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Building House in Bahria Orchard,

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   Advise Seeker
Friday, May 11, 2018 04:14 PM 
Reply: >
Experts! Plz guide would it be beneficial to build a double unit independent 10 Marla house in bahria orchard phase 1 for rental income? Moreover what are the rent rates in bahria orchard phase 1? Is rental property in demand in bahria orchard? :pkf
Advise Seeker replied on Friday, May 11, 2018 05:07 PM 

Although I am not an expert but given the current situation of real estate market no drastic positive change seems to happen in near future
Khan88 replied on Saturday, May 12, 2018 03:58 PM 

If you dont want to lose your money - dont invest in the next 2 to 3 years
Advise Seeker replied on Saturday, May 12, 2018 04:55 PM 

Can you PLZ elaborate???
khan 2 replied on Sunday, May 13, 2018 03:44 AM 

If you invest now, your best case scenario is that your plot retains its value for the next 3 years. Which effectively means around 30% loss due to inflation. In worst case it might lose 30% value which combined with inflation will mean around 60% loss. Add transfer charges, dealer commission, taxes, notices from FBR etc. The final decision for finance bill is that non filer cannot buy any plot worth more than 50laks. This will be passed on monday. So you can imagine the situation
Zaidi replied on Sunday, May 13, 2018 06:37 AM 

Rightly said. This Government has tried its best to kill property business. It is now very long-term scenario. Rental yield is 4 to 6 % and if considered property tax and maintenance costs it will be 3 to 5 % only. But unfortunately there are not much secure options available for a common man.
Khan88 replied on Sunday, May 13, 2018 11:16 AM 

@Khan2: Bravo a very good reply, Sir you have my respect
Advise Seeker replied on Sunday, May 13, 2018 02:43 PM 

Well that's a really good analysis. But my point is that lets say right now 10 Marla plot in Bahria Orchard phase 1 is within a range of 6 million including all costs. If any person having budget of Rs. 10 to 10.25 million instead of going for a 1 K plot in any society may go for construction of house that may fetch Rs. 50000 monthly as rental income for double unit 10 Marla house in bahria orchard phase 1. In other words after investing Rs. 10.25 million one could fetch Rs. 3 million in next five years i. e. Rs. 50000 x 12 x 5 years. There would be an increase in assets value as well. The average monthly rental income may also increase. Will any 1K plot fetch about 25 to 30 percent in next five years??? Isn't it better to go for rental income than investing in plots and wait for long periods of time to gain some profits that are uncertain???
Khan88 replied on Sunday, May 13, 2018 07:58 PM 

@ Advise Seeker:

There are a lot of assumptions in your analysis.

1st - Construction costs will go up within the next 2-6 months period significantly, oil prices are rising and rupee will devalue.
2nd - Will cost you Rs. 8 million atleast to construct a house that will get you 50,000 Rs. income
3rd - Assuming you dont have to pay income tax (under 1.2 million threshold), wealth tax, maintenance and other charges will mean your net income per month will be approx. 40,000 Rs
4th - Every landlord knows house is not always on rent, there are times between tenants - keep one month out just for this.
5th - Assuming you will be able to fetch 50 K rent, your income in five years will be 2.2 million (40K x 11 x 5) with total expense of 14 million. Yearly yield will be 3.14%.
6th - Price appreciation is not guranteed in 5 years, you cant take that into account. Price can go up as well as down but lets hope it goes up.
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