By Livingstone Mukasa
If you are hoping to make money out of a Rental Property, these are the key points to remember.
1. Location. You buy this once and if you don’t get it right nothing will save you from losing money. Best location is near means of transport (Taxi) and workplaces. An extra journey for a Boda, means your tenants are paying more to rent your property. A walk to a taxi stage is cost saving to them.
2. Security of the area. No one wants a break-in every other day.
3. Accessibility and possibly parking space are a huge plus. Rents above UGX 500K usually attract people with access to cars. If they need to pay for parking somewhere else other than where they are renting, that’s an extra cost you must factor in and which reduces your chances of having stable clients.
4. Target the middle market at rents below 1M. Sweet spot is UGX 400K for a double room. Beyond 2 bedrooms the returns are usually not worth the investment.
5. Manage your buy/construction/development costs well. If you go beyond 1% of the value of the property in monthly rent, it will be hard to compete in the market.
6. Remember you are building for the market and not for your consumption. There are luxuries/costs you can add that don’t improve your rents.
7. Have Diamond Hands. Hold and maintain your properties as if you will never sell. Go in for the long haul (Ideally 10+ years)
8. Aim for at least 10 Doors (Homes). Anything less and you may not give them attention required to make it worthwhile. Remember to show respect to your tenants. Don’t enter their homes unannounced and be careful with your words especially when you speak to them In Front of their family members. No one forgets a rude Landlord.
9. Never finance beyond 50% of the value of the property. If you are doing ground-up development don’t borrow for the shell. The financial math doesn’t work well if you do and chances of losing the property to a default increase dramatically.
10. If you buy Land at UGX 50M+ for 100X50ft, it makes sense only if you build multi-level.
Want to invest in Rental Property but don’t know where to start, I am at your service. Livingstone Mukasa +256772459167 Email: [email protected]