Are you on the lookout for investing in a house but have your doubts about making such a huge investment or you are wondering if it’s a good time to invest in the real estate market or not? How about you change the question and ask yourself this: Am I ready to invest for my future security yet or not?
For any new endeavor or major investment, the first and foremost thing to have is willpower. The firm resolution, strong grit and having your mind strictly set on your goal is going to get what you want.
Now, we are not saying that a firm decision and single-mindedness is all that you require towards making such a commodious decision, most certainly you have to consider the economic pointers of the real estate market for the time when you are considering to invest as well as your future plans, other goals, current financial standing and status of savings for the next few years. But the willingness to own a house and being able to fulfil all the responsibility associated with it aptly is what plays the most essential role in helping to clear all your doubts regarding making such a huge decision.
To make the decision easier for you here is a list of things you must consider:
Factors that show mental willingness
Nowadays, with so many options available to facilitate the process of procuring real estate properties such as installment based convenient payment plans including Lahore Smart City, Capital Smart City, Park View City, etc it is not so hard to arrange the required investment. However, this would still be a risky option if you are already in debt or do not have a sufficient amount of savings in case of any sudden crisis. By savings, we do not mean your monthly salary but separate savings account where there is an ample amount of savings as a mitigation plan to deal with such issues.
If you plan on buying some new property while your employment status is yet unstable, then such a major decision is a BIG NO for you as of this moment. Not having a secure and stable source of income is itself a mentally strenuous time, on top of that if you burden yourself with the stress of such a major decision things are most definitely bound to fall apart for you. Not only financially it could be a hassle but mentally very taxing as well. So focus on one major thing in life at a time.
We all have some personal goals and a smart person would always set a timeline to start working on each goal. A responsible person would not only plan out things but also make mitigation plans for each possible problem beforehand and ensure that none of the work timelines coincides with the other. For instance, if you have a pending degree and you still want to plan on new major decisions for your life. STOP RIGHT THERE and focus on what needs to be completed first. If you’re planning on starting a new family and want to make huge investments then this could be a wrong decision too. As a new addition to the family would require a massive part of your salaries and savings already. So the key here is to take your time, plan out these matters and then make an informed decision.
The above list helps us decide if we are mentally on that stage of life where we are ready to make massive investments or not?
Now the below-discussed points would help us acknowledge what are the pros and cons of investing in housing considering the state of the market? How to make an informed decision regarding what time is the best to invest considering the state of the market? Is it a good idea to invest in an expensive area where the prices are constantly rising?
What is expensive or luxury Real Estate?
A major query that should be considered first is that what is an expensive real estate property that deserves to qualify as a luxury? that deserves to be bought paying a hefty amount?
Several factors apply when we are considering if a real estate property is luxurious or not.
- Infrastructure or material used in construction
- Prime location
- Extra Amenities besides the basic facilities
- Negligible crime rate
If a real estate property satisfies the criteria of all of the above mentioned factors then it qualifies as a luxurious property and is worth every penny you pay (Following the market rate).
For example, In Pakistan below is the list of 5 of such projects that live up to the expectations of every real estate enthusiast and are considered luxury projects in light of the above criteria.
- Lahore Smart City
- Capital Smart City
- DHA Multan
- Park View City
- Top City
If you are a real estate investor in Pakistan, you can invest in the above projects without any doubt.
Pros and Cons of Investing in a High Priced Market
Now, what exactly are the benefits of investing in a market where the prices are continuously rising?
The real estate market has been trying to facilitate the buyers to increase their target market. With major cities all around the globe in constant competition to increase the value of the real estate property being able to provide better than all their competitors, there has been an obvious hike in the real estate prices.
While investing in real estate people mostly tend to look at the downside, which is a colossal amount leaving your bank account but forget to mention the luxury and comforts that come from them.
Pros/Benefits of investing in a high rising area
- Helps in building equity and opulence
- Future security
- Has a very affluent rental and resale value
- Permanent security against inflation
- More sustainable cashflow
- Highly amiable and somewhat exclusive tax benefits
No matter how highly a valuable asset is priced at you would always see investors pouring in. The one’s who are aware of the value of a beneficial investment would never consider it overpriced. A good investment always pays off five times more than how much you invested in it. So never hesitate from making a sturdy investment that would secure your future and pay you back by leaps and bounds.
Downsides or Cons of investing in high priced areas
Other than the pros of investing and benefitting from a luxurious investment, many interested buyers ask about the possible problems that might occur so they could plan out a solution in prior.
It would be a blatant lie if we said that the real estate investments are 100% risk-free and do not put forth any struggles or hassles for a potential buyer to endure. Any major decision could not be completely devoid of any presumable issues, anyone who opposes this is misguiding you for their vested interests or is simply unaware.
We wouldn’t exactly call these problems a downside of investing in real estate but merely some risk factors that one must have to consider and minimize those factors.
Here is a list of problems to expect while you are on the verge of and under the process of making massive investments in the high priced sector of the real estate market.
- Extremely time-consuming and taxing
- Needs to be very carefully planned out
- Major capital investment
- Investing a considerable time and a certain amount in maintenance
- Partiality in liquidity
- Short and long term liabilities
The above list of risk factors accompanying all the benefits you would reap from your investment might put many people in doubt. There is no need to worry if you carefully analyze all the plausible risks and work on making a mitigation plan in case any of these risks occur.
Mitigation plan for risks (cons)
- Keep the entire process including every single minor detail on paper. Keeping the process contractual would prevent you from any legal issues that might come your way.
- Keep your property insurance for every single asset you own. Especially the one’s you rent out.
- Find a trustworthy real estate attorney for any future legal issues.
- Strategize not losing most of the liquidity from your rented out assets.
Lastly, buying a house in a high priced area, which is deemed as luxurious real estate as per the market is never a bad deal if you are plan out things strategically and have a mitigation plan sorted for every plausible issue that might occur. This is the sort of investment that eventually pays off several times more than what you invested and comes with innumerable benefits.