Rental real estate is not a new investment channel. Many people in big cities have "lived well" by investing their money in this channel. It can be renting a suite of motel rooms, buying a small apartment for rent only, buying a front-end house, and then renting out a business...
Because it's not new, many people also think simply that, if you have money, just buy real estate and then rent it out, collect money every month... done. However, if you are not familiar with this field, you should note the following issues:
1. Investing in rental real estate is not for everyone
Real estate for rent has its characteristics, with issues of management, troubleshooting, maintenance, insurance, sourcing short-term, long-term customers, working with many customers at the same time. ... The question to ask here is: "Whether indirectly or directly, are you suitable to handle all of the above?".
2. You are buying a future stream of income or cash flow when you buy a rental investment property
In other words, what you pay for a property today is an investment decision for the future, the most accurate expression of investment value is the cash flows generated from the rental property. . One wrong choice in that first step will cost you later. Therefore, you must have a long-term vision to make an informed investment decision.
3. “Perfect couple” location and value
This clearly emphasizes that the location of the real estate will be a decisive factor for your success in finding a return on your investment. Owning plots of land with "golden" or "golden" potential, such as good locations in areas with potential for rapid development in the future, both mean that you are making big and positive strides. in increasing the value of the rental real estate.
The good location of the real estate must first be in an area with convenient transport infrastructure connections, close to hospitals, schools, supermarkets, markets, entertainment, and commercial areas... And because it is an investment For rental purposes, to be on the safe side, you can choose a property in an area with a vibrant rental market. For example, in Ho Chi Minh City, it's Phu My Hung, District 2, Tan Binh...
Of course, in cities, where the demand for housing is high, the ability to buy a rental home in a densely populated area always has a high rental potential, but you need to take into account the rental price. If the investment property is a townhouse or a villa, you should consider the size of the existing residential area. The higher the density of the area, the better the rental potential. Choosing a prime location, therefore, determines the success of rental property investment.
With real estate for rent located in a large-scale project or an area with high population density, it should be noted that the larger the apartment is in a large project, the easier it will be to have more apartments for rent because it is easy to attract tourists. services formed in the same building. You should choose finished real estate that can be rented immediately to increase investment efficiency. You can also choose to buy an apartment under construction, but you can't choose projects that are behind schedule. Priority is given to projects that are close to handover and are paid late.
If you are going to invest in townhouses, villas for rent, you should not choose properties that require additional capital to repair, adjust or rebuild, because this prolongs time, misses rental opportunities, and take benefit. As for semi-detached houses or villas, you should also choose real estate located in an area with many busy houses.
4. Don't underestimate the importance of financial leverage in investing
Using financial leverage means you borrow more money, along with the money available, to invest. A high percentage loan means you use large financial leverage. If you know how to seize the opportunity and make the right decision, financial leverage will help you own real estate with high profits in the future; otherwise, this will become a debt burden.
This is a borrowing problem, so if you use the method of mobilizing loans, you have to find a solution for yourself in each specific case. To be on the safe side, financial experts recommend borrowing no more than 30% of the total value of your investment property.
5. The best and safest place to start is to invest in rental real estate
Residential real estate can be apartments, mini-apartments, townhouses, etc., which are characterized by a relatively lower value compared to commercial, industrial, and resort properties, and at the same time have purchase procedures. pretty simple. More importantly, the problem of managing real estate and customers is easier than most other types of rental investment properties. This is an attractive investment.
6. The larger the size and complexity of the rental property, the more attractive the returns.
Financing options for large buildings, commercial, industrial, tourist... requires a large capital source and accepts other pressures such as management, maintenance, customers...
The result that professional real estate investors get from investing in these projects is a high overall profit. After all, the rental value from these properties is quite high and stable because people Rent is usually long-term.
7. Invest in real estate when you understand it
Like all investments, don't invest in areas you don't understand. “Knowing you know me” is a safe strategy for investors, so make sure you are correct in your understanding to make reasonable decisions.
So have you ever invested in rental real estate "beyond your understanding"? Only if you find someone who knows the real estate market very well in that area and you have found a great property manager.