ROI analysis, I came to the same popular wisdom. If the property is outside the town and it might take a couple of years before the movers and shakers will inhabit it, then it makes lot sense to buy land. A house might end up unoccupied, and won’t give much return. However if you intend to buy something inside the city where the prices are not expect to shoot up so much, apartment with its steady cash-flow is attractive.
Unfortunately, instead of solving problems it opens up a new one. Should I buy inside the city or outside? All this study and research opened more questions then it answered. Looks like I will have to flip the coin. (simplest, easiest and the fastest way to take a decision)