Multiply Real Estate Investments 10X Faster | Magic of Compounding in Real Estate
Multiply Real Estate Investments
Do you know you can multiply real Estate investments in Pakistan and make more than 24 crores in 12 years by investing only 50 lacs per year?
Do you want to become financially independent in ten years?
In the last fifty years, many individuals from all walks of life have religiously followed and have been able to transform from basic monthly income to billionaire status.
This is no ordinary magic performed by David Blaine but the universally accepted magic of compounding and today I will explore one of the most effective strategies which have worked for decades to help you multiply real Estate investments 10X faster.
Interesting market stat: 50% of the wealth is in hands of only 10 % of the investors and the remaining 90% of the investors have a 50% share in the same market.
The billionaires, work consistently with good consultants/advisors who enable them to constantly optimize the return on their portfolio. Moreover, they reinvest profits gained while consistently adding more funds on yearly basis. The second category invests without advisors/reinvestment and follows the buy-and-hold strategy with their limited research.
Now coming down to numbers and basic math of investing, the wealth growth formula has been working for eons. Please look at the illustration below.
Initial Investment = 1 Crore
Per year investment = 50 lacs
Total investment in 12 years = 6.5 Crores
Net worth after 12 years = 24 to 30 crores with 2 M+ rental income
You may ask how does that happen?
Let’s see the magic happening below:
So, let’s start from year 1 in which you will make the initial investment and pay the installments.
Year 1 to Year 3
We Started with a One Crore initial investment. We invested in an apartment at the pre-launch stage. The Down payment would be 4.8 million and the total installment for the first year of 2.2 million. The remaining amount from 1 crore is 3 million. In the 2nd year, we invest 5 million from our pocket and 3 million carried forward from the first year. Now we have a budget of 8 million to invest. In year two we simply paid installments and did not buy anything else.
We have carried forward 5.6 million from year 2 and added another 5 million. With 10.6 million we invested in another apartment unit. The down payment for the second unit was 5 million and the installment amount for both units totaled 5.6 million.
The net achievement in year three would be the asset addition in form of the second unit.
Year 4 to Year 6
In the fourth year, we would have possession of unit one which we bought as an initial investment. We would put it on short-term rental and earn 1.8 million. The installment amount of the second unit would amount to 2.4 million. This year we will not be doing any new buying. At the start of the 5th year, we carried forward a balance of 4.4 million and invested another 5 million. This year we will pay installments of 5.6 million. We received a rental income of 1.8 million from the first unit we would have bought in year 1. At year-end, we are still left with 5.6 million.
In the Sixth year, we would buy the 3rd apartment. Now the apartment’s investment value is 19 million. The down payment amount is 5.7 million. Our installments are 4.1 million for this particular year. However, the rental income has increased from 1.8 million to 3.6 as we now have two apartments making money for us.
Year 7 to Year 9
In the Seventh Year, we invested five million and brought forward 4.4 million. This year we will invest in a new unit with a twenty-one million value. We will pay a 5.7 million down payment on the fourth apartment unit. The installment amount is 7.78 million this year. The rental income saw an increase of 30% to 4.68 million. In the seventh year, we can see the effects of compounding and see our asset basket grow at a faster pace.
In the Eighth year, we carried forwards the balance of 4.68 million and invested 5 million totaling 9.46 million. This year we are paying installments of multiple units which amount to 9.46 million. At the end of this year, there is no balance amount.
In the ninth year, we invested another 5 million. The total installment payments are 6.44 million, more than the amount invested. Hold on! the rental income is 7.02 million. Now we are receiving rent from four apartments. The net balance at the end of the year is 5.58 million.
Year 10 to Year 12
In year 10 we will buy Two apartments valued at 26 million with would take our assets from 4 units to 6 units in total. The Down payment amounts to 15.6 million and the installment value to 7.14 million. Do not worry as our rental this year has increased by 30% which would total 12.1 million. This year we have invested our rental income and 5 million which we initially invested as we are growing our assets. We are left with zero balance.
In year 11 again we invested 5 million. We have an installment due of 14.6 million. The rent we received this year is 12.1 million. The balance amount after paying all installments is 2.5 million.
Finally, in the 12th year we invested 5 million and brought forward 2.54 million. This amounts to 7.54 million. The due installments are 14.6 million, but our rental income is 12.1. The net total which now 5 Million.
As you can see if I keep on using this strategy, I was able to own 6 serviced apartments in 12 years. If I keep on compounding for 20 to 30 years my amount would easily cross 2 billion. I have seen this work with many clients’ portfolios over the years. One crore Challenge is made for people who are committed to journeying with us to grow wealth and achieve financial goals.
You may contact me below to discuss various investment strategies that would enable you to succeed financially.
Frequently Asked Questions on Multiply real estate investments(FAQ)?
One size does not fit all, and I know you must have a lot of questions about the above illustration. This is just an explanatory illustration that demonstrates the growth of wealth and how you can multiply real estate investments simply using the magic of compounding in course of 12 years. However, the amount of investment per year may vary. The required investment is not 5 million in the One Crore Challenge. It may change depending on your investment appetite.
Q-1 The project developments are usually delayed in Pakistan so the actual ROI may be lower?
The above illustration is a smooth-sailing investment journey that many investors have enjoyed. As consultants, we ensure that we only invest in projects where we are not met with abnormal delays. However, if our plans do not go as planned what would happen? Let’s say that the units get delayed by six months to a year.
Our rental income instead of the 4th year would shift to the 5th year. The return on investment would not change in terms of Capital gain as market prices would increase alongside. However, the rental amounts would be less. If this occurred in multiple buying, we would still achieve 80-90% of our target.
Your net worth will still be 20 crores approx. in 12 years.
Q-2 How do you manage risk and ensure maximum ROI so I can effectively multiply real estate investments?
As consultants and asset managers we are constantly on top of things, if a project is getting abnormally delayed which can negatively impact our ROI, we will take an exit and move to the next investment.
Above all we only work in select areas and developers we trust. We carry out detailed research on the project and its potential before we invest to minimize risks.
We take rational decisions not based on emotion and have the capability to adapt to any new market conditions.
Q-3 Who is going to manage rentals?
Rentals are one of the important factors in the strategy above, therefore we have launched imlaak STR (Short term rental management) to ensure we achieve the maximum rental potential of a property.
The capital gains in property are also subject to its future rental yield, therefore different properties may show different behaviors and Capital Growth delay may occur if the project selection is not done correctly.
Some projects are residential, and others are commercial offering serviced or hotel apartments. In the Current market, if we stick to apartments, Residential apartments have different rental and capital gain prospects as opposed to serviced and hotel apartments.
In certain cases, we may go for a rental guarantee project offered by a developer, however, we always ensure that the developer does not overcharge us while offering such guarantees, or else our capital gains may suffer.
Q-4 Does imlaak only work on newly developed projects or also in plots and files etc?
We work 360 degrees and find a suitable investment whether it is a possession project or under development. Usually, development projects are good for capital gains and rental income. whereas possession projects offer lower capital gains but immediate cash flow with rental income.
Besides this, we carry opportunity trading in the plots and files sector. However, our previous experience with volatility in this sector and expected Government policies has taught us that we should keep exposure limited to 25% of our portfolio.
So our priority of investment remains as under:
- Underdeveloped projects offer good capital gains and future rental income.
- Possession properties with good upside potential and rental income.
- Plots and file trading.
Q-5 If I want to invest 10 Crores, how will you design my portfolio for investment?
One size does not fit all. Our plans are custom based on your needs and there are a lot of questions we need to know first, such as your present portfolio and whether you are doing a job or a businessperson. Your age and when are you planning to retire, etc.
However, as a basic principle of wealth creation and given we have at least 10 years, we would divide your investment as under:
- 50% in underdeveloped projects offering good rental returns in the future.
- 25% in possession properties offering immediate cash flow and rental income.
- 25% reserved for opportunity trading in the plots and files sector.
Q-6 Who will ensure my property is resold at the time I want exit?
We are asset managers who give full 360-degree service including the resale of any property purchased under the plan. We aim for properties that are easy to sell and we take full responsibility to ensure our clients get an exit at optimum prices.
Q-7 What is the past performance of your company?
In the last 6 six years, our return on investment has averaged 27% per annum while in some years it has been higher. The details of past performances will be shared at our meeting and all projects and investment avenues will be discussed in detail.
Q-8 Are there any hidden costs of entering into one Crore Challenge?
No there is no hidden cost. We will share a form and give a written commitment to the services provided by the company. Our motto is complete transparency.
This will ensure that you secured your present and future cash flows with passive income without losing an opportunity to trade in plots and files.
To discuss how we can help you with wealth creation and make your real estate investments multiply, kindly contact me at the number below.