It’s natural to consider long-term investments. That way you prepare funds in the future by seeking returns. One type of profitable long-term investment is property. Besides the price tends to increase every year, property is also not affected by inflation. This can happen if everyone has a need for housing. You can make land or houses an option to get passive income, especially if you already have large capital to buy it. But between houses and land, which property is the most profitable? It’s better to do a comparison before making a long-term investment decision. The following comparison is parsed from several sides so that it can give you various points of view to make the most appropriate decision. The following are things that must be considered when investing in property:
Possibility of Ownership Risk
Investing in property has its own possibilities. Both house and land, both have risks. If you invest in a home, you should consider risks such as possible disaster, theft or even home maintenance. Also calculate the possible maintenance costs for the unexpected. Meanwhile, if the long-term investment in land, you will be less concerned about maintenance and disaster risk. Soil is easier to maintain and does not require additional costs. However, there is a risk in the form of moving land boundaries that can be carried out by certain individuals. In addition the land can be used by others without your permission.
Value Added Opportunities
When deciding for a long-term investment, also consider the opportunities that you can add so that the return obtained will increase. If you choose a home investment, then you can use the property for business to make a profit. The house can be used for renting a boarding house, renting out, a place of business, and so on. If you invest in land, it can’t be used optimally to get additional income like building investment. Land is classified as difficult to rent, especially if the land is large. Unless the location of the land is strategic enough, you can rent it out for vehicle parking.
Capital Gain and Return
When calculated in terms of long-term investment capital, buying land will require less capital than buying a house. However, when calculated from the return and capital gains, land has a greater advantage. If calculated on average, land has an increase in inflation of 25% per year. In contrast to land, houses only have an inflation increase of 15% to 20%. Based on this calculation, you need to wait at least 5 years to get the return value of the property. However, if it is calculated in the long term, land and houses both provide considerable benefits.
Potential Property Location
Strategic location is the key to long-term property investment. If the location of the property has a strategic location, then the return obtained is also greater. Today’s society requires mobility and easy access to public facilities so that the more strategic a property is, the more expensive the selling price. For this reason, when investing in property, you need to pay attention to the nearest public facilities and the level of crowds at the location. Also consider the access options that can be selected to achieve certain goals.
Building properties located in urban centers have a high selling price compared to suburban locations. In contrast to buildings, land property has more potential if it is located in a potential area. The area does not have to be in the city center, but has the potential to be developed by investors. Land in potential areas to be developed will have a high selling value so it is suitable as an option.
Additional Costs That May Appear
In the long term investment, you also need to pay attention to additional costs. For example, for a home investment, you need to take into account the additional costs of maintenance. At least once a year you take care of your home property so that it is maintained and the building still has a selling value. In addition, take into account the cost of cleaning and security. Long-term investment in the form of a home must also take into account insurance. In addition there is also a tax fee that is paid once a year. For land investment, the additional cost is not as big as building property investment. Based on this perspective, land investment is more profitable because it does not require extra maintenance costs.