People always say they want to build one bed room apartments in Townships and rent them out.
I agree it’s a great idea but it also depends where.
Location is important.
First of all you have to look at the overheads.
One guy used his R1 million from his retirement fund to build 20 apartments that earn him R50k in total per month.
He built those apartments in an area situated next to Alot of firms.
It was just outside of Town so there was no water and electricity was free.
This is why he was charging R2500 per apartment and making almost R2200 profit because his only expenses were maintenance.
Some people build these apartments and target students. First of all students are not reliable, second of all they damage your property, third they don’t have much money.
The best way to make money through a student accommodation is getting a contract from a University.
Most Universities pay R2500 atleast per student.
Two students per room you make R5000, 00
You also need an NRC certificate. Your tenants should have lease agreements. You should’ve able to debit their accounts monthly otherwise you will waste Alot of time chasing them for money.
Build relationships with Town Planners if you want to make serious money through this business.
A Town planner will tell you that in three years a school and a hospital will be built in a specific area on three years.
What do you do then? You build your apartments so that teachers and nurses can rent them out.
My point is before you invest in a property. You should study the market in your area and cut overheads.
That’s the only way you can be profitable through this business.
All you need is at least R300k to start and build 5 rooms rent them out for R3000 each room.
You make a clean R15k pm.
Location is the key.
Author: Sakhile Mcambi ✍