Dear all,
I just want to get some opinion/advices regarding rolling a fixed amount of capital in short-term sale/purchase of plots. For example, if someone invests Rs. 5 million in rolling only, how much profit can it generate and how often?
Which method pays off better in the long term, Rolling or Holding plots until big jumps or constructing houses and then selling them on a profit?
Respected seniors are requested to give their input on this thread.
Thanks
As real estate investor long term investor is successful but if you are a dealer,then you can roll your investment by buying the item in demand first and then sell it to end user as by this way dealer became rich.But for normal investor rolling investment is just waist of time and money.One should not hesitate to switch his investment,if he feels his previous decision was wrong or no more fruitful as compared to other available options.That’s my point of view and not necessarily one should agree with this:)
Agreed AJ; but this is also my opinion, sometimes u succeed by rolling, but than u watch the property carefully.
I am also confused in similar sort of situation...thinking which one will b better for a 10m investment:
constructing a home in Safari Vally Abu Bakar block or rolling money in plots
It's good to roll money in files as nothing is concrete on ground.Rolling investment can prove useful in stable market too.But paying commissions to brokers on every deal,and sells in panic and buy in excitement in short time ,let the investor in loss in long term.For short term rolling investment,Human psychy matters a lot along with decision making power which affects in excitement and in depression.So it is good for dealers not for investors.So I would say trading in files rolling investment could be good if you trade with authority and understanding but for developed plots.Buy and hold strategy is good for investors.
Well as compared to investing in construction,it's better to invest in plots.That's my assessment and agree to disagree.
@Imran.Yes you can win sometimes in short time but in long term,short term investor will end up in a loss or less profit as compared to long term investor.
But trading in files is different,You can make good money, you can loose handy money too in short term.
Thanks everyone for your advices. AJ bro I agree with you but it seems that I need to be well connected to the market and really understand the dynamics. I'm still learning things so it might be a bit tricky for me. But yes, rolling in files seems good, if the file rates crash then all one can do is hold them until they rise again.
Respected seniors such as Mr Khan, Nasir Khurshid, MBS, Pk1, Syed Ibrahim, Zafar Ullah and others please advise.
If your source of income is buying and selling of property, then you need to keep rolling. You have no choice. You are paying your expenses from trading-profit, but in this case eventually, your net worth will reduce because you will be selling in good area (for example Zone 1) and buying in distant area (For example Zone 2) and then from Zone 2 you will be pushed back to outside Zone 2 etc. This is because you are pocketing the difference.
So if you are in the business of property trading, it is better to also do some property dealing. This way you can increase your net worth. You will pay your bills from commission income and you can invest your profit in improving your investment portfolio.
On the other hand, if your source of income is something else, and you are a long term investor, then I think the best approach is to buy in strategic locations which are newly developed or nearing development completion. This way, you have a good 10 or 15 years to see your investments growing exponentially (they will keep rising - firstly from completion of development, then from start of utilities, then from population increase, then schools etc). Just buy in areas where a new road or flyover is in the pipeline - for example B-17 or E-16/17 and then forget about it and go to sleep.
Or instead of strategic location, you can buy on the basis of big-brand-labels such as Bahria Phase 8, or Bahria Golf or Multi Orchards or DHA Valley. These are good even though location is quite far. Why? Because of the brand value and standard of development. Eventually they will make it big insha-Allah sooner or later.
But if you have another source of income, and you still want to roll, then you will take quite a bit of risk and you may make big time profit too. Or you might lose some value here and there. In this case, you should have the stomach to take some loss. In some investments you will lose and in some other investments you will gain - may be even big gain!
But in most cases salaried people and professionals such as engineers, accountants and doctors dont have the mentality to take loss so easily. After all it is their hard earned money.
On the other hand, for professional property traders - it is easy come easy go. So they will make some bucks here and lose some bucks there.
For salaried type people it is not advisable to keep rolling. Firstly, they are not in the market so they are depending on others to tell them what is good and what is not. Secondly, they will take tension when they lose. Thirdly, sooner or later a smart property dealer will get rich at their expense! This tension is in addition to tension of their job.
So my advice: Just make a mixed bag of investments - preferable in 1-2 cities if you can and then just sit back with a hot coffee in your hand and enjoy the ride on the passenger seat. Let the Malik Riazs and Ch Majeeds of the property world do their job!
Excellent Question put in by MR. Junaid....
I would say for rolling money in construction... Its not an easy thing for every man... It requires experience, skill and know how of property market as well as construction... And thats only few people around can master.... Also construction activity is a full time job, if you want to make it really profitable you must do it yourself.. I mean investor and contractor should be one.. If you have a safe construction bacground and knowledge, then think it that way... Otherwise think many times before making any decision.
For a common investor AJ is right its the holding thing which is feasible.... Putting money in files can be risky. It can turn out both ways....either good or bad .... In simple it involves more risk....
First you must identify your situation, convenience and set out your targets and aims, work out a feasibility study for yourself keeping in veiw all your factors.... Then it would be easy for you to decide which way to go.
Thats just my opinion
Excellent reply by PK1. I agree with him
Well said PK1.Specially I liked this part of your post,
"So my advice: Just make a mixed bag of investments - preferable in 1-2 cities if you can and then just sit back with a hot coffee in your hand and enjoy the ride on the passenger seat. Let the Malik Riazs and Ch Majeeds of the property world do their job!"
Just to add, If you are property dealer then it could be worth rolling your money.while sitting in your estate office,buy from someone who needed money badly and to sell someone who is keen to buy.Both will be contacting you in your office by telephone or will come physically to give you best bargains.One top of that they will give you commission too.:)
Well explained PK1.
Dear Junaid,
I think senior members like Pk1, AJ and others have given their kind views on ur subject question.
I think to be successfull in rolling money in real estate market, you should be very well informed with up-to-date information on the socities in which you are investing. Or u should some reliable dealer friend, which is very hard to find, then you can make good money this way. You should have sufficient time to work with these deals (sale and purchase).
However, I would say that this thing works well when the market is increasing with good pace and this is suitable for files trading, as it requires less capital and easy to sell. However, as already pointed, the chances of loss are very high, if you don't have strong nerves. It would also depend upon ur money, if it is surplus money then you can play with it, but if it is otherway around, it could result in anxiety and pressures.
Long term investment in safe and secure projects is always a good option, but still it depends upon personal preferences.
Regards
Junaid , in my opinion if you can afford long term investment , than even an average investment can become profitable over the years in Pakistan. The Art is to make profit in short term investment... For that one needs to buy at the right time and sell at the right time... One of my frnds bought a plot for about 18 lac.. It touched its peak of about 30 , now he is getting around 24 lac. So he will still be earning 5 lac excluding dealer commissions on the sale/ purchase but he could have got 11 lac if he sold at the peak time..
So the Art is to get a property which is worth buying and selling it when there is an upswing..
However its easier said than done and we all who invest know this through experience...
One has to spend some quality time in the market on daily basis for making short term investments.. Other wise the safest bet is what Pk1 so beautifully put..ie make long term investment in high brand names and drink ur Coffee..:)
Lot of credit goes to PK - 1 for such a clear and realistic assessment about the investment by salaried class and property dealers. It was pleasure to read the stuff. Good job done.
Thanks a lot everyone for your kind advices especially Pk1, Shoaib Mansoor, AJ, Mr Khan and Matrix bhai.
Pk1 bro. Thanks a lot for your detailed, good and looong advice. I am very thankful for your time and efforts.
Actually at the moment I'm jobless and have some limited capital to invest. Sometimes I myself don't know what to do lol but nowadays I have got the "josh" of making a small house in G-15/16 or B-17/DHA/Bahria etc. I intend to sideline a very small amount for my living expenses and reinvest any remaining profit in another project. However, I don't live in Islamabad so that might be a bit of a problem but I guess I can manage somehow.
If that doesnt happen then I might invest in some small shops in an under construction plaza as it would cost less and the return should be fairly quick and good.
If I have people like Pk1, Mr Khan, AJ, Shoaib Mansoor and other respected members of this forum with me, then I don't need to take any tension :)
I wish to invest in something like E-11/3. People who bought cheap files in 2005 are selling their plots on extremely high rates now (1000%+ profit in about 7 yrs). But I guess back then the future of E-11 was bleak and there were some big scandals about it also so people avoided it only to realise that it became a success a few years later and they lost the chance.
Once again, I am very obliged to you guys for all the kind and sincere posts.
Thanks Junaid, we are here to support you in what ever capacity we can. This is the main purpose of this forum, to share and to learn with respect and dignity.
Thanks
Just gone through the thread. Pk1 and AJ both have placed worth reading advises "free of cost". Thanks guys for ur valuable input. Keep up the good work.
Cheers
Much appreciated Mr Khan…
Thx Junaid… Same support needed from your side also…
Dear Junaid,
Short term rolling investment in real estate is always risky business. If you are not full time in the market, then chances of losing are more than gain.
It certainly does not replace earning of a full-time job and becomes more riskier as you start making decisions under pressure. In property business the winner is the one who can wait.
5 million is a decent investment that can you help start a real business. It can give you return and create jobs for others.