We are all looking for investing in real estate and there are hundreds of opportunities out there. You can invest in any option ranging from raw land to developed plots, buildings, houses, projects, malls and apartments. After a while it all becomes very confusing and the more the merrier isn’t true any more. The psychological pressures of making an investment in the right direction actually start to cloud your judgment and in your desperation you end up listening to the advice of everyone around you. Your family pitches in, your friends pitch in the guy next door who has probably never made a profitable investment is also trying to be an expert as well.
After a while you decide to consult your best friend GOOGLE and you end up finding hundreds of new options and a few thousand more suggestions from the experts of the field who have never even probably seen what they are trying to sell you. The confusion keeps on growing and the frustration keeps on increasing, the marketing geniuses on GOOGLE make sure that you end up thinking that the best area to invest is where all the hype is.
Now you find some thing online and you realize that some one in your family or friends also praised a lot about it and finally you end up making one of the biggest decision of your life and invest.
Most of us do actually go through the above process every time we make an investment decision. This problem is very valid in Pakistan specially where every one seems to know everything and what more can you expect when you have people who have never studied one book of medicine offering you a complete prescription for free.
Can you figure out what did you not do while trying to find the best investment for yourself?
Yes, you did not followed a strategy and resultantly your decision is based on a number of distorted factors and chance.
So let me ask you a question, do you really want to put your life time savings on mercy of a chance?
It would have been better if you followed a strategy and a rational logical thinking process to reach your decision, some times the result could be similar but it is important to believe in your decisions in life rather than putting them up for chance. Whenever your decision of investment in real estate has been well thought and supported by logic and facts, it will eventually pay you in long-term.
Real estate profit risk index is just one of the many tools you can use during this process and it will help you reach a logical conclusion. It is not the only factor but it is one which can always come in handy when you are stuck.
Watch this video about Profit risk index :
Profit risk index is an easy to use tool and is always applicable to any investment. What it really does is to define the ratio between risk of loss and profit in an investment. Lets suppose a property you want to invest has a 20% risk of downside and a 20% profit in a year, is it worth to invest ?
In many cases we see that people have invested in real estate with much worse stats. A year and a half back people were investing in 9 Prism for a profit of 60% in 5 years playing against a risk of 20% . Looks ok isn’t it but not really, 60% divided per annum for 5 years is only 12% an year and we all know what happened next when after a year people have ended up losing almost 20%.
Does that make 9 Prism a bad investment?
The answer to this question is NO, it does not , in reality same investment can pay someone huge profits while some others will lose. Some people have made millions in 9 Prism where as some are presently in loss of a few millions. It is all about when, where and how, which i will cover in some later article or you can watch the video in learn the game section of our youtube channel.
Rule of thumb is that when investing in real estate you should not risk any more than 20% at any given time and the minimum profit expectation should be 20% in a year. In my opinion a transaction with 0% risk to downside with 10% profit is better than 20% risk of downside with 30% profit.
Also i do not believe that we should make investments in real estate which have more than 20% risk to downside in an year. It is better to remain under 10% risk and try to find out opportunities which offer 20 to 40% profits on the upside.This real estate Profit risk index is one of the strategies you can use when you are deciding to make an investment and it works better than GOOGLE or your next door neighbor.
Lets get this straight, no matter who you are and what you do, it is better to let the doctors treat you, lawyers defend you , architects and engineers to build homes for you and realty consultants to help you make the best investment. I personally look into all the investment options we offer here at imlaak.com and bring you the best possible solutions. Remember some thing which is good today may not be so good in a month from now or vice versa. You have to remain flexible and opportunities will keep arising for you.
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Investment Consultant and CEO at Imlaak
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Captain Shahnawaz Bhatti (Retd) is the founder and CEO of Imlaak which is based in DHA Lahore. He has represented a large number of investors in a wide array of real estate transactions. With more then 8 years experience in commercial real estate, marketing and real estate project management, he has a proven track record of guiding national and multi-national clients with their real estate portfolios and asset management. He is also an active real estate blogger and offers free advice through his articles. Imlaak handles real estate transactions valued at well over 9000 million every year. Our specific area of expertise includes strategic planning , transaction management, asset trading, partnerships & venture capitalist with experienced business owners, entrepreneurs, inventors & some proven-concept start-ups. In a very short time, Imlaak has introduced a new vision of professionalism, transparency and hard work in the real estate industry. ‘There is no better time to invest in real estate than today’ Captain S. Bhatti