Normally each human being is motivated to earn more and more money pertaining to peaceful and luxurious living for herself/himself, their family, and their future. In such efforts, people look for ways to make secure investments, and for a long, investment in property has remained the top option to go for.
People are encouraged to make informed decisions, therefore, I would like to mention some statistics here apart from the generational trends regarding the property. Although they are absolutely right in their decision, investment in real estate has always been the best option to invest and secure your hard-earned money.
Pakistan, being the 5th most populous country with 36.38% urban and 63.62% rural residents, has a strong potential for construction and real estate industry as the demand for new homes for the growing population is high. According to Pakistan’s economic survey, the construction industry accounts for 2.53% of the GDP of Pakistan which makes up to 380 billion PKR in GDP. Representing the potential of the real estate industry Fitch Solution projected an industry value of 2,705.5 billion by 2028. In addition, China Pak Economic Corridor (CPEC) has brought an influx of infrastructural projects which includes dams, highways, power plants, and commercial, residential, and industrial plans.
This information provides a logical vision for the regular and new investors who are looking for investment ideas in Pakistan, to make investments in the property business. The statistics show that contrary to other business ideas in Pakistan, investment in land is highly lucrative and provides various business options.
This article is a guideline for whoever wants to invest in real estate and major things about real estate investment they should know to earn profits.
Earn Money in Real Estate
In Pakistan, investment in land is a common practice as it is the best way to earn a handsome amount of money. In addition, the tax relief for investors and property holders gave a boost to this industry.
There are various ways to generate money, the basics of which are buying, selling, and renting the property. However, the investments option in real estate extremely applicable in Pakistan are:
Purchasing a property for resale at a higher value
- Buy Files
- Real Estate Appreciation
- Purchasing open land for development
- Purchase a property to rent out
- Real Estate Crowd Funding
- Flipping Houses
- Sell Property
Buy Files
Buying is actually a plot in any housing society but without any allocation or possession. Files are issued before the development of the society and this practice is generally preferred by long-term investors. When a file is officially associated with a developed plot, its rates increase. It suggests that the return on investment can be pretty substantial at this point.
If you opt to acquire quick returns from real estate, a file can be your solution to how to invest in real estate with minimal money.
Real Estate Appreciation
Real Estate Appreciation refers to a gradual increase in the value of a property with time. Selling off property is one of the simplest methods to make money in real estate. The demand for real estate in Pakistan is growing by leaps and bounds which subsequently triggers a rise in the prices of real estate. In other words, you can demand a greater sales price for your real estate property and earn handsomely from it.
When a property’s value grows as a result of a shift in the real estate market, this is known as appreciation. Many people, for example, refurbish their homes. The renovation of their home and adding new features or renewing the existing ones, cause an uplift in the overall price of that property. However, it is important to remember that real estate appreciation is difficult to predict, and no one can estimate the rate of increase with certainty.
Real estate appreciation is quite a challenging and time taking game since it takes time for the values to increase. For example, the land surrounding your home may become busier (for instance, establishing a commercial sector for business units, etc). Perhaps you develop your property to make it more appealing to potential buyers. It is riskier than investing in a cash flow income, i.e. from tenants.
Purchasing open land for development
This type of investment is trending and prevalent in Pakistan in current days. Open land for development is a less risky real estate investment. It entails purchasing an undeveloped, open property that is not owned by any society. Investors that go for this strategy expect a developer to buy the land from them at a higher price in order to build a project.
The most attractive place for such type of investment in Pakistan these days is Gwadar, which is being developed under the initiative of CPEC.
Real Estate Crowd Funding
This is a novel and relatively new method of real estate investment. Real estate crowdfunding services like Fundraise and Realty Mogul allow you to invest in real estate societies projects whose buyers are looking for loans. The platforms evaluate the legitimacy of buyers and projects before displaying them to members.
On your half of the property, interest or income distributions are usually paid quarterly. Redeeming shares (essentially “cashing out”) when authorized after a defined period of time. If you keep your stake, you’ll get a cut of the earnings when the house is sold.
Purchase a property to rent out
An ‘income-generating’ property investment is one in which you buy a house, apartment, or commercial property and rent it out. You keep ownership of the property and receive a steady return on investment in the form of rental income.
Flipping Houses
When you buy a run-down home or a property that needs a little TLC or a total renovation, you are flipping it. You can then sell it for a profit after it is refurbished. However, don’t forget to select the best location for the property. Yes, the location of a home is crucial. As a result, by selecting an old house in the ideal location and renovating it, you might make a big profit.
Sell Property
This is where your real estate investment in Pakistan pays off for you. It’s time to sell when you believe your property has reached its maximum value potential.
However, there are a few measures you must do in order to receive the highest rate and ROI:
Don’t put all your eggs in one basket
When determining the price of a property you want to purchase or sell, don’t rely solely on agents or unverified portals. Examine the listings on Daaclay.com for the property’s location to see the current rate range. Additionally, contact a few agents to get a sense of the market and see what prices they have to offer.
Seek to have a Face-to-Face meeting with another party
Meeting the other side face the o person can help the process go more smoothly, whether you’re a buyer or a vendor. This method also allows you to more precisely check the property’s ownership and legal status. If you’re purchasing a home, double-check the allotment or transfer letter against the owner’s NIC.
Determine the value of the property
This phase necessitates some deception. Call one or two agents and inquire about the rate for your desired property from the standpoint of a buyer. Then call one or two more agents to inquire about the rates from the standpoint of a seller. Because buyers’ rates tend to be higher than sellers’ rates, the true market value will be somewhere in the middle.
Check the documentation for allotment or transfer
Verify the transfer and/or allotment letter paperwork at the society or authority’s office. This will let you know if the property you want to buy is still available. If you’re selling a home, make sure the transfer letter is issued in the buyer’s name.
Go for Token Money
When a transaction is reached, the seller will be handed a small sum of money. This is the buyer’s promise that they will acquire the property, and it binds both parties to the agreement. Token money is usually a modest percentage of the entire worth of the property and should be between PKR 50,000 and PKR 100,000.
The exact information of the property should be included on the token receipt, as well as any legal difficulties.
Cash payments should be avoided
While making payments, keep the payment schedule as simple as possible to be tracked. As a result, avoid buying and selling property using cash payments, when this may result in legal complications – especially as the real estate market continues to normalize.
Pay via pay orders or checks, and save all physical proof with you (in a secure place). This safeguard will also shield you from any potential liabilities in the future.
So there you have it, our guide to the essentials of property investment in Pakistan. If you want to understand more about real estate investment prospects in Pakistan, follow Daaclay. Please do not hesitate to contact us at info@daaclay.com if you have any recommendations or queries. You may also subscribe to our YouTube channel to get the newest information on the Pakistani property market.
