Same Project, Same Property, Different Returns: Why Your Investment Plan Matters

Three investors buy the same 200 sq ft Sky Villa share in the same project. They hold it for the same three years and sell at the same assumed price.

Yet one makes a projected PKR 64 lakh profit, another PKR 76 lakh, and another PKR 73 lakh.

Interestingly, the investor earning the highest rupee profit is not the one earning the highest percentage return.

Why? Because choosing the property is only one part of an investment decision. How much you pay, when you pay, when income starts and how you exit can change the outcome considerably.

The Sky Villa example

Our 15 October comparison used a 200 sq ft share at a base rate of PKR 50,000 per sq ft, giving an original value of PKR 1 crore. For this revised illustration, every scenario uses a projected sale after three years at PKR 70,000 per sq ft: a 40% increase from the base rate. The original 200 sq ft holding would therefore be worth PKR 1.4 crore. A fourth option below uses the same exit rate but builds a larger holding.

These are historical educational scenarios, not a current offer. The future selling price is a projection, not a promise. Expected rent and payments described under a rental-guarantee arrangement must also be distinguished. The figures below exclude taxes, fees and other costs.

1. Installment plan: flexibility in paying

The first plan provides a 6% discount, bringing the purchase commitment to PKR 94 lakh. The original chart spreads payments over 18 months and includes PKR 18 lakh in expected rental income during the three-year holding period.

At the assumed sale price:

• Capital gain: PKR 46 lakh.
• Expected rental income: PKR 18 lakh.
• Total projected profit: PKR 64 lakh.
• Total return on the PKR 94 lakh purchase cost: 68.09%.

At first glance, this appears to be the lowest-return option. But that percentage alone does not capture its payment flexibility. The investor does not necessarily have the entire purchase price tied up from day one.

2. Rental-income plan: a longer income period

The second plan uses the full PKR 1 crore purchase price without a discount. The earlier model includes rental payments of 12% a year on that original value for three years, totaling PKR 36 lakh.

At the same assumed sale price:

• Capital gain: PKR 40 lakh.
• Modeled rental income: PKR 36 lakh.
• Total projected profit: PKR 76 lakh.
• Total three-year return: 76%.

Among these first three plans, this produces the highest rupee profit. Its longer income period more than compensates for the absence of a purchase discount.

However, a rental guarantee is not a guarantee of the whole projected return. The rental obligation depends on the agreement and the payer’s performance. The assumed increase in property value remains a separate projection.

3. Upfront-payment plan: a lower entry price

The third plan applies a 15% upfront discount, reducing the acquisition price to PKR 85 lakh. It includes PKR 18 lakh in expected rent.

At the same assumed sale price:

• Capital gain: PKR 55 lakh.
• Expected rental income: PKR 18 lakh.
• Total projected profit: PKR 73 lakh.
• Total three-year return: 85.88%.

Among these first three plans, this is the highest percentage return, despite producing PKR 3 lakh less profit than the rental-income plan. The reason is simple: the investor commits PKR 15 lakh less purchase capital.

But that’s not all… a fourth way to build your holding

BUT THAT’S NOT ALL · OPTION FOUR

Your rent doesn’t disappear.
It becomes more property.

Allocate the additional share upfront. Settle its agreed price with the next three years of rental credits.

200sq ft
Original holding

+

72sq ft
Rental-credit allocation

=

272sq ft
Total upfront allocation

Ownership proportions only, not a floor plan. Original 200 sq ft in blue; additional 72 sq ft in gold.

PKR 36 lakh in rental credits → 72 sq ft at PKR 50,000 → PKR 50.4 lakh projected extra-area value at PKR 70,000.

Illustration requires the agreed upfront allocation and rental-credit settlement. Cash rent retained is zero; no extra-area rental income or guaranteed resale is included.

90.4% projected total return over three years: the most rewarding of these four illustrations on this measure.

Allocate more area upfront

What if the investor does not need the rental payments as spending money? Instead of taking PKR 36 lakh in cash over three years, the investor agrees at the outset to apply those payments toward additional ownership at the original PKR 50,000 per sq ft rate.

The additional area is allocated upfront at that fixed price. It is not purchased later at the projected PKR 70,000 resale rate. Settling the agreed price through rental credits over three years does not change the area allocated or this model’s terminal value.

• Original cash investment: PKR 1 crore for 200 sq ft.
• Three years of modeled rent: 12% × PKR 1 crore × 3 = PKR 36 lakh, credited toward ownership.
• Additional area allocated upfront: PKR 36 lakh ÷ PKR 50,000 = 72 sq ft.
• Total holding: 272 sq ft.
• Projected year-three sale: 272 × PKR 70,000 = PKR 1 crore 90.4 lakh.
• Projected profit after the original PKR 1 crore cash investment: PKR 90.4 lakh.
• Total three-year return on cash invested: 90.4%. Cash rent retained: zero.

Compared with taking the rental income in cash, this adds PKR 14.4 lakh to the modeled profit: the additional 72 sq ft gains PKR 20,000 per sq ft. The difference is 14.4 percentage points of total return, from 76% to 90.4%. The PKR 36 lakh rental credit is already reflected in the larger holding and must not be added again as cash income.

This has the highest modeled total return of these four illustrations, not a universally best outcome. It exchanges three years of spendable rent for a larger property interest and depends on the assumed resale price.

The illustration requires an agreement that permits the 72 sq ft additional allocation at PKR 50,000 upfront and specifies how rental credits settle it. It does not establish that a 72 sq ft top-up is an available product. If the applicable minimum additional share is 200 sq ft, these rental credits alone are insufficient and the arrangement needs separate approval or additional capital. No rent on the extra area, buyback or guaranteed resale is assumed.

Why the returns differ

The building and projected exit rate per square foot have not changed. Plans A–C retain the same 200 sq ft holding; Plan D adds 72 sq ft through the agreed rent-to-ownership structure.

What changes is:

• Entry price: a lower purchase cost creates a larger gain at the same sale price.
• Income: different payment arrangements can provide different rental periods and amounts.
• Capital committed: profit as a percentage depends on how much was invested.
• Timing: money paid today is tied up longer than money paid later.

That last point is particularly important for installments.

Why installment returns need a different calculation

Suppose a plan allows you to pay gradually over three years. You might pay a booking amount today, further installments next year and the remaining amount later.

It would be inaccurate to assess the timing of your investment as though every rupee had been paid on the first day. Some of your capital remains available to you until its installment becomes due.

The simple return calculation, profit divided by total purchase cost, remains useful. But it does not measure how long each payment was invested.

For the same total purchase cost and receipts, paying some of the cost later can improve the annualized cash-flow return compared with paying everything upfront. It does not, by itself, create more rupee profit.

This is why we should compare both:

• Total profit and total percentage return.
• Annualized return based on the actual payment and receipt dates, commonly calculated using XIRR.

An accurate XIRR needs the down payment, every installment, rental receipts, costs and eventual sale proceeds, each with its date. Dividing a three-year return by three is not a substitute.

Equally, calculating the entire profit against only the booking amount would exaggerate the result because it ignores the installments still owed.

The recovered chart uses 18 months of installments. A three-year payment schedule would require its own dated calculation rather than silently reusing that chart’s assumptions.

Which investor suits which plan?

The installment investor

This may suit someone with dependable future income who wants to spread the purchase commitment and retain reserves. The important question is whether they can meet every payment even if rent starts late. Future rent should not be treated as certain funding for an unavoidable installment.

The income-focused investor

The rental-income arrangement may suit someone prioritizing cash flow during the holding period. They need to understand when payments begin, their frequency, the calculation base and the agreement’s conditions. Income received regularly can serve a different purpose from a larger potential gain at sale.

The upfront investor

The discounted plan may suit someone with available capital who values a lower acquisition price and has sufficient reserves after paying. A discount is less useful if committing all available cash forces an early sale later.

The ownership-building investor

This may suit someone who does not need the rental cash for three years and prefers a larger property holding. They should be comfortable with the allocation agreement, rental-credit settlement and resale risk, while keeping separate reserves for their needs.

There is no universally best plan. The right structure depends on the investor’s cash needs, ability to meet commitments and intended holding period.

Compare the whole budget, too

Our chart starts with the same 200 sq ft property interest, not equal cash commitments. Plan D then increases that interest to 272 sq ft using rental credits. Someone buying at PKR 85 lakh retains more of an initial PKR 1 crore budget than someone paying the full crore.

That retained money matters. It may remain as a reserve or be invested elsewhere, but any return on it must be modeled separately, not assumed.

Likewise, rent can be taken as income or, where an approved arrangement permits, used to acquire additional ownership. Reinvested rent cannot also be counted as cash retained. Additional ownership does not eliminate developer, title or resale risks.

Why a restaurant investment needs its own comparison

A restaurant unit can have a different tenant, operator and income structure from a residential or hotel share. A fixed lease payment is not the same as a share of business profit: restaurant sales, operating costs, the operator’s performance and the contract’s responsibilities can change what the investor receives. Compare the actual lease or profit-sharing agreement, costs, capital commitments and exit terms rather than applying this residential-share model automatically.

For a deeper look at payment timing, explore how IRR helps compare real estate investments. You can also read how Imlaak approaches developer selection and investment advisory.

The real lesson

Two people can invest in the same project and have very different financial experiences. One needs regular income. Another wants to preserve liquidity. A third prioritizes the lowest purchase price. A fourth uses the rental entitlement to build a larger holding.

A meaningful comparison goes beyond asking, ‘Which plan shows the biggest percentage?’ It asks: how much must I pay, when must I pay it, what income can I reasonably expect, and what happens if I need to exit earlier?

At Imlaak, that is the conversation to have before choosing an investment structure.