Ali Jamal is the owner and CEO of Stablegold Hospitalitya real estate investment company.
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In our current environment where interest rates are constantly rising, real estate owners and investors need to think seriously about the cash flow on their assets and investments. Like all recessions, this one is likely to happen. Until then, though, it’s important to put financial prudence over a comfortable lifestyle if, once the plodding is over, you plan on sitting in a sea of greenery rather than a sea of debt.
In my experience as the CEO of Stablegold Hospitality, a multi-million dollar investment and real estate management company, I’ve learned that there’s no reason anyone can’t become a successful real estate investor during a recession. Moreover, I believe one can do this even if the only property they own is a modest single family home.
The trick here is to change one’s perception of a home from a space intended for just one family to a space that can accommodate more individuals. By buying a home, owners can earn more money per square foot of the home, while renters can enjoy the benefits of affordable housing, which also helps them save for their own home. Le voila, a financial win-win for everyone.
Here are some tips for acquiring, converting and operating a successful room home.
How to acquire?
Try not to limit your search based on the largest number of rooms your budget can hold. The needs of tenants in a one-bedroom house are slightly different from the needs of a single family. For example, make sure you have enough bathrooms and free parking spaces, or at least enough square meters to renovate and renovate.
Also look for properties in areas where you can find early career professionals or trainee professionals as they need affordable housing solutions to save money. We often find such properties near a university/college or near corporate headquarters.
Before buying the property, I recommend talking to the neighbors to make sure they don’t have a problem with having a room nearby. Converting a single-family home into a one-bedroom house may require some renovation, and failing to make yourself known to the neighbors early on is a reason for them to head straight into town instead to voice their concerns .
How to manage
A room apartment is not a passive investment. Be prepared to be hands-on; don’t expect renters to run the show. They need 24/7 access to you. Establishing some ground rules at the beginning of a lease can help reduce potential chaos in the future and help tenants best share space with one another.
Thorough screening of tenants before signing a lease is another way to avoid chaos down the road. Perform credit and reference checks. This is important not only for your investment but also for the safety of other tenants and neighbors.
Don’t forget to research the city’s regulations around owning a home as there may be permit requirements. However, in most cities I’ve researched, it seems relatively easy to own one when affordable housing is in high demand.
Final Thoughts
Owning a guest house is not easy. It’s not the same as owning a single-family home, where we don’t have to worry about sharing our private space with multiple tenants. We also don’t have to worry about marketing, business expenses and city regulations. But the pain of being more creative with your assets can be worth the reward if you can create an additional stable source of income amid an unpredictable and promising economy.
In addition, potential investors should bask in the fact that owning a one bedroom home is a stone’s throw from owning a hotel or apartment complex; in both cases, you serve multiple tenants within a single structure. For credit institutions, entering into such a venture can prove that you are able to own and operate multiple properties. It will also give you the confidence and motivation you need to know you have this very easy!
The information provided here is not investment, tax or financial advice. You should consult a licensed professional for advice on your specific situation.
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