I want to invest in a house where I could earn consistent income from the rent. The budget is approx 13 million. But my mandatory requirement is the security of investment. I don’t what to take any risk of investing in a property where there is any fear of house being occupied illegally by the tenant. I am settled overseas and cannot afford running for legal procedures for getting the house vacated from the tenant.
Please suggest the best place in Islamabad/Rawalpindi region where I can get maximum possible rent amount yet fully safe investment.
Thanks
Dear Manlec,
Risk free investment,
Dha phase2,
Bahria phase8,
Regards
Nadeem Bhai, Sorry no offence intended but probably you have not read the question fully or I would differ witb your opinion.
Bahria Phase 8 can not give rental return.
Rental return is usually where demand n supply gap exists.
These localities are far away from the business/job center of Islamabad. Why one would go to Phase 8 and spend so much fuel. Islamabad rental market is sectors as far as I know or societies closer to sectors.
If safe heavens investment like dha and bahria is far, you can also try commercial office or shop in secure place.
A boulevard shop at dha business bay would work for you. Defence villas is also a one good option but it will be a bit heavy on our pocket.
I think G-13 4 marla house is in your budget, plus you can opt to buy some flats in PHA Islamabad and Lahore, with good rental income plus no litigations no qabza mafias, and flats are easy to manage when we compare them with houses.
Agreed with Nasir bahi.
I would suggest buying a 8 marla plot in G-15 and building a single story house with remainder amount. Plot is half the price as compared to G-13 but rental value is in the same range with small difference. Afterwards if you have more cash you can make the second story and increase your earning.
G-15 is a completely secure investment which will keep rising in value because it is close to Pindi, close to Islamabad, close to Motorway close to New Airport and close to GT Road via Taxila etc. It suits a lot of people because of location.
I think PHA flats option as mentioned by Nasir Bh is the best option for you. I recommend you to go for G-11/4 C type flats. They are secure and gated which makes them ideal for living. You will be lucky if you find one as they are in high demand and very few people are selling them. The rental return is also good.
This shows how artificial our real state market value is, just a bubble of air, prices going up and down with no solid ROI in terms of rentals, example is with 13 million investment one cannot get the proper advise on rental outcome. This also shows that 90% of the investors due to which the price fluctuate are not the genuine (end) buyers. With one news on new road or pocession prices going up and with another news on delay it comes down, no developments for years and years, just people investing as to make the investment diuble, by holding files and keeping hopes.
Sohail, you are quite right. Unfortunately the business case of rental return from residential property is very weak in Pakistan, the other option is to go for commercial.
Thanks everybody. Please see my note below.
Thank you everybody for your valuable advice.
However, I have noticed that probably most of you have missed my mandatory requirement that I want to buy the house at a place where there is no fear of "Qabza" by the tenant. I have been told by some friends that in CDA sectors, there have been cases of qabza by tenant and they had to go to the court to get the house vacated.
Are houses in DHA1/DHA2 and Bahria safe in this regard?
What about G15? Is it safe to invest there in this regard?
Moreover, what is PHA flats?
Thanks a lot.
I think dha would be best in this regard and better go for govt servants as tenants.do not go for private parties.
@Manlec,
you are so cautious , SAADI_AQAURI SUGGESTIONS ARE PERFECT FOR YOU,
better go for dha, or bahria safari valley ,
no more thinking left or right,
you won't sleep comfortably in peace of mind , in any other location ,
as any where else you will have some perception of delusions , and illusion , as you are terribly cautious,
I am dealing with rent issues since childhood and had many cases with my tenants too. AH always won. After cases my assessment is that we lack knowledge of rent restriction laws which makes problem for us.
I have never come across qabza problem in any Islamabad sectors regarding residential properties unless owner has done some serious mistake. But my information is limited.
First, we should have proper agreement and attested from district court. Stamp paper should be proper and has the same names and signatures in issuing authority register.
Agreement should have witnesses signatures and ID card attached. Each paper of stamp paper should be signed by tenant and owner. All agreement should be on stamp papers and not on plain paper attached.
Most importantly, which many people ignore, is the giving and taking of proper rent receipt. If there is problem, this would be your strength.
I think G-15 will be good for you in your budget. My own experience in Islamabad is that private job people with small family has no problem at all. I had bad experience with a senior Govt officer. Those private job people whose employers pay rent are "the best" . No need to worry at all.
If you want I can shed more light on the topic. It's Iftar time.
My opinion is limited and others can differ.
@BR Malik…Very important and useful post. Please share more info like what kind of problems you ran into and other useful steps for keeping us out of any hassle.
Mainly my problems were not increasing the rent regularly. Subletting to some other people showing as real brother. Leaving heavy electricity bills. Demanding money for vacation of commercial property.
In my view one should be cautious before giving on rent. Recently I rented a house and even I checked profile of the person on Facebook and LinkedIn before agreement. One should not rely on property people. They know owner's touchy issues and they paint perfect picture for you.
Many of us have little idea that rent issues are governed by rent restriction ordinances of each area. No matter what type of agreement you have, all matters are ruled by that law unless you register the agreement with rent controller of that area. But the problem with registration is that one has to pay 5% of total rent expected in agreement time as registration fee. Multi nationals do this for commercial properties.
Govt officers are bad tenants in my view. Their training is to step on other's domain and get benefits. They do that. But other side of the coin if you have access to their senior, you can easily fix him in case of problem.
Private job people in telecom and bank are best. They come for a fixed time in Islamabad and leave after 3-5 years usually. Usually young people with small family. Pay regular rent as they get it from employer. Uninterested to involve themselves in problems and just want to enjoy. Profession of tenant really matter. For example, if you know a journalist or lawyer for a long time and give him some property on rent, it will end up in problem.
Another rule is not to give property on rent to friends and specially relatives.
I don't think giving residential property is a problem at all in Islamabad. Exceptions are everywhere.
Crux of the matter is that one should take care of legalities at the time of agreement and than chill. It doesn't mean that a strict agreement would make you safe. It's just that the agreement should not have any loophole.
@Manlec. Don't worry at all about problems in tenancy. Just focus on the area and budget.
Unless you want to live in same house later on once you move back to Pakistan, don't go for residential house for rental value.
Instead go for some commercial shop/plot which will give you higher ROI. House maintenance is very costly and does not give much return. (Maintenance cost nikal ker residential rent is nothing unless ghar F-7, F-8 type sector mein hou).
Mein yeh ghalti ker chuka houn ... App yeh na karein :)
Just to give you rough idea of rents in DHA-2 for example.
1 Kanal Upper portion 30-35K
1 Kanal Lower portion 45-50K
1 Kanal house in DHA-2 will cost you minimum 25 Millions. Maintaining 1 Kanal house will cost you some money too. So you need to take that in account also.