Different from any other business, an apartment rental business offers a steady income with a minimum time to spend. In spite of the bad stories we mostly hear about problematic tenants, this type of business rarely goes bankrupt. However, it will take longer time to get your return of investment (ROI) compared to other business ventures because the cash flow is small compared to the size of your investment. Still, putting that aside, the apartment rental business remains the favorite investment for many people especially the retirees due to its minimal risk.
If you are also planning to venture in this line of business, here are some tips for you:
1. Consider the location.
You should analyze your potential location if; it is close to places of interest and is accessible to public transport, its site zoned for construction of residential area, and if there are there places or facilities nearby. These are just few of the questions you need to examine before actually starting the construction of your apartment building. Doing this also enables you to determine your potential tenants. Like for instance, you’ll expect to have students if your area is near universities or young professionals if your near offices.
2. Know the existing rental laws.
As a responsible owner, you should know and be updated to the current rental laws that often change fast. Doing this will guide you in knowing how much you can increase rentals. Also, be informed about ejectment procedures. In case you are renting out condominium units, you need to adhere to association rules and regulations. You must also have your lease agreement drafted by an experienced lawyer.
3. Screen your tenants well.
Your ability to discern your tenants is where your business highly depends it success. Avoid accepting those who don’t have the capacity to pay their obligations on time as well as those who will likely cause too much wear and tear or commotion in the neighborhood.
4. Put value on amenities and aesthetics.
There are many entrepreneurs in the apartment rental business, you must make your business stand out by putting value on aesthetics and amenities. Some would invest on furniture and paint jobs as this will be your edge over other apartment business. You can try providing high-speed Wi-Fi if possible. The appearance, amenities and services of your apartment also highly influence the cost you can charge the tenants.
5. Be upfront about the costs.
People hate hidden charges, so as a landlord, it is your duty to tell your potential tenant everything they have to pay including the deposit and advance payments they need to make before moving in.
- Register your business with the Department of Trade and Industry (DTI) if you’re the sole owner or with the Securities and Exchange Commission (SEC) if it will be owned by a corporation.
- Secure a Barangay Clearance.
- Get Building Permit, Occupation Permit as well as Fire Safety Permit from the municipal or city Hall.
- Register with the Bureau of Internal Revenue (BIR). Your certificate of registration will indicate the schedule of your tax obligations with the national government. You may also obtain your Tax Identification Number (TIN) and authority to print official receipts at the BIR.
- Have your official receipts printed.
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