Judging from the many buildings sprouting all over the country it’s clear that the business idea of rental houses is here to stay. Rental houses offer financial security since the risk is low once they are in operation, unlike quick money business like owning a matatu which can collapse in seconds through incidents such as theft or accidents. So what are some of the things to consider when constructing rental houses?
1. TAKING A LOAN FOR THIS IS A NO-NO
Rental houses are an investment that takes longer for an investor to start realizing returns especially if you factor in other associated costs such as maintenance, agent’s fee and the loan interest. What this means is you may end up using all the money you get monthly on repaying the loan and taking care of other expenses. If you start making returns on an investment after 50 years and you built it when you were let’s say 40 years, do the math. The most reasonable period that one should be able to recoup their initial investment should not be later than 10 years from when they finish construction
What is the point of putting up a house and you don’t get tenants? One of the reasons for this could be the location of your building. Remember, buildings that are closest to social amenities fetch a higher amount in terms of rent. So when buying land after you have made due diligence and are assured of no drama such as court orders behind that land, see to it that it is at least close to the road. Also, do your research to find out who are your potential tenants. Do not put up an executive 5 bedroom flat in an area highly populated by university students thinking you have a ready market.
Before you construct a commercial building it is important that you get to know the building regulations of that area. This means you may have to involve the Local authority. A survey has to be conducted by the relevant bodies to establish whether the building is appropriate in that location. Is the land a public land or not? Are you putting up a club near a learning institution etc? Woe unto you if you don’t heed to their instructions and build where you are not supposed to. Chances are that your building will be demolished in the future and you will have no one to blame but yourself.
4. DON’T BE AFRAID TO GET YOUR HANDS DIRTY
To save on some maintenance cost you could learn to do some tasks like fixing broken electrical sockets and a clogged pipe as this will save you time and is way cheaper as compared to hiring contractors.
Make sure to involve professionals in every step of the construction process from architectures to the laborers. Avoid shortcuts as they can be costly in the long run. There is no venture without risks so be prepared and handle every challenge as it comes since the benefits are also in plenty.