According to recent statistics, Pakistanis spend around $5.2B on construction and real estate every single year.
Now, this is a huge number!
Have you ever thought why so many investors are interested in real estate?
If your answer is no, do not worry because this is exactly what this article is about.
Real estate is one of the most lucrative investment ideas in Pakistan and for all the right reasons. Unlike other investment and business opportunities in Pakistan, real estate comes with multiple benefits.
In this article, we will be discussing all the major things about real estate investment that you should know.
So, let’s get started!
Things that are Essential for Real Estate Investment
Here is a list of things we think are absolutely essential for successful real estate investment in Pakistan.
1. Real Estate Investment Knowledge
Adequate real estate education is a must for real estate investors.
You must have sound knowledge of the ins and outs of real estate investment. Spend a good deal of time understanding every nitty-gritty detail of real estate. It is a growing industry in Pakistan which means it has a fast pace.
Construction of a real estate asset needs to be top-notch and without any defects. To keep up with this volatile pace and to be a successful investor, it is crucial to have hands-on knowledge of all the latest trends of the real estate market.
There are so many media from where you can learn about real estate for free. Some of the most common media are:
- Real estate books
- Real estate blogs
- Real estate youtube channels
- Real estate podcasts
- Real estate TV shows
All these media are convenient and easy to access. Make use of them and try to learn as much as you can from these mediums.
2. Have a Strategy
It won’t be an exaggeration if we say that lifetime cash flow through real estate investing is certainly possible. All you need is a practical and workable strategy. Get to know why you should invest in real estate.
Before investing your hard-earned money, spend a fair amount of time in devising a holistic strategy for your real estate investment.
For example, do you want to invest in all kinds of RE properties or you want to stick with one niche only? Do you want to invest as a sole proprietor or you want to go for a partnership? Do you want to build your portfolio locally or want to expand your investment to other cities as well?
These kinds of strategic decisions make or break your real estate investment. You should know what common real estate investment mistakes to avoid. If you have a good strategy at the place, you can get good returns in a short duration of time.
3. Select Rewarding Properties
Getting the perfect property is not the luck of the draw. You need to be vigilant and well informed to get the perfect property. Before investing in real estate, ask around about the property, prices in that area, types of property like whether to invest in apartment or house, or whether to buy a shop or a house, information about amenities, and the neighborhood.
Most importantly, make sure it is approved by the development authorities of your region.
Inspect the property thoroughly and keep your eyes open for any kind of defects and make sure all the documents of the property are valid and complete.
To stay away from financial loss and high risk, it is crucial to follow all these steps.
4. Work on your Real Estate Financing
Unlike other small investment opportunities in Pakistan, you need a fair amount of finances to invest in real estate. The healthier the finances, the healthier the returns. The method you choose for your investment can make it a success or a failure.
Some people use their savings for investment whereas some people take loans to finance their real estate project. The options are many, it is better to do a SWOT analysis of each option and come up with the best possible alternative that suits you.
Advantages of Investing in Real Estate
So, now that we have a fair understanding of the major components of real estate, it is time to understand why you should be investing in real estate.
There are many advantages to real estate investment.
Real estate Investment is a great way to secure and multiply your hard-earned money. There are many types of investment opportunities around us like each having their own set of pros and cons.
Some investments yield good returns but they are very risky. On the other hand, investments that are safe and secure, usually end up generating fewer profits. In short, the benefits of investing in property are versatile. Zakat on an investment property is dependent on the income you are getting from it. Get to know the difference between zakat on property and property tax.
We analyzed certain investment opportunities and it is safe to say that real estate is the most secure and stable source of passive income.
1. Less Volatile
Real estate investments do not face abrupt changes like other investments such as investing in stocks and shares. The real estate market is quite stable and the prices appreciate at a smooth pace. It means the chance to incur a loss is lower in real estate.
If you are a risk-averse person who wants to grow his money at a smooth pace, real estate investment is perfect for you.
2. Better Returns
Real estate gives you good and consistent returns. On average, you can earn up to 20% return every month. For instance, if you purchase a piece of property for RS.500,000, you can sell it for Rs.560,000 next month, that too without doing anything. You are earning an extra Rs.60,000 by sitting at home.
3. Tax Benefits
Investors usually get tax deductions on the property. For instance, you can get deductions on mortgage interest. Governments usually do this to invite more investments in the country. Get to know a tax on property.
One of the most important and appealing factors in real estate is the full ownership of the asset. When you purchase a property, you get full ownership of your asset, and nobody can take it from you because you have all the legal rights to it.
In other forms of investment such as stocks, mutual funds, and vice versa, you do not get the tangible asset and its ownership. That being said, real estate allows you to have control over your assets.
5. Double Benefits
If you have a house or a flat, you can reap multiple benefits from it. You can rent out/ lease out your house, you can put up your spare space on Airbnb, you can use it for your own residence and when the property prices go up, you can sell it. How amazing is that?
If you are looking for an investment opportunity in Pakistan that is packed with many benefits, real estate is the perfect option for you.
These are some of the major advantages associated with real estate investment. If you are looking for a secure long term investment, do consider real estate investment. Do your research, try to get familiar with the best real estate investment cities in your region and invest accordingly.
This was a comprehensive guide from us to you. We hope now you have a fair idea of how to invest in real estate.
Happy real estate investing!
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