Things to Consider Before Investing in Real Estate

Real Estate is the best way to make your investment secure and profitable. This fact is true indeed, but it is accompanied with some other decisions and choices. There are certain points you have to keep in mind while investing in real estate like doing a considerable amount of research on prices, market conditions, the legality of properties, prices of properties, and many more things.

If we look at Pakistan’s real estate industry, we may find other factors than the traditional ones. The economic condition of our country keeps changing due to many factors which directly influence the real estate industry in both positive and negative aspects. But after the inflation, a positive change has been seen in the real estate of Pakistan due to more foreign investments as the rupee devalued and overseas Pakistanis tend to invest more. Here are some facts to consider before investing in Real Estate.

Type of property

While purchasing a property you will have to look for the right type whether you want to buy-and-hold it to sell later on profit or to buy a property and rent it out. Now there are majorly two types of properties, residential and commercial. Rethink your requirements because every property comes with different terms and conditions.

Buying budget

Sort out and arrange the finances before you call an agent. See whether you have to take a bank loan, borrow from any other source, or choose self-financing. Visit the properties and compare them with your budget. You can choose among studio apartments, two bedrooms apartments, villas, farmhouses, residential plots, or commercial properties. You have to allocate the finances accordingly to make the down payments, installments, or full payments.

The legal status of the property

Check the legal status of the property. See if the society has approved NOC. Several authorities issue the Non-Objection Certificate to the projects. In Pakistan, PHATA, RDA, TMA, MDA, LDA, PDA, and CDA issue the NOC to the developers. Similarly there is this list of illegal housing societies in Islamabad Many other points guarantee the legality of the property but look for the NOC as it is a legit legal approval.

Location of Property

The location of the property is the key point to determining its worth. A good agent will never suggest you invest in an inappropriate place or location. Some projects are accessible through major convenient and main routes attached to them or have many important projects and buildings in the nearby areas which increase the demand for the property. So, choose the location wisely by visiting each site.

Price of property

Compare the prices of selected properties. Contact different agents and consultants to determine the right price and don’t let anyone scam you. Prices of the properties fluctuate due to changing factors in the economy. Plus, many other aspects are involved in the price difference like different locations, legality, developers’ credibility, and demand of the project.

Some housing societies have very low prices, like Avalon City Islamabad and at the same time, there are others like Bahria Town, that are very high in prices. So you have to find the best one, suitable for you.

Competitive analysis of properties

Compare the value of different projects with every respect. You may select multiple properties to invest in and contact several agents. But do the competitive comparison of the projects according to their sizes, prices, locations, owners, developers, legal status, payment plans, and demand. During the analysis you may come across many new and unknown facts about properties to use in future and these may also help you select more projects to invest in.

Payment Plan

Compare your budget with the payment plans of the selected properties. See the down payment amount, possession time, installments payment, interest rates, development charges, and total amount of the property. These might vary due to many factors like location, economic conditions, legal status, or development status of the property.

Law and order

Before you consider investing in real estate, you have to get across a real estate lawyer to help you out with all kinds of legal matters. You have to see all the taxation methods and tax rates for different properties. This will also help you to identify any property as a legal project, check developers’ legal history and property’s legal worth. You have to get familiar with all the legal authorities and procedures related to real estate laws in Pakistan for this purpose.

Return on Investment

Buying a property for investment purposes makes you determine the return on investment. You may want to rent out the property or just sell it after the prices increase. But first of all you have to ascertain the return you expect to earn. Now calculate the annual rent or selling rate of property to eliminate any type of uncertainty. You should be able to predict the appreciation or devaluation of the property as it directly affects the ROI.

Developer’s credibility

You have to check the work history and previous projects of the developers of the selected properties. Many times the developers have ongoing scandals which you’re not aware of or maybe you are missing out on many other expert and professional real estate developers. It will also help you determine the value of the property with respect to its owners and developers.

 

Sources: Amanah.pk Real Estate

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