Many are looking for different ways to earn passive income. One way to achieve this is to buy a condo unit to lease it for residential or commercial use. This investment has a high-income potential because there is often someone looking to rent their place or a company looking to expand. However, a condominium doesn’t guarantee profits. Several factors come into play that positively or negatively affect the profitability of a unit.
It is difficult to liquidate a unit when the purchase is not completed, and if the expense is higher than the income. Experts cite the following ideas that can help you maximize the earning potential of your condo unit.
Identify Your Target Audience
When you are checking out a preselling condominium in any city to lease it out, identify the type of person or organization you aim to target. A clear target market allows you to narrow your marketing pitch and enables you to shorten your list of potential tenants. A general, stumbling in the dark approach may get you lucky at times, but the risk is too high, and your investment too costly to try this. Have a persona in mind; some examples include:
They are likely to lease for a long time because they want to settle. Both parents are likely to work, or one of them stays at home to care for their child. They want to be near their office and would wish to go to a school nearby.
The Job Hunter
This person wants to be near the commercial district because of the job and networking opportunities. You might cycle through a handful of tenants like this because they follow where opportunity takes them.
The First Time Owner
They are fresh graduates or 20-somethings who just moved out of their parents’ nest. They’re not going to be picky but still want comfort within their means.
The Start-up Company
They are looking for an office for their growing organization. They want a central location near employees and clients.
Determine an Investment Budget
You want to make money from your condo unit; you’ll need to have an investment figure in mind. Project a possible income minus initial and future payments, and improvements. The number must be greater than your costs so that you’re not in the red or breaking even. Lower your investment budget by looking for an affordable, fully furnished unit and a contractor that offers a reasonable price.
Target a Return on Investment Figure
A glimpse of the future is essential in any kind of investment because you at least want to have an idea of your return on investment. Interest rates and market fluctuations can be volatile during certain conditions. Have a figure in mind when computing your possible income. You want your return higher than the interest rate and the revenue higher than monthly and yearly costs.
You also have to factor in the neighborhood rental rate to project profit. These are some of the ways to maximize your condo investment. Consider these when buying a unit. These ideas enable you to identify the right strategies for a good return on investment.