Real estate can serve as the best way for investment in contemporary world and specifically in Pakistan. Land acquisition has remained people’s first priority since ages. For someone who has little savings but big dreams, we would always suggest looking for investing in real estate. But for a newbie, there are certain questions like what is real estate business? And what is this whole hype about?
There is no pet answer to these questions. One has to decide what suits them the best, keeping in view the capital in hand, business dynamics, and risks involved. As said, “The best investment on earth is earth itself”; because investing in investment property is comparatively safer in Pakistan, and has enormous return potential. Moreover, it also has an insulating effect in days of recession and unfavorable economic conditions.
5 researched Ways of Property Investment in Pakistan
Here are 5 researched ways to invest in real estate.
Finding Property for Sale
One of the most obvious ways to dive into the industry is to buy and hold. Investors have been into this for ages. In this format of investing in real estate, investors usually buy a property for a longer period of time, and sell at the right time. But hold on, this is different from rental properties and BRRRR, which we will discuss later. We only advise you to get along this business if you have the capital for a longer period of time. The two key factors that you must consider before buying and holding are, uncertainty and time commitment. If you are ready for these two then investing into property like this won’t be a big deal for you.
Buying Rental Property
Another amazing way of investing in real estate is buying a rental property. You can easily find listed properties like houses or apartments for sale in appreciated locations. Once you find such a property that will definitely have a magnificent rental yield.
On top of that, if ever you want to shift business you can always resell the property staying within a wide profit window. However, this mode also doesn’t work for everyone. You have to keep in mind the cost barriers you’ll have to face in case of not finding an appropriate tenant. But thanks to the property portals, and real estate agents or brokers, this is no longer a huge hindrance these days.
The investor doesn’t even have to manage the business; rather they hand it over completely to the real estate management companies and enjoy their chunk every month. Thus it can prove as the most convenient and hassle-free kind of real estate investment in Pakistan,
Buy, Rehab, Rent, Refinance, Repeat – BRRRR
This is also an amazing strategy for investors planning to invest in real estate marketplace. In this kind of framework, owner buys a comparatively older or damaged property. He then rehabs it enjoys a greater chunk from the rent he receives.
The acronym itself explains each and every step of the business. But that’s not all; BRRRR is also an amazing and beneficial framework to diversify your real estate portfolio, and help you build a reliable alternate income stream.
However, one thing that we suggest is; while going for a BRRRR project, never forget the mighty 70% rule. This rule says that, the property value and the capital investment required to rehabilitate must not exceed the 70% of its total value.
Find JVs and Giant Consortiums
These days there are plenty of novel and seasoned companies who have joined their hands in building mighty real estate projects. If you are too occupied by your mainstream chores, this method will ease your property investment cravings out a lot.
In this format of investing into real estate, investor has to keep himself connected with the marketplace. You don’t have to work very hard for this, rather you can also find them through your everyday internet surfing.
Additionally, follow reliable Facebook, and Instagram pages to keep you updated with newly listed properties and investment opportunities. Just keep in mind that this is also a long term business and you may have to wait for 2-3 years for the project to get mature. If you have the capital to stay within the market for such long time, then you are good to go.
Fix and Flip
Fixing and flipping houses is another beneficial method to invest in real estate. This means that the investor find a usually older home for sale, fixes it, and quickly sells at a better price.
Thanks to several YouTube channels for highlighting this, fix and flip is a short-term project, and it earns a good amount of money for the investors. But speaking frankly, fix and flip is a job and not a business. If you are searching for a passive income stream, this won’t help you.
However, if you have the capital and time both to invest, we would suggest you to initiate such project. But before that, keep in mind that these projects earn you profit at the time of buying, so do remember the 70% rule. And also, don’t waste much of the time in renovations. Keep your schedule ready, and set a realistic sale price before practically jumping into the project.
The Bottom Line
We have elucidated five best of the best options for you real estate investment in Pakistan. But this does not mean that you have to pick one from the above. Truly speaking, these methods work the best if you combine them with one another. For example, you can find a real estate for sale, buy and fix it, keep it for rental gains, then do the BRRRR. Once you have enjoyed the benefits from the property, you can always sell it again with a mighty profit. That’s how real estate investors in Pakistan do the business.
There is no perfect time and venue for the real estate investment. For example, BRRRR earns you a lot of liquidity if you require. Investing in JVs and Consortiums diversifies your portfolio, while rental properties give you excellent return maintaining a passive income source. The best one can do from this is to figure out what suits them the most, and build a roadmap accordingly.