Two of the biggest barriers, while investing in Real Estate, for a first-time investor are; knowledge and sufficient funds.
One can easily educate themselves regarding the needed knowledge to invest in real estate by referring to different sources including visiting different real estate agents, personal research, books, etc. but what about money?
Having low capital, risky investments and fluctuating market trends raise concerns in the minds of the first time investors.
However, despite these concerns, investments are highly rewarding. A little investment can help you grow your wealth, ensuring a second passive income and a secure future guaranteed.
But you may ask, how much money do you need to invest in Real Estate?
Well, the answer varies for each project offering. Real estate investment could start as low as Rs. 1 million only.
Let’s break it down so that you can confidently move towards your first investment property with a realistic plan and approach.
Q. Why is Real Estate Investment important?
An investor has many options to invest in.
This ranges from stocks to bonds, mutual funds, etc. with each having different features and benefits.
However, out of all the options, real estate investments hold a significant advantage, ensuring guaranteed profits, by offering predictable cash flows, appreciation in value over time, higher returns and more incentives.
Real estate investment holds a significant advantage over investments in bonds, stocks, or mutual funds as it gives you full ownership of the tangible asset.
Today, the outbreak of COVID-19 has exposed the inadequacies experienced, especially in Pakistan.
The pandemic ignited major economic disruptions, severe impacts, global lockdown, and unemployment.
Where normal life changed overnight for everyone, real estate investments did not face abrupt changes as other investments such as in stocks and shares.
The real estate market is quite stable and the prices appreciate with time. As COVOD-19 slowed down the process, it also gave a chance to incur a lesser loss in real estate.
Q. What is a Commercial Real Estate Investment?
Some may think that investing in real estate means to own a house or a plot.
That is not the case, as residential units are a small category in the much larger world of the investment market.
To successfully turn real estate into a source of passive income, consider investing in commercial real estate instead of residential.
A commercial real estate unit encompasses a building, including shopping malls, retails stores, office centres, hotels, apartments, and condominiums.
Investing in commercial units is more stable, as the construction, investments and operations are managed by a ‘sponsor’ company.
You invest funds into any desired property of your choice, becoming a passive investor in the project.
Commercial real estate investors receive cash flow from monthly rents, ultimately resulting in higher returns and incentives.
Q. How much money do you need to invest in Real Estate?
Having cash on hand gives you access to many deals. The more the deals, the more the profits.
However, every real estate project has its unique features and an investment plan.
Real estate investment comprises of different expense categories, namely
- Token Money
It is a sum of money that has to be paid by the buyer as an indication of serious intent to purchase a property, a document on a mutual agreement between the buyer and seller about the selling price, and is facilitated by a real estate agent.
- Booking amount
Booking amount is commonly the 10% sum of the amount of the property that has to be paid first to book your unit. The remaining sum can be paid according to the instalment plan offered under the project.
- Monthly/ Quarterly instalments
It is an equated sum, paid monthly or quarterly, by the investor on a set date.
- Down Payment
A down payment, usually a percentage of the total price, is a specified amount of money, paid by the buyer or investor as a guarantee before the finalization of the sale.
- Possession Charges
This amount is the remaining 20% of the total amount, paid after the investor is given the ownership of the tangible asset, i.e. the property invested in.
- Starting Unit Price
The starting unit price is the lowest price unit in any project. Every project is unique, offering different deals, monthly profits and incentives. The total amount is subject to property taxes and fee such as transfer fee, stamp duties etc.
Are you moved to invest in commercial real estate?
Q. Is it Safe to Invest in Real Estate?
Are you on the lookout for an investment opportunity, but are scared of getting scammed?
Here are some of the salient features of an investment project that vouch for the safety of it.
1. Money-Back policy
A money-back policy guarantees a 100% refund, ensuring that an investor can pull-out of the deal and receive the invested amount at any time of the client’s choosing.
2. Approved projects
Investing in projects gives investors a financial stake in it. Along with enjoying the benefits, the investor will also share the disadvantages.
Hence, it is imperative that investors, especially first-timers, invest in legally approved projects by the state-owned authorities including the Capital Development Authority (CDA), Rawalpindi Development Authority (RDA), etc.
3. Company-owned Land and Project
This factor removes any third-party involvement in the entire process, as the dealings take place directly between an investor and the company representative.
Other questions that you might want to ask before investing in a real estate project are as follows:
- Does the company have a successful track record?
- How long has the company been in business?
- How happy are the customers who’ve invested previously?
- Is the company honest in their dealings?
Q. What are some Real Estate Investment Opportunities in Twin Cities?
If you are on the lookout for some investment opportunities, check out the table below. Delivering the perfect solutions for all your real estate problems, Graana.com brings you the safest investment opportunities on the fastest-selling projects in the twin cities.