Nine ways to make rentals profitable

22 Nov 2015
Uncategorized

Taken from http://wetzelservices.com

In 2011, Night Rose Kalumba decided to leave her rented shop in Kiyembe, a city suburb where she was a tailor She had realised her business had started losing market as customers had stopped flooding in like it was the case before.
Kalumba then decided to focus her energies somewhere else. “I had half an acre of land in Kasubi on Hoima Road. By the time I left Kiyembe I had saved Shs10m so I resolved to use this money to build rentals.”
She resorted to building rentals because, “Building rentals is a Iong time investment that you will never regret. I built my houses with the intention of helping me to educate my children, pay my bills, and look after me in my old age which I have pretty well succeeded in. I now pay school fees for my grandchildren and have also built a tailoring shop although it is not well,” Kalumba explains.

Make your rentals profitable

The look of the house
Kalumba says the more you take good care of your rentals, the more people will yarn for them.
She adds that you need to always make sure that your houses are in good shape with proper services such as electricity and water.

Accessibility and security
No one would want to skip any drainage system while going to their home or staying in an insecure and noisy place. Rentals in such areas will always cost less while those in a well-established places will be costly. However, Kalumba asserts that one can construct a passage with a proper drainage system and a fence around their rentals to avoid intruders.
Egesa says rentals should be secure, beautiful, self-contained. “People do not want to move miles looking for toilets. People love their privacy; enjoy their freedom without the landlord staying around making noise over this and that.”

Sizeable rooms
Kalumba explains that for one to benefit from their rentals, they should always know and treat this business just like any other.
“Give these houses a proper treatment just like your own house. Make sure your rooms have reasonable size. Otherwise, you will not reap enough from your rentals,” she warns.

Respect tenants
Always treat your tenants with respect and even when they approach you with complaints that may come along the way, treat them fairly.
“Just because you own some rentals, doesn’t make you a better person so there is no need to act like it, however your job as a landlord is to be fair, not to be nice. Being nice will give your tenants and others the leeway to walk all over you and take advantage of you at every turn. ” Kalumba explains.

Make everything clear from the start
Whenever you are taking in new tenants, make sure that it is clearly indicated that they are supposed to pay three full months or more compared to what you want with one extra more fully paid month, which acts as insurance.
Kalumba explains that this paid extra month helps in repairing anything that would be damaged by the tenant while they were staying. However, it is refundable if nothing is needed to be repaired by the time the tenant leaves.

Privacy and convenience
Everyone needs privacy and they would want to be seen out of their houses only when they are going to work or shopping.
They want everything to be done in their houses. So one building a self-contained house with everything indoors like the bathroom, toilet, kitchen, ceiling, enough space, well fenced, water system, tiles with at least a pit latrine outside in case of water shortage .
When a house has all these such a landlord will be assured of getting all the money they want.
Egesa adds that you need to make sure that tenants have their independence for their utilities.
“Some landlords want to take control over their tenant’s utilities such as water and electricity which they don’t want because at times they are cheated.”

Facelift
It is the roof that makes your house look nice and precious. If you find that you want to add more value to them yet you do not have money to reconstruct the whole building, Kalumba advises that it’s a matter of only breaking the roof top to the beam and fixing new trendy doors and windows. This will yield you big.

Consider the area plan
He also advises whoever wants to build houses to always know the plan for town where there is development. Rent is determined by the developments surrounding your houses. The area must be active.

Consult
Kalumba advises that it is always good to reach out to other landlords for help because this will help you out on improving and adding value to your rentals.

Tenants needs
Unlike other areas such as Bombo and Entebbe roads, Isaac Kazibwe, a house broker at Extreme Properties & Constructors Ltd says people now are very much interested in houses along Hoima road, Gayaza Road, Namugongo and Kyanja among others since these areas are near the city with at least less traffic jam and with the construction of the Northern by pass making the transport system easy and affordable.
Egesa says there are several things needed by people depending on their pocket. There are different people with diverse tastes.

Family houses
The first class people will always want family houses with three bed rooms, not less than two bathrooms and toilets, fair sitting room and dining room, a fair compound well secured with a fence and a good gate.

Self-contained and accessibility
The middle class will look for a two-bedroom house, one toilet and they would not care if they shared a compound.
They include bachelors, singles. The third class would want houses around small suburbs, town centres because they do not have cars so accessing their homes would be an issue if they are not in those areas.

They would go for one room even when not fenced although everyone would want the best.
Challenges
Egesa explains that one of the major challenges in dealing with tenants is managing the tenants and the waste from their houses.
“This can be a very big problem as some of them do not take good care of the facilities. Some tenants even fail to pay rent and they do not want to leave the house which may require you to go to court. Some also vandalise your houses.”

Why invest in rentals
Source of income
Kalumba explains that every job has hazards.
“If you have it today, you may not have one tomorrow leaving you in misery but if you have rentals, and good tenants, you will be able to get money at the end of the month with no hustle.”

Long shelf life
Building rentals is one of those businesses that one can put and it will be set to stay seeing you through your old age because if well maintained, houses take a long time to depreciate.

Charge any price
She adds that this is the only business where you can increase your rent and you are not asked questions.
The tenant either stays in the house or looks for another one.
It is the only business where there is no bargaining. One can increase rent at any given time of their choice yet no value has been added.

Salary top-up
Rentals can act as a backup in case one loses their job and it can also be top up on your salary.

Security
Freddie David Egesa, the Risk/Security manager at Jomayi Property Consultants explains that in Uganda if one has a commercial asset.
“You can get a loan from any bank which will help you put up other developments. It helps you have a steady income which you will never get worried about at the end of the year. And also the prestige that goes with the land owners.”

Originally published here.

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