The convenience and luxury of a prime and yet affordable spot amidst sky-high land prices in the city make condos a formidable sector in the real estate industry in this country. While owning a condo is already a wise real estate investment, the financial- savvy pack takes it a notch higher by renting out a condo to maximize their hard-earned money’s worth.
Condo rental in the Philippines is a smart move whether you are considering to rent out your condo before you eventually move in or thinking of buying a condo solely for rental. Urbanization that increasingly develops at a rapid-fire speed coupled with a strong economic growth encourages a high influx of tourists, marking a high demand for rental spaces. Anthony Leuterio, president and CEO of property rental search engine Rent.ph, said that they get a daily average of two thousand inquiries from people who are looking for places to rent. Aside from locals, many of these people come from other countries like the United States, UK, Japan, and Korea. “The demand for residential spaces is increasing but the supply is not so much,” Leuterio said.
Now is the best time to take full advantage of this situation. Be a knowledgeable landlord and reap the rewards without the hassle with these tips for renting out a condo property.
1. Plan Things Out
To successfully earn from a condo for rent, it is crucial that you carefully consider all the factors involved. You need to do the math in studying the financial feasibility of this venture. According to Francisco J. Colayco, a financial advisor, one of the important things to assess is “your ability to maintain all amortization and maintenance (association, repair, taxes) payments,” for which a steady stream of existing income is imperative. He also advises to prepare for times when the unit will be vacant because you will still have to pay the condo management.
Money is just one of the several things to consider before renting out a condo. As early as now, you might want to consult and hire a property manager especially if you have yet to purchase a condo. Get an expert opinion in choosing a unit based on location, reputation of the condo developer, and the rules on renting of the condo management.
2. Keep Your Cool With Tools
Managing a real estate investment can be nerve-wracking with all the numbers that you have to deal with. Do your sanity a favor and prepare for the avalanche of data by setting up your tools. Open an ad hoc bank account to separate the cash flow from this condo rental from your other sources of income. Create an accounting spreadsheet to record the money inflow and outflow. Also, ready your repository that will hold all the papers that you will have during the course of your property rental business. These tools will be your backup if ever you are questioned by anyone from your property manager (if you will get one) to your tenant and even to the condo management and concerned government offices.
3. (Paper) Work It Out
Save yourself from legal and financial woes by reading first the fine print of every document governing the condo unit’s ownership, use, and rental — the declaration, bylaws, and house rules and regulations. Once it is okay on your end, have a checklist handy for the permits and other necessary papers like when you enroll your unit for lease.
4. Tailor Your Condo According to Your Target Market
While Leuterio said that there is a huge demand for rental spaces, there should be no reason to be complacent. With the condo rental bandwagon, stand out from the rest by adding value to your condo. Go beyond meeting the basic necessities like electrical wiring and plumbing — furnish your condo with your target market in mind. Is your unit situated right smack in the middle of a business district? Anticipate the cosmopolitan design and storage needs of a young professional. Knowing your potential tenant will also give you a clue on renting out your condo at a price that will meet your costs and yield you profit and at the same time, reasonable enough for your tenant to stay long-term.
5. Find the Tenant that You Want
Now you need to get the word out that your condo is available for rent. Again, team up with your property manager as he or she will be the one who will be interacting more often with the tenant. Decide on the advertising that you will use depending on your budget. Come up with an interesting and sufficient ad and include excellent photos of your unit. Hold an open house for everyone interested. By now, you should also have a clear idea of what you want in a tenant. To be safe, do a background check on interested people to weed out those with a record of bad finances or worse, illegal activities.
6. Rules Rule
Keep in mind that as the landlord, you are responsible for your tenant. Present a well-detailed contract where the rules and regulations are stipulated in black and white, leaving no gray areas as much as possible. Harvey Jacobs, a real estate lawyer, advises, “It is a good idea to add a clause to your condo lease that makes your tenants responsible for any fines the condo association imposes on you for their violations.” Now that will make things crystal clear.
7. Keep Your Tenants Satisfied
You may have your property manager to oversee things for you, but be hands-on as much as you can. See to it that your tenant is satisfied and that your property manager does not have problems. Remember, continuous occupancy is key for you to reap a return on investment.
Condo living is here to stay so renting out a condo is a wonderful way to make your money work for you. Of course, condo rental for a business still entails certain obligations, but with this guide, maximize your resources while minimizing the risks as you make your way into practical real estate investment.