Rental investment is one of the popular investment channels, bringing attractive profits for investors. The question is how to invest in high-yield and stable rental apartments?
According to Realestatevietnam, two types of business models exist today:
- The first model is property-letting, which means that you take your own house / apartment and rent the house / apartment.
- The second type is rent-outs, which means you rent a house / apartment and you renovate or divide it for someone else to rent at a higher price to enjoy the difference.
It can be seen that these two rental housing business models have quite different margins. If rent-to-rent generates an average return of 5-10% per year, the lease-to-lease model can bring profits up to 50% to 100% per year. However, with the rent-to-own model, you will be less labor-intensive and safer, while renting and leasing will bring more risks and require you to have better knowledge and business skills. , and at the same time put more effort management. Let’s take a look at the investment experience of fast-paced, secure rental apartments below:
The first experience of investment in rental apartments: Defining the purpose of the investment
Most people think of a rental housing business that focuses on finding a good apartment to buy, or renting and then renting out, and forgetting what’s important is their true desire. The first thing you should do before thinking about the rental housing business, is to clarify some of your own questions such as how much capital you want to invest? business model want to stick? location area will invest? desired rate of return? Looking forward to the future after the completion of the deal? …
Ask yourself many questions related to risk and profit before the rental housing business
After you have answered all the questions above and have a clear idea of what you want, finding and submitting information for search channels such as brokerage offices, online newspapers, newspapers … will bring Your results are accurate and effective to surprise.
Secondly, investing in rental apartments: Considering bank loans, applying leverage
The fact that most successful real estate investors and investors in the world never use up their entire cash for a real estate deal. Evidence for this is that US President and Real Estate billionaire Donald Trump, in real estate business dealings, he only spent 20% of the capital though he has a lot of cash in hand. Because the nature of the property gives you a great leverage ability from the bank. However, when using leverage, you need to pay attention to the negative cash flow – the principal and interest payments monthly for the bank. Calculate and note that negative cash flow with positive cash flow from renting to select the right business model and mobilization.
You can also mobilize capital from individuals in a co-operative way and share them with a proportional amount of profit.
The third experience: Effective negotiation, win-win
When buying land, buying a house for rent or renting a house, negotiation is very important. You should know that real estate is a valuable asset so every negotiation difference is like a unit price per square meter, or a reduction of a monthly rent if multiplied by the total area or total The rent time is a pretty big number.
In addition, if you choose a rental-lease model, the exploitation and cooperation with the real estate owner is a long-term process and has many influencing factors. There is a need for effective agreements with both sides. The landlord has good rental rates and long-term stability. Tenants are also rewarded with good returns. Their cooperation is new and long lasting.
The fourth experience: Rehabilitation to optimize profits
Every apartment / house has its own wasted space that if a business owner makes use of it, it can create value for other tenants or increase profits.
When buying or renting a house / flat for rent, look at the corner of that space. Often a large house / apartment with many rooms for rent, kitchen on the ground floor is rarely used and used. Instead of letting the shared space be messed up, you can turn it into a kitchen room for guests who love to cook.
The fifth experience of investing a rental apartment: Finding target customers
The most common mistake real estate agents make is to learn real estate brokers on the market by marketing real estate with generic content in order to attract more tenants. with many different needs.
But the problem you, the rental housing investor, should remember that real estate brokers need to attract more customers because they have different shopping carts for consulting. In contrast, you have only one rental product, so do not waste your time on visitors with inadequate needs. And the trick here is to use the target marketing approach: to thoroughly describe your rental property characteristics, prices and fees, along with the real image of the property. Then put this information on channels that many search customers such as real estate classifieds, newspapers …
The biggest thing is that you do not try to hide information, or use other real estate illustrations, because when tenants come directly to see the house, they will realize it. So be honest with the marketing content from the beginning, you will get the target tenants – the guests whose home is true to their interests and needs.
The sixth Experience: Post rental as soon as possible
The phrase “time is money” in the rental business is a literal statement. Every day, every hour, every minute, every second you can not rent your house, you lose a corresponding amount. If anyone has ever modeled rent – sublease. The rent paid to the landlord and then still not rented the room will understand the feeling of losing money every day how terrible.
Therefore, renting must be done with speed and speed. To do this, you need to prepare and rent before the house is completed. And another method I’m using is organizing races for business teams to rent a house to find the winning team and extract a portion of their monthly income. If you are an individual doing this model, you can apply the same by sending information to many brokers to create a competition and race for your main home.
Experience the seventh rental apartment investment: Operate and manage rental properties efficiently to optimize costs
In order to obtain the client’s rent on time, apply the principle of preparation and convenience to guests in various forms of payment. Be aware of paying for service charges on time so that no water cutoff occurs – cut off the electricity to a large number of renters and keep the owner credited with paying the rent. If there are problems or incidents involving the amount due to the landlord, notify them first and have the accompanying documents.
The registration of temporary shelter, fire protection equipment and the necessary permits for rental housing are also interested to comply with the law and should seek advice, specific guidance The police of the area are managing your rental property.
In addition, repair and maintenance of the property before damage occurs, do not wait until something new to handle. Because of that, at that time you suffered heavy losses and the cost of repairs would be prohibitively expensive.
Experience eighth apartment rental investment: Caring attentive rent, dedicated
Caring and assisting tenants is one of the most important factors to get long term tenants to your home. Besides, let’s focus on the good ones and gradually reduce the bad rent.
In a house, bad renters will make good guests leave. If you can not get rid of the bad guys and keep the good ones down, the other tenants will fill up your house. As such, you will have bad experiences when doing business with them such as late payment, disorder, unhygienic and destructive property.
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