Sooner or later, we all reach the right age to retire from working life, so we must start preparing early to enjoy a carefree retirement. Although it may seem too soon, the best time to start preparing for retirement is after the age of 25. Will you buy land or build a house.
Many wonder what type of assets to invest in according to their age, and most agree that the real estate sector is the best option. However, there is the question of what type of property to buy.
Since the real estate market has a wide range of options, from apartments, commercial premises, houses, and land, among others, to offer a complete answer to this question, it is important to know the advantages and disadvantages of each type of property available.
Buy a house or land are the two most viable options to invest in real estate for retirement, so in this article, we will focus on the advantages of each one so that you can make the decision that best suits your investment needs.
Advantages in Buying a Land
One of the investments that have attracted the most attention is the purchase of land. However, there are often taboos about these acquisitions. Therefore, below we mention the main reasons why investing in land is a good option.
1. Goodwill
Inflation is a factor that robs money of the ability to acquire goods; that is, it causes the value of money to decrease. In countries where inflation remains at stable levels, it is possible to protect capital with sound investments, and such is the case in Pakistan.
When preparing for retirement, this risk factor should be considered since retirement savings can be affected and lose their value over time and due to the various effects on the stock market, for example, what happened in 2020 due to the COVID-19 pandemic.
So how can we protect our capital from inflation? The answer lies in investing in assets that, instead of depreciating, increase in value over time.
The best way to safeguard your retirement savings is to invest in real estate, such as Capital Smart City, as they are safe, stable assets that increase in value over the years, along with inflation, which means that your money is not devalued.
Capital gain is the appreciation of the value of a good derived from the improvements made to the property as well as to the area in which it is located. An example of this is the purchase of relatively cheap lots in areas where there are now shopping malls.
In general, the surplus value of a piece of land can be between 10% and 20% per year, but this percentage can be higher if you know how to choose the right lot.
Although the acquisition of a lot by itself is an investment with great potential, this operation should be carried out in the states of the country where the value is more likely to increase and within urban areas, such is the case of Pakistan.
2. Possibility to Build from Scratch
What can be built on an acquired lot? Depending on the type of lot, you can build a house, commercial premises, warehouses, offices or industry; the possibilities are unlimited, in addition to carrying out the construction process on your own to prevent hidden defects.
The advantage of buying a lot is that there are endless options to build the property that offers the highest income. Buying or building is a question that many consider; however, the freedom to participate in the design process is a plus that only a bare lot provides.
Unlike buying a home that is 30 years old or more, which involves an additional expense for repair or remodeling, you can count on quality materials and workmanship, in addition to a completely new property.
The advantages of building a house or commercial premises are greater, since the profitability that they achieve will allow you to increase your capital in the medium term.
3. Possibility of Temporarily Using the Land to Obtain Other Income
By diversifying income, it is possible to maximize profits. Therefore, it is convenient to acquire properties for different uses. While a piece of land is being built, there will be others that are not in the process of being built. How to use this lot to generate additional income?
You can choose to offer the land for rent. In this way, the retiree will receive a periodic payment while the value of his property continues to rise. A lease agreement establishes the conditions under which the land will be used and, in turn, to be able to conserve the real rights over it.
4. Very Low Risk of Loss
Retirees have worked many years of their lives and are not willing to spend their money on projects with a high degree of uncertainty. Therefore, they should consider the possibility of buying a piece of land since it almost always wins.
As in any investment, the acquisition of land is not exempt from the risk of loss. The market will define which properties are in demand and whose value increases, but they can also lower their cost, which is rare.
However, when buying lots, there is a principle to remember during write-downs: you only lose when you sell below purchase value.
Fortunately, the time that lots are below their value is very short. As long as they are not sold, in a short time, the recovery of the investment will be seen. Even in times of crisis, it is where you should take advantage to buy more properties with the possibility of earning when the value returns to normal.
Is it Better to Buy a House?
When thinking about retirement, the most logical thing would be to buy or build a house since there are many means of financing that allow you to acquire a mortgage loan that will be paid off in the golden years.
However, although building a house has several benefits, buying it finished offers other advantages that we mention below.
Advantage
- The waiting time for delivery is less than for construction
- You can see the finished property and calculate the spaces for the furniture to be placed
- Time is saved in the search for supplies and labor for construction
- The construction company takes care of all the paperwork
- Housing can be found in houses within areas where there is no longer room for new housing
Disadvantages
- Extra investment for real estate valuation of the property to ensure that it is in good condition
- Additional expenses to repair or remodel aspects of the property that are not to the buyer’s liking
- Unlike buildings for commercial or industrial use, residences have a lower capital gain. This can be around between 5% and 7% per year, so it is important to make a calculation that allows you to discover if said profit covers the expenses involved in the maintenance and repair of a home
Steps to Buy Land and Build a House in Pakistan
Investing in the land offers a great repertoire of opportunities to increase wealth while enjoying retirement, but for the purchase to be successful, you must know the procedure for acquiring a lot and starting the construction of a property.
- Choose the area of the country that allows the best long-term capital gains to be obtained. The economic indicators that Inegi usually publishes will help identify these opportunities
- To facilitate the previous step and those that follow, you can choose to consult real estate investment advisors. Through them, contact is established with sellers, which allows for comparing prices and locations
- Once a land of interest is found, it is necessary to verify the legal status of the property in the Public Registry of Property. This means that it must be checked whether the person offering it for sale actually has the right to alienation
- You also have to find out in the Public Registry of Property if it is free of liens. You should never buy a good that has been offered as collateral for a loan or has an embargo
- It must be verified that the plans of the land coincide with those that the municipal urban development authority has in its registry
- The acquisition must be carried out before a notary public to certify the operation. It is not enough that a simple purchase contract is made between the parties
- Although public faith offers great legal support, it is preferable to register the lot in the Public Registry of Property. Even if the deeds of the land are lost, as long as they are in this registry, it will always be possible to prove ownership of the property
- If you are going to build a house or commercial premises, you must request authorization from the municipality and pay the corresponding rights
General Aspects to Invest in Real Estate in Pakistan
The acquisition of real estate in Pakistan is usually considered a vulnerable activity for money laundering prevention purposes.
If a property was used to commit crimes of this nature, a procedure called asset forfeiture might apply. This means that the government can take the property from the owner.
It is more common for crimes to be committed in buildings than on unbuilt land. However, in order not to be exposed to the loss of the property due to the actions of previous owners, it is appropriate to put a clause in the acquisition where it must be stated that the use that was given to said assets previously is unknown. With this, the buyer is relieved of responsibility.
You also have to take care of the payment method of the purchase. In order not to be negatively reported to the financial authorities, it is preferable to pay the consideration by the bank and, preferably, never make the purchase in cash.
Get to Know about Blue World City: the Ideal Development for you
If you are still not sure what type of land to invest in, Capital Smart city is the best real estate project in Pakistan, where you will find the opportunity to invest in high-value residential or commercial lots.
Invest in your Future with Land in Pakistan
In conclusion, is it better to buy land or a house for retirement?
To enjoy a decent retirement as a result of the efforts to increase our capital, what is best is to acquire land with professional advice, either to buy a house or start a business.
At Sky Marketing, we have commercial, industrial, residential and mixed-use land that meets the needs of each of our clients. More than 25 years of real estate successes and market studies guarantee the profitability and added value of our developments.
Get in touch with us so that one of our professional advisers can provide you with information about the project that fits your investment plan, and start building a prosperous future today.
If you want to know more about investments and real estate advice, we invite you to visit our blog, with more than 50 articles prepared for you.
