A property portfolio is a collection of real estate investments made by an individual investor or an investment company. Property portfolios consist of properties you purchase exclusively for rental and investment purposes, not for private use.
Investing in multiple properties would help you generate a significant return on your investment over a certain period. For this reason, you need to invest in properties that deliver high rental yields and high capital returns, as it’s rare to find a property that offers both.
Investing in Real Estate
The benefits of investing in real estate are numerous. Real estate investing ensures a steady cash flow through rental income in the short term and high profits in the long term. Moreover, real estate investors can save money on tax by showing reasonable costs of owning, operating, and managing the property. The best investment against financial security is real estate, as you invest in physical assets that will increase in value with time. While rental properties can lead to higher cash flow, rent tends to increase with time.
By inflation, most businesses have stagnated, except real estate, because investors can pass inflationary pressure to tenants to raise rent and incorporate inflationary pressure in the form of capital appreciation. Thus, we find there is no single reason to “do not” invest in real estate because it seems a more reliable investment.
How to Build a Solid Real Estate Portfolio?
There is no defined benchmark in this regard. Generally, more investment in commercial properties will contribute to a more substantial portfolio as a real estate investor. Having at least three or more properties in your portfolio is a beginning as it will represent a solid property portfolio in Pakistan.
Real Estate Investments in Pakistan
Suppose you are a new entrant in the field of real estate investing; you need to take your time to do thorough research on the property sector. Watch out for newly and rapidly evolving real estate trends in the country. Practically all the major cities of Pakistan are going through a significant real estate investment shift from plots to high-rises.
Karachi is the largest city in Pakistan, which has turned into a skyscraper city. Super-tall buildings and infrastructure have turned the skyline of its urban landscape into a concrete jungle. Also, the second-largest city in Pakistan, Lahore, is showing aggressive property market growth.
Hence, LDA has now permitted high-rise developments in the city; Lahore is on its way to becoming the next big hub of multistory buildings in the country. Keeping in view, the capital city, Islamabad, has recently introduced mixed-used projects to promote the concept of multipurpose buildings and pave the grounds for a sustainable future for the town.
These cities are the best option in Pakistan to invest in the real estate sector, and if you are an expert in real estate, you should look for investment opportunities in these cities to build a substantial property portfolio in Pakistan.
BENEFITS OF HAVING A STRONG REAL ESTATE PORTFOLIO
Firstly, the most significant benefit of having a solid portfolio is that it allows investors to diversify their real estate business spectrum. Investing in a wide range of properties innately lowers the risk factor usually associated with real estate investing because every real estate market performs differently.
Furthermore, by investing in several distinct communities in the same or multiple cities, investors can generate considerable rental income on a short-term basis (short-term rental) and a profitable return on investment (long-term investment).
Lastly, but most importantly, if some of the investments in properties fail to translate into profitable outcomes, then this loss could be easily covered by other real estate investments generating profits.
Real estate is a diverse asset class that is simple to understand and can improve the risk-and-return profile of an investor’s portfolio. By itself, real estate offers cash flow, tax advantages, capital appreciation, competitive risk-adjusted returns, and inflation protection. And diversifying your portfolio in the real estate sector can lower the volatility of your investment. For further guidance, we have already discussed how an investor can build a solid real estate portfolio in Pakistan and how a diverse portfolio can benefit investors.