Hunting real estate for rent - an attractive investment channel in the next 5 years

Day post: 10-04-2017
Hunting buildings for rent can reach profit margin of over 20%
Real estate investment specialist Ho Chi Minh City, Nguyen Hong Hai said that in 2016 on the market has appeared many individuals and organizations tested and successfully operated lease model office building for rent. again. The average profit is 10-15%, even a good organizational unit can earn over 20%. Expected in the years 2017-2020 this business model will continue to attract the attention of the investment community.
With buildings larger and more solid than townhouses, the total lease period (before the subleasing arrangement) must be calculated in units of ten years. Occupancy rates are more diversified. 40% of tenants are big names or big names. 30-40% of the next tenants are start-up startup companies. The remaining 20% ​​is equally divided among banks, design firms, construction companies and other foreign companies.
Banking clients are listed as sole agents, renting only the ground floor, extended lease. They are willing to pay a premium over the average 150%. Therefore, if there are traditional tenants from the banking group is a huge advantage when operating the rental of the building.
Average asking rent for guests is 18-25 USD, of which the cost of renting a package of 12-15 USD per m2, management fee and services for the building of 3-5 USD per m2, the rest is profit . Having to rent the whole building package, the company's monthly capital expenditure costs are not small, this is a big challenge. Therefore, want to have a 100% rental interest. If the occupancy rate of 80% is just breakeven.
Hai estimates that the office leasing market is still promising in the coming years due to Vietnam's deep integration with the region and the world. Therefore, the rental model is still extremely attractive. The advantage of renting a building and then renting it out is that the investor does not lose land, construction costs or shorten construction time.
Hunting townhouses rental luxury residences 25%
General Director of Phu Vinh Investment Consultant Joint Stock Company, Phan Cong Chanh, said that the model of investment in luxury apartments for lease in big cities was popular with the real estate business in 3-5 years. There is still room for growth in the next half decade.
Currently, the largest high-class motels in HCMC's urban districts: 1, 3, 5, 10, 11, Tan Binh, Phu Nhuan and Binh Thanh. In new urban areas such as District 2, 7, high-grade rental space includes: renting for Vietnamese (3-5 million VND / month) and renting to foreigners (5-10 million VND / month) .
Typical room for rent is 15-20 m2, near the center, price is 3.5-4.5 million dong per room per month or more. This is twice the cost of a low-budget room (less than 2 million VND / room / month) but half the price of a smaller apartment. Compensation of the location of the high-grade room for rent is quite convenient, connecting to the central area fast, good service.
In this form of business, individual investors rent houses near alley in the city and arrange space for rent. Instead of investing the land from the land, they only rent, then arrange for sublease according to their own process. This option has the advantage of having less initial capital, thus recovering capital faster than direct investment from A to Z (buying land, building houses, leasing operations).
The challenge of this option is to find supplies (rooms) and have large demand (rent). It may be necessary to invest in more furniture but this money is partly recovered from the deposit of the customer. Yearly rents / total investment value is about 40% per year. The rate of filling 70-80% break even, filling 85-100% profit. Average monthly profit depending on how the management can reach 2-3% per month. Estimated operating well, profit over 25% per year.