Guaranteed Income in Real Estate Investments and why are they convenient
There are many forms of real estate investment. There are those who buy a property to resell it and obtain land rent, those who think of taking advantage in the real estate sector, and those who even aim at industrial reconversion. However, the majority of Pakistanis prefer low-risk investments and therefore aim for real estate investments with guaranteed income.
What is Real Estate Investing?
Real estate investing involves buying a property as an investment to generate income. You can earn from real estate investments through direct income, the increase in value, and income related to the properties. There are many options to choose from when investing in real estate, as it includes everything from residential properties to commercial properties, to land. Additionally, you can buy residential real estate’s such as condos or houses, rent them out, collect monthly rent from renters, or sell at a profit when the property increases in value.
You may buy a house for the sole reason of increasing its value so that you can sell it at a profit. Additionally, you can buy commercial or industrial properties and rent them out, allowing you to get a steady income from your tenants on a monthly basis. Real estate investing can be pretty straightforward if you understand the basics of economics, risk, and investing. You need to make sure that the profit you earn from your investments is enough to cover the taxes you pay, the risks you take, and other real estate ownership costs. You need to do your research to figure out what type of real estate investment may be right for you. Before we look at the different reasons why investing in real estate is beneficial, you need to know that many real estate investors don’t invest directly. The main reason they don’t use their personal wealth directly is to protect their assets should something go wrong.
What Are Guaranteed Income Real Estate Investments?
Income-guaranteed real estate investments are all types of brick-and-mortar investments, which give you the absolute certainty of earning an income. According to some people, all real estate investments are guaranteed income because investing in the real estate market always pays off.
In our opinion, however, the real estate market offers many opportunities for guaranteed income investments, but also some risks. The real estate market is very stable. Fluctuations occur periodically, but market fluctuations subside within a short time. This is the situation if we look at the short term. If, on the other hand, we try to look at the real estate market over the medium term, we notice three trends:
Rental prices continue to rise more and more because many people are unable to buy a house. Banks, which hold many non-performing loans in their bellies, are increasingly reluctant to grant real estate loans.
Rates on real estate loans, at the same time, have reached very low levels. Banks now sell money for less than the face value of the money. But getting a real estate loan is always very difficult.
Residential property prices have decreased compared to the period before the crisis. What crisis are we talking about? Not of the crisis of 2008, but even of the crisis that began in the 90s, and which still lasts today. Those who bought a house in the 90s often bought it at very high prices. But if you are looking for a guaranteed income real estate investment, the best time for this type of investment is now. If property prices continue to fall, and rental prices rise, buying a house and putting it on income is the best choice.
Evaluate the Costs of Real Estate Investments with Guaranteed Income
All investments have their cost. Even real estate investments with guaranteed income. The first rule for those who want to invest is never to rely only on their own money but to take advantage of the banking leverage as much as possible. This means that even if you can buy a house in cash, it is preferable to ask for a real estate loan, investing only the money necessary to pay the advance for the purchase of the property. The real estate loan is the main cost of your investment. And also what can increase or decrease its profitability: the lower the installment of the real estate loan, the higher your income will be. The best solution is to take out a mortgage that does not last more than 25 years. In addition to the real estate loan, however, your investment will also have other costs:
Many people faced with all these things get scared and prefer to look for another type of investment. However, the best way to understand what the actual costs of your real estate investment are is not to imagine how much you will have to contribute to the budget of the condominium for the installation of a new lift.
How to Identify the Best Real Estate Investments with Guaranteed Income
Understanding what the costs of your real estate investment will be is only the first step. The next step is to figure out what the profits will be. To estimate the extent of your profits, you need to identify the type of property that allows you to have the highest income. The advice that many people are given is to buy a one-room or two-room apartment. This type of property rents out very quickly, especially in large cities. If the studio flat is very close to a subway station, a train station, an office area, or the university, you will be able to rent it for a slightly higher-than-average price.
Studios and one-bedroom apartments cost much less than larger apartments and therefore allow you to pay off the mortgage in a fairly short time. But secondly, before choosing, it is worth asking yourself a few questions: is the property in need of a renovation? Nowadays, buying a property to renovate is convenient: the property costs less, and you can enjoy deductions on renovation costs. But compared to a newly built property, a property to renovate could hide nasty surprises. A classic is plumbing, which typically starts failing soon after a renovation.
How to start
Several ways to invest in real estate.
You can use a real estate agent if you want to buy a property, making it easy for you to find properties for sale. There are also real estate brokers who find undervalued properties for sale and put them under contract. Using these intermediaries involves transferring ownership of the said property at a higher price. This process is best for finding homes you want to flip for a profit. Plus, you can eliminate the need for any professional’s altogether and purchase investment properties yourself.
Finally, the real estate platforms, which you can join as an investor, aim to acquire or finance real estate projects. In most of these cases, you will have to carefully evaluate the operations to join and the capital to allocate. The rest of the fulfilments will be carried out by specialized subjects. If you are interested in the latter option you can hire services from the Al Hayyat Group of Companies, a multifaceted group of Real estate development, construction, marketing, sales, and investment portfolio Management Companies.