Four things to know before deciding to buy condo to be rented out
12 Feb 2017
buy sell rent tips
A novice investor has a lump sum of cash in hand and wants to own some asset, so he/she shops around for a condominium unit to buy and rented out. The question is – which condo? If the investment is on a pre-owned fully-furnished unit, rent can be collected immediately, without the buyer having to shell out the down payment because it can be realised from the income from the rent. At the same time, a loan can be taken out almost instantaneously. Even luckier if the purchased unit already came with the current tenant, thus reducing the risk factor of having to look for a tenant. All the factors must be considered together, particularly these four important ones:
1. Location
The thing to consider is the that location of the project must be attractive. Most prospective tenants prefer a location with convenient transportation routes, such as less than 700 metres’ walking distance from a mass transit station. If it is farther than that, there should be shuttle bus or motorcycle taxis services available at the project or close by.2. High occupancy rate
The second most important factor is the occupancy rate of the project. If the project is at least 70-percent occupied, it means that the condominium is in high demand and should not be difficult to rent out. If a project has a low number of tenants that means it is not desirable to both tenants and owners.3. Low number of units.
The number of units in a project does have an impact on the number of tenants as a project with a high number of units would have too many units available for rent leading to competitive pricing. However, if the project is situated in a good location and has high occupancy rate, the number of units becomes a less significant factor.4. Location of the unit
Where investing in a condominium unit for rent is concerned, the low investment could be ideal when considering the rental yield. The selection of a unit in a good location also affects the price. The units on higher floors would lead to higher investment because the selling prices are higher than units on lower floors. The prospective tenants are also varied. Some prefer lower floors as they believe they are safer while some prefer higher floors for the more expansive view. Therefore, if looking only at profit, perhaps investing in a unit on a lower floor could save on cost and could be a good choice. In addition to the four factors above, there are several other factors that an investor should consider in a 360-degree perspective before considering to buy. If you believe that you have gathered enough information so much so that you are confident of your decision, then by all means, invest and start making profit today.Related Articles:
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