Investing land for building rooms for rent is a business trend appearing and continuing to be popular although there are many forms of investment real estate was born.
Comfort is better than pride
Doing business in the form of building houses for rent in the districts near Ho Chi Minh City such as Hoc Mon, District 12, District 9, Binh Tan …, even Binh Duong, is popular with many investors.
Nguyen Minh Hoang, now the head of a business office in District 3 (HCMC), has accumulated and borrowed $180,000 to buy a piece of land and build 20 rooms for rent in District 9 (HCMC). In order to increase the safety of its guests and make a difference to its predecessors, Hoang added additional expenses for hiring security guards for the hostel and for cleaning the area.
“Each of my self-contained units has an area of 16 – 25 sqm, security and hygiene, so the average rent per unit is from $130 – $160 / month. Spending, the revenue of the chain of motels is about $3,200 / month”, Hoang said.
This type of business for rent is not only blooming in HCMC but also spreading to other provinces. In particular, the land is concentrated many large industrial parks, land plentiful and cheap price, Binh Duong is a lot of investors from Ho Chi Minh City.
According to Hai, a person with experience in the real estate investment said that investment and real estate, the form of buying land for housing is a way to invest “Comfort is better than pride”, suitable for people with idle cash and do not want to save in the bank because of low-interest rates.
Mr. Hai said, recently there are people selling 150 sqm of land for $32,000 in Binh Duong. After many inquiries and inquiries, he decided to buy a house to serve housing needs for workers working in nearby industrial parks. After about 5 years of business, Hai has recovered enough capital. Although the average room rate in Binh Duong is lower than Ho Chi Minh City, with a large number of workers, the demand for large rooms is always light, the average monthly revenue about $910.
“It’s a waste of money, but many people still invest in land near industrial parks, universities … to build rental homes, because apart from stable income from rent, real estate price increases are also huge. After you have rented a room, you can sell the land at home with higher prices if you do not want to business anymore”, said Hai.
Must be careful
Ho Chi Minh City Real Estate Association (HoREA) reported that the population of Ho Chi Minh City has reached nearly 13 million people, of which nearly 3 million are immigrants (23% of the population), more than 400,000 students; every year there are more than 50,000 new married couples.
In addition, according to a survey by the HCM City Department of Construction, the Ho Chi Minh City Research and Development Institute, there are about 500,000 households without the home. In the contingent of cadres, civil servants and officials in the city, about 139,000 people have no house. Of the total of more than 402,000 workers, laborers working in export processing zones and industrial parks of the city, 284,000 (accounting for 70.6%) have to rent accommodation.
Le Thanh Chau, Chairman of HoREA said that this is a positive sign of the market because people actively participate in settlement of immigrants, income earners low.
“Currently, state-owned rental houses or developers using state budget funds only cover about 13% of the housing needs of immigrants, workers, students, etc”. More than 87% are self-settling”, Chau said.
However, many experts in the same emphasis, the rental business room rental is also very complex and risky. Because renters are usually low-income people and not all tenants are the same. If you are inexperienced in screening your tenant right from the start, the landlord may be able to meet the center of the bad housing. At this point, the host will have a lot of trouble and the business is also more difficult.
Therefore, before deciding to invest, the landlord must carefully calculate, from location to how to mobilize capital to be reasonable. For those who are active, must pay attention to management, avoid the loss of lead and fishing.
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