Real estate markets are extremely complicated because there’s more to it than just buying or selling an investment property. A major factor behind it is the many types of real estate investors who trust real estate investment in Pakistan with their money. Therefore, a need to understand the real estate market and participants, as well as, their agenda to distinguish which one is best for you:
How do real estate investors work?
An investor is the one who fetches real estate investment assets in their portfolio. There are different kinds of investors. Expert real estate agent says that investors can work individually or as institutional, wholesalers, or investment strategist.
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Let’s have a look at different types of real estate investors
REIT investor
The most passive form of real estate investment in Pakistan is the REIT. It is same like investing in a stock market. The formula goes like you will have to purchase shares in an investment company and in return, receive a bonus when profit is paid by the company. The major advantage of investment in REIT is that you don’t have to be an accredited investor or experienced one like real estate agents. It is as easy as buying or selling shares but it is important to do your research before taking on any investment shares because you will have little to no control over how the company manages the system.
Buy-and-hold investor
Buy and hold investor is a kind of real estate investment where you buy an investment property but end up renting it out for a monthly income. Generally speaking, it is a kind of an active form of real estate investment in Pakistan for which you do all the homework for finding a tenant and sorting out maintenance issues. It is also a kind of long-term strategy because investors after buying property tend to keep it for years. It gives you stable returns and an investor or a landlord can control the amount of price coming monthly. Moreover, if you hire a real estate agent company you will have the chance to turn this into a passive investment.
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fix-and-flip investor
This type of investment is much more common nowadays. In this condition, the investor will purchase a real estate investment property that is undervalued, try to renovate the property, and resale it at a higher price. Once the buyer is found, investor keeps a difference between the initial investment price and final sale price as a profit. This type of investment has the golden chance to pay back in double the number. You can take help from a professional real estate agency to find a deal and figure out how to fix it. Be ready to count labor costs and additional renovation charges in your calculated budget.
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Wholesaling real estate investor
This investor works as a middle ground to find a deal between an investment property owner and an end buyer. Find an underpriced real estate deal and sell it for a higher price without spending money on renovating it. You can keep the difference between the price you paid and the one sold as profit.
How to select which kind of real estate investment is best for you?
Once you know about the types of real estate investors, it is important to decide which strategy you would go for. Keep reading till the end to get to know which type of real estate investment in Pakistan suits you:
Active vs. passive investing:
First, you have to choose whether you’re attracted to active or passive investment. Because active investing is of work. However, in return, you make larger profits, as well as, trading time and effort. With passive, there is less work and might be cutting profit.
Long-term vs. short-term gain:
the next concern is either you want long-term or short-term gains, while often short-term gains take a lot more effort as compared to long-term.
Real estate investment can be a great technique to expand your portfolio. However, if you’re just getting started, it can be confusing to differentiate between the types of real estate investors. Arm yourself with this knowledge to get a better idea of what type of real estate investing is best for you.