Rental houses business is for those who have cash and need a steady cashflow, not quick profit. Such properties also contribute to wealth accumulation by acting as collateral when borrowing money for other investments.
On the other hand, if you’re a starter who aims at multiplying wealth and you have interest to invest in rental houses/business, you’re literally taking a wrong route.Construction is very expensive in the first place.Take an example: A plot of land (50ft×100ft) costs around 50 Millons. Building 5 standard self contained requires you an estimate of 250 Millions. That sums up to 300M.
You will realize that each unit is rented at 300,000 a month. That’s a gross total income of 1.5 Millions per month if all units are occupied. That’s 18 Millions every year. So to cover up your money invested, you need 17 years (18M×17yrs)!!!!Remember all units may not be successfully occupied, some tenants may default payments, we haven’t considered the cost of repairing when a tenant vacates, property tax etc….
Another advice would be;- To buy land and stock. Don’t build. Remember land gains value every day and night. Just wait for any development and resell it. That’s the best way to multiply wealth.Rental business is not a business to multiply wealth, rather an investment for ecomonic security. So it must be done at old age as you enjoy your retirement.
Jaluum Herberts Luwizza is a Speaker,Writer, Columnist with the C.E.O Magazine and Contributor with the Nile Post.He is also a Business Consultant with YOUNG TREP East Africa’s No.1 Business Management and Consultancy firm that helps people start and grow profitable businesses.twitter:jaluwizza
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