I was wondering as what can be a nice choice.A plot or a house? suppose a kanal plot in dha Islamabad OR a 10 Marla house in dha Islamaba??,bcz both have near same price.
So keeping pro and cons in mind which choice will be a nice one in-next 5 years time frame or 5-10 years time frame?
The same question apply to cda ,bahria and other societies,
I was just wondering in my mind search, that a ready made house increases both in real land value plus construction value increase in time frame ,,,and plus a rent value is a plus point in the said time frame as well,
A plot can only increase in real land value and thats all.
Please share your thoughts.
Thanks
I will go with the answer in your question, that house is better. House+land+rent.
@ DK…Sir For best buying at dha,you can contact me at 03455370978.My vote is for 1 kanal plot as you will get a very nice plot in 1.4 crore and 10 marla nice house is 1.8 to 2 crores approx and will take time to get appreciated as compared to 1 kanal plot which have much juice left in it.
I agree with Saadi, a constructed house also has the downside of depreciation over time and if the property has been given on rent, this depreciation can occur at a much higher rate than if it was being used by the owner himself. Depending on construction quality, in 15 years it might even become demolishable or in need of major refurbishment.
An equal sum of money invested in carefully selected plots will yield higher returns over the same period of time.
Dk. I guess house with rental value is a better option. If you calculate it with someone who knows finance, you will get to know that rent over the period of 10 years would make a big difference. It's just that we eat that rent every month and do not calculate as a chunk.
Say you save 10% of every month's rent, this amount will be used for upkeep of house. If proper maintenance is done, it's not so that your house will depreciate. Also, regarding tenant's maintenance of house, I think if a house is made keeping in mind the usage for rent, few things will be damaged by tenant. One should make house for rent having minimalistic approach. Have less and less things in home which can be damaged. For example I would avoid using expensive sanitary fittings, extra cupboards, expensive kitchen etc. Will use marble instead of tiles on floor. Will use single Color in whole home instead of Color schemes. Will have robust electrical switches etc. Structure cannot be damaged by tenants.
So in my view it's a lot better to have income giving small house instead of having a larger piece of barren land in the same amount. You can calculate.
B.R.Malik… Very well explained Sir.
Thanks.
Br malik..Sir i think it depends upon ones priorities..If one wants an appreciation in his net worth then i think plot is a better option as it multiply manifolds..
If one wants a fixed monthly income in order to meet his expenses then i think house is better option.
What if we change the discussion to have a comparison between a possession/developed plot and and a house.
Non possession plots/files has a lot of factors in pocket to bring surprise up and down in value. Developed plots has steady increase.
Also, a house construction doesn't stop increase in value of plot.
So in between plot cycle from file to possession given is higher risk and higher return game. No doubt. But after possession, it's steady increase. This steady increase will continue after construction if map is of standard house . Also, I think more important is to have a house according to the demand in that particular locality. I know a person who made house in E-11 having 9 bedrooms but with single kitchen and drawing room. Such mistakes can effect negatively on value of property as a whole. But if the house is built on standard map according to demand of that locality, building value will not depreciate and rent will be bonus.
Sir i dont recommend file trading to anyone...I personally think that even possession plots can give excellent returns if bought at good rates after careful selection.
IN same budget one has to compromise plot size plus no matter how good construction one has done,dealer always consider 15 year house as demolishable ones or at least that house needs some major renovation..
Lets compare the returns according to my view point over the span of a decade..
Suppose in dha 2 a person buy a plot for average price which is 13 million approx..
1 kanal plot at minimum give 10% per annum..
For 5 years,it gives 10% pa on average.
After 5 years,plot worth=195 lacs
For next 5 years it gives a return of 5% per annum on average.
Plots worth after decade=2 crores 43 lacs 75 thousands..
Although you will see that 1 kanal good plots would touch 2 crores much sooner than 5 years..
10 marla nice house can be constructed for 1.5 crores on average.
10 marla nice 80 lacs on average
After 5 years=Plot worth=120 lacs
After 10 years=plot worth=150 lacs.
Rent at present=40000 approx for full house.
After a decade rental amount would not exceed=55 lacs approx
55 lacs-10% for renovation and taxes=49.5 lacs.(although its very less for major renovation of 10 marla house).
Price of construction=Do not appreciates instead it depreciates because of usage and new construction trends.
10 marla house can be constructed in 70 lacs..
After decade,worth of construction would not be counted for more than lets say at max of 30 lacs.
So net worth of that person after spending 1.5 crores=Plot appreciated price+rental amount+constructed house worth=229.5 lacs.It also costs head ache of construction which everyone cannot bear.
So i think in this way bigger plot is better if you need a surge in your net worth.
This was a tricky situation ,which i faced ,and when i see it now i wish i had opted for a house,well the money i invested in one developed plot with possession and another one non possession area,at that time the same money was enough for a double story house in the same society.NOW with the down turn in prices plus stagnation in market, when i analyse the situation ,i find it like this,
The land value reduced in prices 20 %, even if at some times it jumps 100% from here in next 5 plus years ,the net value will be worth 80% more than original price,
NOW if i had opted for house only half the area of plots,the net land value loss would have been 10%, but in next 5 plus years the RENT PLUS CONSTRUCTION COST difference , plus the 100% proposed price jump (which minus 10% today's down turn prices ) will be 90% for land value of the house.
CONCLUSION, i would have been better off with house.
BR.Malik ,yes non develop plot has a huge ups and down and difficult to compare with a house,
BUT developed plots are easy to bring in calculations with a house ,
THE only factor is the price tag of the time ,at what the purchase is made as MENTIONED BY SAADI,in dha kanal plot=1.4 crore but 10 marla house above this price tag.
To carry this discussion till the end, I would highlight another angle. I think renovating house cost is Rs 200-250 per sq ft of good quality house. It's not a big cost. If your house is safe from water, it's life is 50 years .
Tenants in Islamabad are relatively better in maintaining house in comparison with other cities, if carefully selected.
Other angle is that for plots, one has to be vigilant all the time regarding market. It's good for those who can spare sometime out of their busy profession. I assume almost all investors has other professions and this is part time work.
WELL a house is like a solid cash ,and very sound feeling as well ,you feel you have something in hand very real to be honest,and you are also confident of being the owner of something in front of you,
A plot anywhere is like a mysterious bank account ,where you feel rich at some point and being slashed in accounts at other points,
YES a renovating idea is a fantastic one,and the life span of well constructed house must double with it,
I also disagree with respect to SAADI, about the life span of a newly constructed house ,it cannot be restricted to 15 or 20 years to be honest with yourself , at least 30-50 years in heavy rainy areas even is a well thought out span.
Gentlemen, make it simple.. The best thing to invest is in small near possession plots (Because per marla profit is the max and area is not developed therefore it has a lot of room for growth unlike saturated places where rise in investment is very slow), this is if you want to sell it in the future. If you want to buy for yourself then you may buy the biggest size plot which will be cheaper on per marla basis.
Coming to house, a house is always a bonus, it will give you incremental rent along with the appreciation of the plot+building+labour profit. Again if you are selling to someone else, then the smaller the house, the more your profit percentage.
Anyway, the real thing is saturation point. When an area gets saturated (full development with too many houses and few plots), its useless to buy a house or plot in it as the rates are already saturated.
Junaid. Can you elaborate more as why smaller houses has higher percentage and larger has lower? I thought that large houses are used by elites and they can afford to pay for stylish houses. Smaller houses are of relatively needy people and they have small pockets.
Malik Sb.. Meri naqis rae mai e.g:
G-13
4.44 marla house
Plot+Construction+Profit = 70+30+25 = 12.5 million
Per marla Profit = 2500000/4.44 = 563000
G-13
20 marla house
Plot+Construction+Profit = 250+120+80 = 45 million
Per marla Profit = 8000000/20 = 400000
Difference is approximately 163000 per marla
Other things to consider:
Time consumed is much less on small houses
Small houses are easily sold
These rates are rough and average but you will see that small houses always give you max profit per marla as compared to large houses.
I think for investment point of view;
plot with good location is always a wise option.
One of my friend purchased a plot in 1-14 in 13lac four years ago and now its worth about 40 lac. I purchases a house five years back in 19 lac and sold at 25lac. Spent a lot for its maintenance and its taken 6 month for sale. Plot is like a hot cake for sale.
@ Junaid. A 50x90 house only consumes 68% of its total area for construction while smaller houses go upto 88%. So a lot of area is vacant in larger houses so we can't calculate on full 20 Marla.
But your view is right that smaller houses take less time to construct and easier to sell. Big houses take a lot of time to construct.
Chaley Sir aap apni marzi kay rates aur covered area laga dein… Phir bhi small house will give you more profit per marla. This is why I put 12 million as construction cost for 1 kanal house.
Really this information help ful for us. Thanks to share ...
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