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Shahid Riaz
( 1 post )

[20 Replies]
I want to invest 4 million rupees in the property either residential or commercial, expecting rental of the property per month must not be below Rs 30,000. Kindly give your valuable advice, primarily looking for a property in Lahore or near Lahore.

    2595 days ago In Investors Advice
    Post Answer
    HASHIM RAZA
    (3 posts)
    Same question for me
      2365 days ago 

      PAK Ausi
      (20 posts)
      Rental return is mostly 5 percent of property value. So may not be possible to get rent 30 thousand on investment of 40 lakh.
        2365 days ago 

        MBS
        (1157 posts)
        Rentals rarely bring high roi. However, if you really need a scoop with less money, you gotta do some effort to identify such option out of the market. I won't say, its an easy deal to pursue.
          2361 days ago 

          Iftikhar Anj..
          (3 posts)
          Kindly visit the following links to find appropriate homes, flats and shops for investment and contact the agents or owner of that property to know about the current expected amount of rentals for these properties.

          for homes: http://www.zameen.com/search/results.html#rd_purpose=1&page_view=1&cat_id=1,&property_type=9,8,21,22,20,&price_n=2000000_5000000&sqft_unit=marla&sqft_conv_unit=3&view_sale=1

          for flats: Flats

          for shops: 2360 days ago 

          PAKISTANI-1
          (3019 posts)
          @mbs ...Yes rentals do not bring very high roi but the roi increases.

          According to ajmal the rental return is 5% of property value. Let us assume this 5% remains the same. So if the value of the property increases, the rental value will also increase proportionately.

          Automatically, the roi percentage will increase even if property value percentage (5%) remains the same - because your investment remains the same yet property value increases.

          Secondly, investment for rental is safe because your principal asset is safe and appreciates in value due to rise in property prices. On the other hand if you invest in business, the assets (such as equipment which is your capital contribution) depreciate in value, and there is a risk that expected revenues will not be reached due to foreseen and unforeseen circumstances - eg. Load shedding, drop in real income and purchasing power of middle class due to devaluation and inflation. Costs are getting higher by the day for example insurance costs, imported items costs, energy costs are sky-rocketing but consumers do not have the economic muscle to keep the businessman afloat by paying for higher prices.

          Personally i want business to flourish more than property because that is the sign of a vibrant and powerful economy. But we also have to be realistic.

          What do you think?
            2360 days ago 

            Saqib
            (67 posts)
            I have an oppurtunity in islamabad, where u can invist around 7 million and can get rent upto 50000 to 90000 per month.
            Ghauri town, buy a commerical plot around 6 million,
            Construct shops (temporarly shops) cost u around 6 to 7 lac.
            Rent it out from 15 to 20 thousand per month
            I have done the same and making 60000 per month from it. If u can construct basement and ground flour then u can earn around 90000 to 100000 per month.
              2360 days ago 

              Saqib
              (67 posts)
              I have an oppurtunity in islamabad, where u can invist around 4 million and can get good profit from it. If u cant spend around 7 million as i mention in my previous post.

              Buy plots in ghauri town phase 7 which is being under construction and in 6 months or so , it will give u good profit. Currently its prices is from 145000 per marla to 155000 per marla. Buy 5 marla plots as many as u can and keep it for 6 months or so , u will get resonable profit. I am avaling this oppurtuanity and getting good respoce.
                2360 days ago 

                MBS
                (1157 posts)
                @pk1 yes the value of land and rentals increase pertaining to real growth and inflationary pressures.
                And i agree, its the safest investment but the safer it is, the lesser the return.


                Now A realistic income expectation on 4mn investment would be 20000/mo. Now even the rentals are increasing over years coz of inflation or real growth, but the house/shop is depreciating physically as well- more maintenance costs, etc

                Secondly, it takes roughly 13-15 yrs min to recover your initial investment thru rentals, even if the rental income more than doubles in this period to 50000.
                But at the same time, your initial capital should also have become 12mn after 13-15yrs just because of inflation and currency devaluation.

                So where's the GAIN then, you block your capital, you put in all your efforts, you deal with messy tenants and you remain engaged with dealers to show ur property and sign the contracts and deal on day to day water, gas maintenance issues? You hardly break even on your investment after such a long period.

                So overall, i would say a commercial property might lead you to a good income, its very hard to make good bucks with residential properties.

                And yeah, am not ruling out the possibility of very good returns, if one gets hold of a great opportunity or spends his money wisely and timely.

                Generally, its easier to trade in plots, hold em for the right period, sell em and you're outta it. Not a periodic cash income but Less hassle, more return in one go.

                Ref: irr, future value of money
                  2360 days ago 

                  Nobody
                  (1 post)
                  Hi mbs i again love u a lot you are are extra ordinary genius i am very impress with your wise and nice sayings. Allah bless you. Wish every one should be wise like you. Love u love u really love u
                    2359 days ago 

                    Sheeraz
                    (33 posts)
                    @mbs

                    Good analysis but why an expectation of a profit of 20000 on an investment of 4 million? You can get 40000 per month on the same investment if you put in national savings. Interest factor is there but the returns are greater and there are no risks. The interest factor is discouraging though and forces many like us to look for halal options.
                      2359 days ago 

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