Buying land versus buying in a gated community

A question we keep getting asked by prospective second home buyers is whether we would recommend buying land or buying a home in a gated community. I’ve personally thought extensively about this question and while I would like to give a single answer, my recommendation would depend on the personal circumstances and desires. First, let me summarize what I feel are the advantages and disadvantages of each type of investment:-

Advantages of Buying Land or what you cannot expect in a gated community:

1. You are able to break up your financial commitment and stage it into two – buying the land and then the cost of building your home.

2. You are able to build your dream home – customized to your requirements and with those special touches that you were dreaming of. So for instance if you want an indoor courtyard for yoga or a private library or an indoor pool – all these things are possible because you are in full control.

3. You are able to control your own costs and are not bound to pay any society charges or collective charges.

4. You are able to make changes to the property and add rooms or amenities over time.

Disadvantages of Buying land or the pros of buying in a gated community:

1. You are really on your own and expenses such as security and maintenance are solely your burden while in a gated community they are shared costs.

2. While you are in control of your own property, you have limited control on your surrounds and so you may find yourself surrounded by barren land or else an ugly structure. In a gated community, you benefit from a master planned community with a certain quality of pathways, neighbors etc.

3. It is typically more expensive to add amenities to a stand alone property while in a gated community, you will find common amenities like a gym, club house, swimming pool etc. are well maintained centrally.

4. Gated communities tend to be safer and more secure and are so ideal for non resident owners.

5. While buying land, you have no control over the people around your property and may find limited neighbors of the same social strata, in a gated community that is usually lesser of a problem as all buyers would typically buy from the builder and so would be of similar socio-economic background.

So what would I recommend:

I have come to feel that for a young couple with modest means, it is best to buy a home in a gated community in a second tier destination with all amenities such as a pool, club house etc. For an older couple I would recommend buying in a gated community in a more established destination. I would only recommend buying land if you are significantly wealthy and are really keen to have something that would be a signature property and have the means to see that dream to reality.

A disclaimer: When I recommend buying in a gated community – here are a few things I would watch out for:

1. A community which sells plots of land. These communities tend to attract investors who will never build and you will end up with defaulters and empty plots all around.

2. A community without amenities such as a club house, pool, etc.

3. An unethical builder or a development without clear documentation or where the ownership transfer is unclear.