You may have faced this dilemma in the past or maybe that’s what you are currently facing. To get a standard 500sqm plot or a 300sqm serviced plot of an estate.
By the end of this article you will have all the information you need to make a very informed decision.
Before we even start, what’s a serviced plot? There are many companies selling land but only a few of them are actually selling serviced plots.
Serviced plots are plots of land in an estate that is ready to be built on. Where the company that owns the estate will provide vital amenities like centralized water, internal roads, electricity, security, general waste disposal system, sewage systems among other things.
In layman terms this means that the company aren’t just selling land and afterward selling you the land, they will disappear, no!
They will actually sell and develop those lands. Build on it, put all necessary infrastructures and amenities.
Plots in this kind of estates are serviced plots and of course they are more expensive than regular plots because all these infrastructures means that the environment of your land will develop very fast thus making your land appreciate in value exponentially.
Examples of currently selling serviced estates are Makarios, Itunu, Amen Phase 3 et cetera.
So should you buy the 300sqm plot or the 500sqm plot?
What land size should you buy?
Apart from the 200sqm size difference, there are other factors that distinguish the 2 plot sizes.
Deciding on which one to go for comes down firstly to your budget. 500sqm plot is usually 50% to 60% more expensive than 300sqm plot.
However most companies offer installmental payment plans meaning that with a little tweak, you can get 500 sqm plot at most, they give you a payment plan.
Next is the purpose of your acquisition. What’s your intention for the land you are buying?
Are you buying for capital gains? This means to buy and hold the property till it has appreciated much in value then resell.
Are you buying to build your residential house on it?
Are you buying to later develop the land for commercial purposes?
If you are buying for the purpose of capital gains, that’s holding the property till it has appreciated much then reselling it.
Bear in mind that the people who will be interested in buying 300 sqm plot later from you are people looking to build their residential houses on it.
While the people who will be interested in buying the 500 sqm (or more) plot from you can be developers looking to erect houses and either resell or rent.
Between these two groups of buyers, who do you think you can get more money from?
It is important to also note that when you buy 500 sqm plot (or more) you can choose to sell the lands in bits.
For example if you buy 1,000sqm. You can choose later to divide that into 4.
So you will get four 250sqm plots out of that. 3 years later you can sell one 250 sqm plot and still have 3 three. Years later you sell another one, and another one.
This allows you to not be under pressure to liquidate your investment because of an emergency.
If an emergency comes up, you sell a part of your land, use the money to solve your problem while still holding on to the main part of your land.
You can’t do this when you buy a 300sqm plot. You can only do this when you buy a 500 sqm plot (or more)
If you are acquiring the property to build your residential house on it, bear in mind that if you buy the 300 sqm plot, then the only thing you can do is build your residential house on it.
Nothing else!
Whereas if you build the 500 sqm plot (or more) you can divide the land into two, build your residential house on one part and leave the other part to sell later.
Or you can build your residential house on one part, and build a house on the other part and either sell the house or rent it out.
Real estate investments: Land vs Houses, which one should you buy?
You should also note that buying a 300 sqm plot puts many other limitations on what you can be able to do with your land in the future.
For example, if you buy a 300 sqm plot, then there is absolutely no possibility of you doing a joint venture with any developer later in the future.
A joint venture is an arrangement whereby a developer comes to you. They have the money to build, you have the land to be built on so you two will make an arrangement to share profits that will be realised from the sale of those houses when it is completed.
For example Joseph Adefarasin, that’s the father of Paul Adefarasin, the founder of House On the Rock church bought a land at Akin Adesola for just £2,000.
That’s Victoria Island now. When the area started to develop and grow in population. A company came to him for a joint venture.
So they made arrangements that the company will build their house, rent it out and collect rent for 10 years, then after that 10 years the ownership and rights to the house will be shifted to Joseph Adefarasin.
They signed and after building and renting out for 10 years. The houses were transferred to the father of Paul Adefarasin, the money he got from renting out those houses was what he used to send Paul Adefarasin and his siblings to schools abroad.
He didn’t have money to develop the land himself, but through Joint Venture, he accomplished that.
However developers when looking for joint ventures, they don’t go for small lands. You need to have at least 1,000 sqm plot and above.
So that’s the main difference.
When buying land, buy as much as you can. Even if what you will use the land for is not clear to you. Buy!
As far as you have the money, buy.
The bigger the plot sizes you buy, the more your options and what you will use the land to do increases.
While the smaller the plot sizes you buy, the smaller and more limited your options are.
Special thanks to Rabiu of Meet The Property Guy for parts of this article.
I am Ugochukwu.
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