As an investor you need to know if the property you are investing in is for basic rental purposes or commercial use, meaning you can have property and welcome investors or other interested persons to come and buy your property depending on the type of project you have.
“What do people say about you when you’re not around?” It’s a one million dollar question to a lot of people.
Investing in real estate can be a big deal and a bomb of maximum profit, but also a downfall if you do not plan it well in advance. Actually, investing in rental property needs to be well-planned.
As an investor you need to know if the property you are investing in is for basic rental purposes or commercial use, meaning you can have property and welcome investors or other interested persons to come and buy your property depending on the type of project you have.
Basic rental property is a type of investment, which is known by almost everybody and most people especially in Dar es Salaam have invested in it. Yes, almost everybody has invested in it, but do they really know how to do the business and dedicate themselves to such kind of investment?
If you are investing in rental property, it is a challenge as you will need to consider the following, as the landlord of the property you are responsible for the payment of mortgages and every taxes and costs for property maintenance. It is also the duty of the landowner to make sure the property is in proper condition before inviting tenants. This means it is suitable for any person to live in. All this must be kept into mind of any person, who wants to invest in rental property.
Knowing all this, a person must plan a strategy on how to gain profit and at the same time paying off the mortgage and its taxes that come along with it. How do we get such income? The source of income will come from tenants. You will charge the tenants a reasonable price that will help you pay off your mortgage and of course at the same time getting profit, as it is not a charity work it is business so gaining of profit is a must.
Advertise your property and invest in the property, which is close to basic services such as schools, hospitals, supermarkets, places where water is available, security and drainage systems are good. These will attract tenants, as people love to live in a place where they can get all their basic needs and also feel secure.
If you are sure of filling your property with tenants then you are also sure of paying your mortgage at the right time and also gaining your profit as you continue with the business. Knowing people to invite to your property is also a challenge. A challenge on the price of rent fees and also the type of tenants you will be inviting to the property. Although you have a mortgage and taxes to pay do not over-charge rent fee otherwise you will end up having no tenant at all or few tenants.
That is why it is best to have a good plan before investing in this business and also the type of tenant you invite to the property. Some people are careless and taking care of someone else’s property is not their cup of tea. Here you need to be very careful of the people you invite because if they end up damaging the property, you will have to incur other costs of repairing the damaged place as some tenants may refuse to pay for the damages they have caused and you will have to do the repairing for yourself.
This situation will disturb the budget and the plan you have in the investment business. Hence, you need to be careful and also be prepared in case such an eventuality occurs.
To avoid or reduce such a challenge some of the countries like India have a rent law that wants the tenant to pay a security deposit equivalent to the whole year house rent apart from the monthly rent. This security deposit money is refundable, when the tenants decide to vacate or when the lease agreement is terminated.
The security deposit is given to the landlord as his security in case of any damage in the property he can deduct from it, but he has to agree with the tenant. By paying the security money the landlord will be able to get his monthly rent as usual and also use the security money to pay the mortgage by the time the tenant wants to vacate the premises. He can also be ready to return the deposit money. This kind of strategy may help the landlord avoid problems with the tenant.
Therefore, investing in rental property you need to have a very well-planned strategy so that you can enjoy your investment after the payment of a mortgage. It is a bomb business, but how do you approach it, is still a challenge to everyone. It is best to consult a profession in real estate and be well advised and most of all advertise your property to attract people.
