For long-term survival, one needs to look forward and think of ways to build the future with lasting stability in terms of wealth and health. And to generate passive income for years, there’s no better investment than real estate.
A well-chosen property will yield excellent returns, rental income, appreciation, profits, tax advantages, and diversification in the near future. Well, in Pakistan, Islamabad is one of the best cities for real estate investment.
Whether you live in Pakistan or anywhere in the world, real estate investing is one of the best ways to secure your future.
To be the best property investor or succeed in the industry, you need to arm with a lot of hard work, dedication, knowledge, and most importantly, PATIENCE.
For drawing successful property investment decisions, listening to real estate professionals and investors is the right place to start. Here’re some wise words from the world’s renowned real estate investors.
Top Tips from Successful Real Estate Investors
To take your next investment decision a step further, we have gathered 5 real estate investing tips from people with experience.
So, whether you’re new to real estate investing, this article will help you build a better perspective; let’s dive in.
Diversification is the KEY in Real Estate Investing
In real estate, it’s commonly preached that the best area to invest is the one in the backyard; investing in only one geographical area can limit your profit potential and the respective possibilities.
Considering other cities and areas can open a large pool of investment opportunities and protects your diversified portfolio; also, your wealth will not get affected by the volatility of the market.
Jeff Miller, AE Home Group, Maryland
Well, the top 3 cities, and their respective areas, in Pakistan to invest in real estate are;
Best Areas for Real Estate Investments in Pakistan | ||
Cities | Areas | Investment Potential |
Lahore | LDA Avenue, DHA, Bahria Town, Etihad Town, Kings Town, Bahria Orchard | Housing Schemes |
Islamabad | DHA, Bahria Town, Gulberg, Blue Area, Sector b-17, Park View City | High-rise buildings and Corporate Offices |
Karachi | DHA, Scheme 33, Bahria Town, Clifton, Jinnah Avenue | Luxury Apartments |
Get to know the Market
When investing in property, it is important to learn about the selected markets. So, get to know about the current real estate trends, including decreases or increases in income, average rent, interest rates, unemployment/crime rates, and other key aspects before investing.
Being well-informed will allow you to grab the current status of the respective market and plan for the future. Constantly forecasting and staying up to date can help you protect your investments.
Sacha Ferrandi, Source Capital Funding, Inc. and Texas Hard Money
For your help… here’s how professional valuers calculate the market value of a property;
- Assess the current property market climate
- Look for similar properties that have sold recently
- Consider property price predictions
- Research area planning
Know the Tax Laws on Real Estate
Now more than ever, it’s becoming very important for investors to be up-to-date with the new emerging developments in tax laws of the respective market. This means more than simply knowing what the tax laws are in your state, county, and city. Also, how to file for the right deductions and tax concessions.
Some tax benefits of real estate investing include; low/favorable tax rates for long-term capital gain (if held for more than a year), minimal tax on rental income, depreciation claim on commercial properties, and other concessions on building and construction.
Nate Masterson, Maple Holistics
Well, for your recall, here’s the updated tax rate on the value of capital assets in Pakistan;
- FBR imposed a 1% deem tax on additional/unused property (like houses, plots, farmhouses, etc.) valued more than 2.5 crores, with no regular income. A 20% tax will be levied on the proposed income of 5% on such properties.
- Advanced tax on the sale or purchase of immovable property is 2% for tax filers and 5% for non-filers.
- Capital gain tax period is 6 years and the maximum tax rate will be 15%; the distribution of tax will be;
- 15% tax in 1 year,
- 5% in 2 years,
- 10% in 3 years,
- 5% in 4 years,
- 5% in 5 years,
- 5% in 6 years, and
- 0% in 7 years.
Learn the Market Cycle Theory of Real Estate Investing
Commercial and residential real estate follows a cyclical pattern, which is closely linked to economic trends that prevail locally/nationally. This cyclical pattern includes four phases – recovery, expansion, hyper supply/accumulation, and recession.
Getting to know them will help you predict the right trends and take informed/controlled decisions. and Try to invest in the right phase.
Purchasing during in later stages of recession and early stages of recovery phases can help you earn significant capital gains and maximum rental income.
Paul Koger, Foxy Trades LLC
Find Properties in Emerging Neighborhoods
Emerging/up-and-coming neighborhoods offer growth potential and tax incentives for investors while enjoying maximized profits.
Several factors are taken into consideration when evaluating the investment potential of a geographical location, including;
- Location – how far/close the locality is from the major landmarks and the availability of the facilities in the area.
- Consistency in Development – It includes how consistent the area planning and developments are and how timely the delivery of properties is. These are two trust-building factors that increase/decrease the popularity of a neighborhood.
- Demand and Supply of Properties in the area – If the vicinity is well-built and well-maintained, then the demand for properties will be more than the one with poor/under-developed infrastructure.
- The rate of Returns on Investment – One of the major advantages of investing in any geo-location is the rate of return on its available capital investments.
- Commercial Viability: For commercial real estate investments, the locality should be a hub of commercial activities, having the presence of local and international brands and chains. The presence of high-end brands makes a locale commercially viable.
Ralph DiBugnara, President of Home Qualified
Wrapping Up
Here are some of the known real estate investing tips from professionals and experts; get them noted and follow them before making any investment decision.