How You Can Get Best Investment Property in Pakistan

A very important consideration when buying an investment property is to decide what is more important to you, profit or capital growth, or a good combination of the two? The way to work out the profit on a property is to take the annual gross rent, subtract all costs (ie service charges, ground rent, buildings insurance, repairs, and renewals) and divide it into the total cost price and multiply by 100 this will give you the gross profit in percent. In order to determine the all-important net profit, you must subtract any letting agent commission. Remember that this is the true way to work out whether a Property in Pakistan offers a good profit. Don't just add up all your costs, including the mortgage repayments, subtract them from the rent and say, 'that's how much I'm making'. Of course, this calculation is essential, but only for your own personal circumstances. In other words, can you afford it, can you pay the mortgage, service charges, etc during void periods, but it will not tell you the actual investment potential?

When It Comes To Buying To Let Properties, Profit or Capital Growth, You Can't Have Everything, Generally speaking, there is usually a trade-off between profit and capital growth you may get a good profit, but you usually have to sacrifice some capital growth. Often very up-market properties tend not to give such a good profit but do return good capital growth. I personally believe that unless you are very wealthy or desperately in need of the rent as income, it's best to settle for a good balance profit with average capital growth. I suppose these do's and don'ts are not really hard and fast 'rules', and there are always exceptions, but you would do well to follow these guidelines where practical in order to profit from your properties.

Buying Investment Properties Do's and Don'ts

1. Don't Be An 'Armchair Investor'


Over the past few years, many people have believed that all they need to do in order to invest in the Property in Pakistan was to browse a few websites, maybe join a Property Portal and let the portal select properties from which they then select. When it comes to successful property investment, whether you're buying to let or looking to develop, there is no alternative to 'getting your hands dirty'. You have to actually view the Properties in Pakistan yourself - no one is going to be as careful with your money as you. It can be pretty hard and tedious work but unfortunately, as in slimming where the only thing that really works is eating less and exercising more...there is no simple substitute.

2. Local Can Be Best


If you already live in or near a good investment area it is in my opinion, best to research your local area first because you know it best. Also, you can easily go back several times to check that you are making the right decision, whereas this is often very difficult if you're faced with a long journey to go back and forth to make these necessary checks.

3. Don't Get Too Personal


Don't buy an investment Property in Pakistan just because you personally would like to live in it. Always look at it from potential renter points of view. Also, try to avoid spending too much refurbishing the properties. You may fall in love with a fantastic kitchen and a bathroom, but unless yours is an extremely up-market apartment, you will be wasting your money, as there tends to be a 'ceiling' rent for a given size flat or house in any given location.


4. Don't Fool Yourself!

If you're buying leasehold Property in Pakistan, always remember to factor in all the costs. Here is a useful checklist:
Check the Service Charges
Check the Ground Rent
Check the Buildings Insurance (usually included in the service charge)
Remember that you may well have void periods, possibly up to two months in every 12 during the change of resident, etc.
Remember repairs and renewal costs
Gas and possibly electricity safety checks cost of a year, although if you shop around you can probably spend less.

5. Do Be Well Connected

The old adage, 'Location, Location, Location' is paramount when it comes to suitable buy-to-let property. It is always helpful for the properties to be no more than 15 minutes walk from a station if in a city like Lahore, or at least close to other travel links such as motorways, bus routes, etc. Also, look for handy shopping facilities, bars, and restaurants, as these are always attractive to the resident.

6. Do Pay Attention To Things You Can't Control


If you are buying a flat, pay particular attention to the common parts, it's no use ending up with your very own 'palace' set in a 'slum'! This can often be an issue in converted Properties in Pakistan, where there can sometimes be no formal or at best an ill-defined responsibility for the maintenance and cleaning of common parts such as hallways, drives, and gardens.

7. A Better Profit

As long as you purchase within a major city like Islamabad, Lahore and other cities, you will usually get a far better rate of rental return from a Property in Pakistan, although you will not get quite the same amount of capital appreciation. But of course, in the unlikely event that the market goes down (shock horror!) then you will get correspondingly less capital depreciation! In this respect, the purchase of a good ex-local authority property is actually a lower risk option than buying a more up-market one.

8. Do Research The Market. Who Will Be Your Resident?

Where and who are your potential resident? Are there businesses and organizations locally with an ever-changing workforce, such as hospitals, universities, even TV studios where people are usually employed on short-term contracts? Flats and house conveniently located for these kinds of places should usually let easily.

9. Where Is The Best Place To Look For A Suitable Investment Property?

As I have already said, for the best rental profit and minimum void periods it's usually best to purchase in urban areas, cities, places with universities, hospitals, good employment opportunities, etc. But should you consider buying a Property in Pakistan a long way away, in another part of the Country? It is certainly true that some cities and areas of Pakistan are better than others when it comes to renting out property. For various historical, cultural and employment security reasons, many northern and midlands cities offer good opportunities for rental investment, with very healthy rental yields.

10. Can You Get A Contract?

Of course, unless you are a cash-rich investor, it all finally comes down to getting a mortgage, which these days is not as easy. Remember that many lenders will not lend on blocks of more than six stories, so always check with your broker or mortgage provider first before proceeding too far with your purchase.

Comments

  1. Thanks ARZ giving wonderful tips and awesome knowledge. Your blog help to investors to make right decision on his investment.

    ReplyDelete

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