5 Tips to Mitigate Risk in Real Estate Investment

Pakistan real estate is worth more than $300 million and contributes 2-3% of GDP. So, why the citizens are still hesitant to invest in real estate?  Real Estate in any country has its own importance and worth. People tend to invest with great capital amounts and sometimes they end up losing all their investments. It is not that easy to jump into this industry without any skills and experience. But here we are going to discuss that every investment comes with uncertainty or the risk of loss. So. how real estate can be fully safe? It can surely be if you do a little effort.

Every investment is supported by any expert’s services and strong research. Because the amount of capital, department of the sector, profit earning capacity, time period of investment, nature, and attention are different for each investment sector. So you cannot simply think of investing in real estate one night before buying a property. You have to follow certain steps to mitigate the risk in real estate investment. Here are some of the pro tips for you to follow:

Prefer “buy and hold” properties

Before investing in real estate you should know the beauty of the “buy and hold” strategy. Here we are not against selling the property. But for beginners, it is suggested not to focus on earning quick profits. They can rather rent out the property and invest the time in finding the right tenants rather than finding new sellers. It will give you enough time to calculate the appreciation in the prices and side by side your cash flow is also maintained. Buying a property and trying to sell right away might bring loss due to many factors such as the recession time period, development status of the area, legal status, developers’ credibility, and the price of the property. But all these factors can become useful over a time period. So it is always preferred to buy and hold the property until it’s good to sell.

Diversify the investment

Never invest in only one project or property. Investing in multiple types of properties like commercial, residential, corporate, retail, or warehouse will also shift the risk burden on each asset and will let you maintain a good cash flow. But it will take good research and more effort, and capital to diversify the investment. But in this case, you are not much bothered by the vacancy of one property. Or if your property gets stuck you still can peacefully look for a tenant or a seller. Each asset will have a different ROI, rent, expenses, location, and nature. You will also gain significant knowledge about real estate assets and will keep expanding the business successfully.

Check the developer’s credibility

Before going to visit the property site, first, select the various properties and then check each property developer’s credibility. The goodwill of developers of the society or project helps you gain the trust of your tenants and buyer. For the past 6-8 years people have started to check the developer’s profiles to recognize their abilities and work. So, you also should do the same. The experienced developers also fail and the new ones are sometimes compatible enough. But investing in the projects of successful developers helps you minimize the risk.

For example, Avalon City Islamabad is a great example. It is developed by ZKB Developers. These are the ones who have built various successful projects proposed by the Government of Pakistan such as roads, bridges, dams, and metro stations. They chose a prime location and top-notch facilities to facilitate the clients and residents. So, choose the asset wisely and see who has worked on it.

Select the right city and location

The location of the property is one of the most important factors. A good developer makes the location a prime location. We have mentioned the developer’s importance above, now it’s time to check the location. The location decides the future of your asset and investment. Because the tenants are mainly concerned about the accessibility, nearby routes, and landmarks of the area. If the routes do not suit anyone then they won’t prefer buying the property.

Understand the real estate market’s trends

First, you have to get a little information about the real estate market trends. Such as hot selling locations of the time, top trending developers, and popular housing societies. To know these factors, you can get information from the internet and real estate consultants. They are always there you guide you and make you see an asset in every aspect. The agents will guide you about the suitable property and the best time to invest by judging the market trends.

References: Amanah Real Estate