IN THIS POST:
– Houses
– Rental Portions
– Flats
– Vacation Homes
– Offices
Looking for a rental property to earn some extra income on a monthly or yearly basis? Well, there are actually several types of rental property investments that can reap enormous profits. Stay with us as we discuss each of the possible rental investment options one by one.
Types of Rental Property Investments in Pakistan
Families, young couples, students, and newly relocated employees are some of the target demographics for a residential rental property, most of whom can either not afford to buy a house or would prefer not to, primarily because they are uncertain of where they want to live long term or are unsure of the state of their finances and expenses in the near future. Small corporations and start-ups are also in the rental market, majorly looking for commercial premises for rent.
As a real estate investor, you can cater to each or any of these target markets by choosing the right kind of rental investment to add to your portfolio. Here are the most common types of properties to generate a rental income in Pakistan:
- Single-Family Homes
- Multi-Family Properties
- Apartments
- Vacation Rentals
- Office Spaces
Now, let’s discuss each of these rental property investments in Pakistan with respect to their potential for yielding a stable rental income.
Single-Family Homes
Single-family residences are ideal for small families looking for a rental property at an affordable monthly rent. When they are bought in the right neighbourhood at the right price, single-family homes can be quite profitable as rental units. A single-family residence is generally a detached house that is enough to accommodate one family of around 4-5 members. Here’s what to consider before investing in a single-family home as a landlord:
- Smaller homes are easier to maintain.
- A home located in a good neighbourhood will attract tenants quicker.
- Single-family homes also have good selling potential.
- A small property is easier to finance as an investor, allowing you to save and diversify your portfolio further.
- Renting a home to a family usually means that your tenants will not be moving abruptly since families have their children’s schools, jobs, and other commitments to consider before moving homes.
Multi-Family Properties
Have a larger budget and want to invest in one large property for rental benefits? Rather than going for a larger single-family house, consider investing in multi-family residences. What sets these units apart is that they can actually be rented out to different families as smaller units, while they may be sold as one. Thus, you might have two or even four families living in the same square footage as one large house, giving you four times the earnings in monthly rent.
Commonly known as duplexes or triplexes, here’s what to consider when you’re buying a multi-family property:
- Renting out larger square footage to multiple families means earning more monthly rent quicker than buying a large house and renting it to just one family.
- It is also a smaller initial investment.
- By renting out several small units, you will no longer be completely relying on only one family for your monthly passive income.
- There will also be lesser chances of having a completely vacant rental property if one family chooses to move out.
- Owner-occupied rental properties have a lot of benefits and attract more tenants, so you can consider living in one unit or portion while renting out the rest of the property.
- Ensure that every unit has a dedicated entrance and sufficient privacy to boost the property’s appeal.
- Communal areas like a backyard, parking area, or laundry room are always an added bonus for tenants living in small rentals.
Apartments
The most rewarding option for most landlords is to buy one or several small flats in a residential building and rent them out to potential tenants. The reason why this option is the most rewarding is that its target audience is versatile. From single employees relocating to a city to students who do not want to live in a hostel to young couples and even small families, rental apartments appeal to everyone, especially in a city like Karachi, where more than half of the population is used to vertical expansions rather than owning/renting their homes from the ground up.
Here are some features that make investing in a rental apartment so appealing:
- Apartments are fairly easy to maintain.
- Renting out more than one flat ensures that you are never completely losing your rental income in case of a vacancy.
- You can appeal to a larger demographic, but we’d recommend choosing whom you want to rent the apartment to beforehand, so your interior décor can appeal to the potential tenants even more.
- Having apartments for rent in a luxurious complex means tenants get to use additional facilities for free, and you don’t have to maintain any of them either.
- Choose the right floor in an apartment building while investing, and you’ll be able to get better tenants and charge more rent.
Vacation Rentals
Investing in a vacation home in Pakistan is a fairly new concept, but it is a hugely successful one as far as real estate investment is concerned. While you might face some difficulties in selling the property, unless someone is willing to move to a scenic region for their retirement, it can be a good rental prospect, especially if you are buying a house in a well-planned and luxurious community like Patriata Resort Valley. Here are some of the other factors to consider as you invest in a vacation rental:
- Vacation rentals yield good returns from tourists who are often willing to pay more for a luxuriously furnished house.
- Having additional facilities in the same housing community is an added bonus as your touristy tenants get the best return on their rent and will be more eager to stay in your rental unit.
- There are several pros and cons to owning a vacation home, and one of the downsides is that it is a seasonal rental, which means that it will only perform well and yield rental income during the peak tourist season of your chosen region, remaining vacant for the better part of the year.
- However, investing in a vacation home in Pakistan means having a property ready for your retirement, with beautiful scenic views and the best amenities at your doorstep.
- Moreover, if you want a vacation any time of the year, you know where to go as you get to stay in a furnished property without paying any rent, and don’t have to search for hotel vacancies either.
Office Spaces
Commercial office spaces include offices built in bungalows as well as those in commercial buildings, and while both options are open to rental property investors, buying official suites in a high-rise and then letting them out to smaller firms is a sure-fire way to using the premises and getting a long-term rental agreement signed between both parties.
Renting commercial office spaces is quite often the most reliable kind of rental investment, primarily because your tenants are other professionals and corporations, whose credentials can easily be verified, and who are less likely to default on your rental payments. Here are some other features of investing in commercial rental properties:
- Timely rental payments with fewer follow-ups.
- You will also have fewer disputes since the matters will be handled a lot more professionally via the correct channels.
- Your tenants will be a lot more reliable in comparison to residential alternatives.
- Renting out a commercial space often means that you are no longer required to maintain the space as the owner because corporations have their own reputation at stake with a poorly presented interior and will perform regular maintenance tasks as needed on their own.
- Long-term rental contracts are quite common with commercial rentals, meaning less frequent vacancies.
These are the different types of rental property investments that can benefit you in the long run. Irrespective of which property you buy, here is how you can make your rental ready for your tenants. If your rental unit has been lying vacant for far too long, here are some reasons that may be causing it and what to do about it. You might also consider upgrading your property with these rental features that attract tenants the most. You should also check out this post on why tenants move out of rental properties, which can help you improve yours and prevent this from happening.
Stay tuned to Zameen Blog for more property renting tips and tricks. Email us at blog@zameen.com with your comments, queries, and feedback, and we’ll get back to you on them shortly.
