Starting an Apartment Business
Income for Years to Come
If you want to have a reliable stream of income for years to come, then renting out apartments is one sure way to go. It does not always require a big upfront capital because one need not build the property from the ground up since a good renovation project can jump start your apartment rental business. With a lot of creativity and good business sense, you can generate a good source of income from this type of real estate business in no time. Make sure to keep the following tips in mind before you go head-on with this new venture.
Renting Business Basics
Renting out space or an apartment no matter how small or big requires some background information on the business. You will be investing savings or loaned money so adequate preparation before you start is therefore important. Apartment rentals business will be a great source of income for years to come and this is one of the major reasons why you want to be in the business.
The demand for home spaces often rented out like apartments, rooms, and condo units will continue to rise. Skyrocketing house prices and the accompanying mortgage rates are factors which drive people to choose renting. Because of this fact, you are in a great position to get a return to your investment soon if done right.
First and foremost, write a simple business plan. This is basic and you need not make it really elaborate. If you realize that making a business plan is not your cup of tea then do not let it be a stumbling block as you start this great business idea. Business plans are a dime dozen in the internet if you know how to look. You don't need to copy what you find but make it as a guide in making your own.
Keep in mind that written plans have a greater percentage of becoming a reality. It also keeps you in focus on your target no matter how big or small it is.
Basic Things to Keep in Mind
The lack of capital should not be a hindrance from planning this business. Capital is necessary to purchase the land and the building from the ground up. It is crucial when setting up rental units but there are funding sources if you know where to look. Savings, a loan from friends or a bank are just some of the fund sources you might want to look into. In case you have decided to get the funding from friends or relatives, make sure to put everything in black and white to prevent any problems later on.
On one hand, banks can be another fund source for start ups. Just all the fine prints. One drawback from a bank-financed loan are the required documents which may take long to complete. Credit rating is also another factor that would help determine the approval process of the bank.
An adequate piece of land accessible to transport would be a great plus. Choose one near schools, establishments and points of interest. The property will cost more of course but keep in mind that rent demands are higher for such locations. Rent prices are also driven by the kind of neighborhood so choose your land properly. Make sure to purchase the land from the legitimate owner. Check with the land registry office to make sure that the property is legit.
Secondly, take note of other details in the area. Make sure your land is not on a major fault line. Bodies of water may not be good as it can cause flooding in your area.
The kind of rent out space In building your rental apartment building, you have as many choices when it comes to design. Whether it will be a single or multi-story building is largely determined by the amount of capital and the size of the property on which it is to be built. If land is still to be bought, always conduct diligent search to make sure that the property has a clean title.
Once capital is available and you have the property on which the building will be built, the actual construction is where the real work begins. Make sure that all necessary government permits are obtained from respective government agencies . Building permits, clearances and other required documents should be on hand to avoid any inconveniences later on.
5. Business Registration
Once the building is up, register the business either at the Department of Trade and Industry (DTI) if it is a sole proprietorship, or at the Securities and Exchange Commission (SEC) if you are planning to put up a corporation. The websites of these agencies provide clear guidelines on how to go about with the registration. Complete documentary requirements must be submitted to the respective agencies to ensure approval.
6. Get insurance for the property
Insurance for the property is hedge for any eventualities, (e.g. fire) that could present great damage to your rental business property. Getting an insurance can be added expense, but the costs will be be recouped and with you having that peace of mind that your investment is secure. Insuring the property will save you a bigger headache in the future. Make sure to chose an established insurer in the area with an impeccable and solid track record.
Starting a Fixer Upper Rental Business
7. Draw up a lease contract
Putting everything in writing is protection for both parties. hence a lease contract is a must. Obtain the services of a lawyer in drawing up the appropriate contract.
8. Screen tenants
Screening will assure the owner that only tenants who are capable of paying for the rentals are admitted. This is important so you will weed out those who have a great possibility of not being able to meet their monthly rentals. Since this is a business investment, chose tenants that have the capacity to pay the monthly rentals and present the least property damage to the units.
9. Maintenance of the property
Part of an apartment business owner's responsibility is to maintain the property regularly to ensure that it will last longer and give a higher return on investment. Periodic check-ups are definitely a must. Never ignore tenant complaints on repairs. Finally, repairs must be done as soon as a problem is discovered. Do something early on before the problem gets worst. Common problems may include leaks, drains, electricity and wall cracks.
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