So You Want to Become a Landlord? Welcome to the Rollercoaster!
Let’s be honest – the first time someone said “real estate is passive income,” I almost choked on my anda paratha. Passive? Brother, the only thing passive is your bank balance when the plumber charges 15,000 rupees to fix a leak at 2 AM.
But here’s the truth: rental properties can genuinely make you good money – if you don’t mess up the basics. I’ve been renting out properties in Lahore and Islamabad for 7 years now, made plenty of rookie mistakes (like trusting a tenant who said “bhai bas 2 months delay, phir pakka”), and somehow still came out smiling. These tips are straight from the school of hard knocks.
1. Start with the End in Mind (Yes, Like Stephen Covey, But for Plot Files)
Before you fall in love with shiny new apartments in Bahria Town or DHA, ask yourself one question:
“If I HAD to sell this property in 3 years, would I cry or celebrate?”
Buy in areas where people actually want to live – not just where the billboard says “future New York of Pakistan.” In 2025, the safest bets in Pakistan are still:
- DHA Lahore/Karachi/Islamabad
- Bahria Town (all phases that are already developed – Phase 8 Rawalpindi, anyone?)
- Gulberg, Johar Town, Model Town in Lahore
- F-7, F-10, E-11 in Islamabad
Pro tip: Drive there on a Sunday evening. If you see families eating gol gappay and kids playing cricket in the streets – congratulations, you found a livable area.
2. The Golden Math Every Beginner Ignores (Until the Bank Calls)
Do this calculation before you even think of paying token money:
Rental Yield = (Annual Rent × 100) ÷ Property Price
Example: 5-marla house costs 1.4 crore You can rent it for 55,000/month = 6.6 lac/year Yield = (6,60,000 × 100) ÷ 1,40,00,000 = 4.7%
In Pakistan, anything above 5% gross yield is decent. Below 4%? You’re basically buying a very expensive hobby.
Fun fact: My first property gave me 3.2% yield. I called it “tuition fee”.
3. Cash Flow is King, Queen, and the Entire Royal Family
Positive cash flow means after paying:
- Bank installment (if financed)
- Maintenance
- Property tax
- Society charges
…you still have money left to buy biryani on weekends.
Negative cash flow? That’s when you’re paying from your salary to keep the property. I did this for 18 months. My wife still brings it up in arguments (“Remember when we ate daal every day because of your ‘investment’?”).
4. The Tenant Screening Ritual (Do This or Cry Later)
I have a simple 3-step tenant check:
- Salary slip + bank statement (last 6 months)
- Office visit (yes, I actually go – takes 30 minutes, saves years of pain)
- Previous landlord reference (call them, they’ll spill all the tea)
Once a guy showed me a salary slip of 3 lac/month. I got excited. Then I visited his “office” – it was a cabin in Ichra Bazaar with a Photoshopped signboard. Lesson learned.
Funny landlord line: “Good tenants are like honest politicians in Pakistan – rare, but they exist. Keep looking.”
5. Never, Ever Skip the Police Verification
In 2023, Punjab Police made it mandatory, but even if you’re in Sindh or KPK – just do it. Costs 2,000 rupees and 2 hours. I once skipped it. The tenant turned out to be on the “wanted” list. The day police showed up at my property with rifles, I aged 10 years in 10 minutes.
6. The 50% Rule (Not Perfect for Pakistan, But Close Enough)
In the US, they say 50% of rent goes to expenses (excluding mortgage). In Pakistan, I use the 60-70% rule because:
- 10-15% society/maintenance charges (DHA/Bahria are brutal)
- 5% property tax
- Random plumber/electrician visits
- That one time the geyser exploded (don’t ask)
So if you’re getting 60,000 rent, expect only 20-25K in your pocket after everything.
7. Renovate Smart, Not Fancy
Tenants don’t care about Italian tiles. They want:
- Fresh paint (beige or off-white – hides dirt)
- Working bathrooms (no leaking taps, please)
- Decent kitchen cabinets
- Inverter/AC wiring ready
I once spent 8 lac on a “luxury” renovation. Got only 10K extra rent. Could’ve just painted and changed the lights for 2 lac and got the same tenant.
8. The Rent Agreement – Your Holy Book
Never use the 200-rupee stamp paper template your uncle WhatsApped you. Spend 5,000 and get a proper registered agreement. Include clauses for:
- 10% annual rent increase (yes, you can enforce it)
- Who pays society charges (usually tenant)
- No sub-letting
- 2 months’ notice period
I once had a tenant who turned my 10-marla house into a girls’ hostel. Found 14 girls living there. The agreement saved me.
9. Build Your Dream Team Early
You need these people on speed dial:
- Reliable electrician
- Plumber who actually shows up
- Property dealer who doesn’t disappear after taking commission
- Lawyer (for when things go south)
Pay them a little extra to be your “VIP” contacts. Trust me, when water is coming from the ceiling at midnight, you’ll thank me.
10. The “One Property Per Year” Rule
Don’t try to buy 5 properties in your first year unless you’re already rich. My formula:
Year 1: Buy one, learn everything the hard way Year 2: Buy second using lessons from first Year 3 onwards: Scale up
I see too many beginners taking huge bank loans for multiple properties and then crying when one tenant disappears with 4 months’ rent.
Final Thoughts – Is Rental Property Worth It in 2025?
Yes, but only if you treat it like a business, not a get-rich-quick scheme.
In the last 7 years, my properties have given me:
- 6-8% annual rental yield
- 15-20% annual price appreciation (in good areas)
- A lot of grey hair
- Stories to tell at dawats
If you’re willing to learn, be patient, and not fall for “50% off plot files” scams, real estate can be the best side hustle in Pakistan.
Just remember: The property doesn’t make money. You do – by making smart decisions and not trusting tenants who call you “bhai” too much.
Happy investing, future landlords! May your tenants pay on time and your geysers never burst.
