Real Estate Developer Kisumu-Factors to Consider when you build an Apartment

If you would like to think about investing an apartment building, there are fundamental factors which you need to take into consideration before you invest a single coin. The end result and return thereof which largely employ how well you addressed those factors. As a property developer, it’s our business that will help investors make right decisions before investing any money in a real estate property.
Here are the factors to consider when investing in a real estate property much like an apartment.
1. Cash Flow
Will the property bring net positive cash flow? Simply put; will I make profit from this investment? This is very important to ask providing you with assess the market critically.
What will help you make good judgement here depends upon these factors;
The demand in the local marketplace for unitsIf there’s a huge demand out there, you will not experiencing a long vacancy period. This will confirm you start getting returns immediately the property is completed and even when a tenant gets out, the time it takes to bring in another tenant will be a short one.
The type of market you would like to invest inThe type of market will dictate the huge amount you can charge as rent. If you operate outside the expected range, you will definitely miss out on tenants. Therefore the market will impact directly on what you may can receive as rental income. There may be estate were a two bedroom unit in an apartment attract monthly rental income of between Ksh.20, 000 and Ksh30, 000. Exactly the same two bedroom unit if moved to another estate will attract a maximum of Ksh15, 000.
The cost of financingIf the price of capital or finance is high, the return will be reduced. If you secure financing at an interest rate of less than 10%, then you certainly stand a chance of constructing good return from the investment than if you secure funding at an level of interest of 13% or more.
How much your down paymentThe amount of deposit you make will reduce the funding required hence the costs associated with financing. If you locate a deposit of 40% of the cost of the project, then you is only going to look for financing of 60%. If another person places a down payment of 20%, the remaining 80% will most definitively be financed by debt capital hence more interest expense.
Once you have stare upon all these points, you then need to ask whether you’ll make money by investing in the property you have in your mind? If you don’t have a good clear answer, look into a property developer who offers consultancy or financial analyst.
2. Appreciation
You need to try to ask yourself whether the place you prefer to invest as the good potential of appreciation of property value and rental over a period of time. You need to invest in a place where rental income inclined go up and definitely not down over quite a while.
If you buy in an estate where rental income or property value rarely appreciates, then you are putting your money into a high risk area. If the value does not appreciate, there is a high chance the fact that the value will come down over the same length of time analysis.
5. Risk
Risk is something to plan for. It’s said that you expect the most beneficial but you prepare for the majority. You need to ask yourself are you aware of what happens if all your assumptions were wrong. If you expected the units to remain fully occupied or at least 70% occupied and now you only attain 35% occupancy? You expected the value of the property to go up enabling you to secure funding but today the value has dipped?
When you plan very effectively the risk, you are adequately conditioned for any outcome. Before investing in any property development project, assess the risks involved and then judge if you will still make money if the risk occur.

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