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Renting Out Apartments As A Business


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Starting your own small start-up can be as simple as purchasing a studio unit and renting it out to a tenant. However, before you go on sites like Property Guru and use the search term “Apartment for sale“, there are some factors that you need to take into consideration.


The location of a property is a make-or-break factor when it comes to any start-up that focuses on creating an income from rental properties. No matter how low the price or good the interiors of a unit, if the location is not in an easily accessible location or is generally inconvenient to stay in, then it is unlikely that rental demand in that area would be substantial. There are several details that potential tenants look for before even inquiring about the availability of a property:

a. Public Transportation.

The first detail is whether the property is located near any public transportation terminals. These come in the form of train stations and bus routes which make commuting easy to and from the place where a person works. The closer a property is to these locations, the more likely demand would increase.

b. Main Road.

The second detail that potential tenants consider is the proximity of the property to a main road. This is similar to the factor mentioned earlier involving the proximity of a property to public transportation terminals. The closer a property is to a main road, the less time a person would spend commuting since most main roads can connect a commuter to the various areas which are close to where they work.

c. Malls, Hospitals and Supermarkets.

The third detail would be the proximity of the property to malls, supermarkets and hospitals. Whether a person wants to go shopping for groceries, visit the hospital or purchase clothes, the proximity of the property to the aforementioned locations is often considered as a much-needed factor. The distance of a rental property from these locations directly impacts the level of convenience/inconvenience that a person goes through. Since people would prefer convenience over inconvenience, the likelihood of a property being rented is connected to the perceived level of convenience they would go through.

d. Rental Rate in the Area.

The last detail is the comparable rental rate for the property based on an examination of similar properties within the general area. Due to the presence of multiple online databases for properties, tenants, more than ever, have the capacity to judge the rental value of a property. As a lessor, you need to examine the current competitive rate of rental prices within the area (within the building itself would be even better) and make the necessary adjustments in order to conform to current market values. Failure to do so (i.e. increasing prices significantly beyond current market rates) will result in a lower likelihood of people renting your property. The standard practice within most real estate markets is to base the rental rate on current market forces plus or minus 10% depending on the level of demand that you are after.


Aside from the location of the property, another aspect that potential tenants tend to look for is the availability of parking within the building. Whenever an entrepreneur purchases an apartment to rent it out, they are often given the option by the developer to purchase a parking slot within the building (as required by most domestic real estate laws based on the size of the property development). Choosing to purchase a parking slot is influenced by the type of tenant demographic you are after. For example, if you choose to eschew the purchase of a parking slot, you are in effect alienating potential tenants that have a car. On the other end of the spectrum, if you do buy a parking slot, it is unlikely that tenants without a car would choose to rent your unit unless you negotiate for the price of the parking to be removed from the cost of renting the unit. Choosing the appropriate option will entirely depend on the type of tenants that you can observe within the building and whether they normally need parking or not. Do note though that you could potentially rent out your parking slot via the administration office of the building but you would be competing with other unit owners.


Last, but certainly not the least is the type of amenities that are available within the building. Does it come with a pool? Is there a mall directly attached to the building? Is there a laundry shop inside? What sort of security does it have? It is questions like these that prospective tenants normally ask and ones which you should examine prior to purchasing a new apartment for renting it out.

All in all, there are plenty of business opportunities in real estate for an entrepreneur that is crafty enough to know what to look for and how to maximize the details that people tend to overlook. Just be sure to make a proper evaluation before you jump feet first into any buying decision.


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