Something strange is going on in the property development sector. Apartments are up everywhere and, in many cities, all of them look pretty much the same. It seems everybody has an identical idea. Why this happened?
Came to the idea that property moguls should stop trying to find deals and establish themselves. Home prices in the prized area are now so high that opportunities to return became scarce. That’s why many people build to rent rather than buy to rent: it makes more economic sense.
Why Build Only For Rent?
Of course, every time you develop a property, you have two options. You can sell it instantly and then pocket the difference between your costs and your income as profit. Or you can install units and rent them out, generating income over time.
Renting really gives you extra money in the long run than you can get out of pocket from a private investor. But there’s one more reason self-improvement is an amazing idea: results.
When you have control over the building process, you can set unit prices. This way, you can create low-cost, high-quality accommodation that actually beats much of the housing stock in the immediate area.
As Development of Candea show, this strategy is something hundreds of real estate investors use today. Why buy when you can build something better for less?
How Much Capital Do You Need?
Of course, the downside to this scheme is the massive amount of capital you need to build an apartment block. We’re talking millions of dollars. However, if you can gather such resources, you put yourself in a really good position. If the bank believes the project is possible and will generate returns, they will let you borrow even more.
When coming to rent out apartments, scale problem. You want to cram as many people into the smallest space as possible, without looking like they’re living on top of each other.
You’ll also want to take advantage of some of the latest techniques in building design, architecture, and layout. Concepts such as wide doorways, stepless entry and underground parking tend to be popular with renters.
How Much Money Can You Make?
Once you have a successful project up and running, the amount of money you can make is big. The total cost of developing an apartment block might be $5 million for you and $20 million overall.
Total costs may be $0.5 million per year, and revenues $1 million. In other words, you are earning $500,000 per year on your $5 million investment, which isn’t bad.
Wrap
If you decide to get into property development, you must know what you are doing. If not, you can all the time work with a partner who understands the landscape. Property is a millionaire factoryso the sooner you start a scheme like this, the better.
