You don’t need a lot of money to get into Real Estate and earn profitable returns on your investment. From Wholesaling to Land Development, real estate offers diverse avenues to maximize your investment. In the first article of this series, I explained how you can earn substantial fees from wholesaling without putting up a cent of your money. This article will examine equally lucrative income strategies from Flipping, Property Management and Land Development. The key to success with all these ventures is to learn the correct approach that is applicable to each.
My first attempt at flipping, was in the 1980’s, with a residential lot in Runaway Bay, on the main road, across from a major hotel. I, with two other partners purchased the half acre lot for $25,000. Within two months we offloaded it for $125,000. I was not yet a realtor, but the joy of making a profit of 500% whetted my appetite to learn more about the field. Flipping is the term used when you purchase a property, whether a vacant lot, a derelict house or a “fixer-upper”, renovate it then resell it for a profit. A vacant lot may require that you merely clear and fence it. In the case of a house you may add extra living units and then rent the complex. By so doing, you enjoy a monthly income from the rent and still own the property. Thereafter you can choose the right time to sell.
Last year, as a realtor, I sold an old, 12-unit, two storey apartment complex, in a suburb of Kingston to a client looking for a good investment property. The new owner renovated the complex, by installing modern fixtures, upgraded the plumbing and will soon finish with a professional landscaping job. The units will then, attract monthly rentals of nearly two and a half times what they rented for before the renovation. Within seven to ten years the owner should be able to recoup the investment and sell for a tidy profit.
To be successful at flipping you must select the right property in the right area. In addition you need to have some knowledge of construction or have a team of dependable workers who can do the work economically.
Are you an efficient administrator, with an eye for details? Do you have the skills to supervise a team of workers? Do you have a desire to run your own business and earn a decent monthly income? If so, then getting into property management may be the thing for you. Property Management entails caring for the upkeep and operation of a property – residential or commercial. It involves, collecting rent or maintenance fees, attending to repairs, paying staff and performing some bookkeeping duties. You earn a percentage from the rental or maintenance fee for your supervisory effort. In large strata units a percentage of the accumulated monthly fees can afford a reasonable, steady income.
Managing a single property in the absence of the owner is not the scope of what we are talking about here. Not much money is made from that. You make good money in property management when you have in your portfolio a number of units and offer separate ancillary services under contract. In the late eighties and early nineties, I managed a cluster of resort villas on the north coast. In addition to the property management fee, I charged separate fees for marketing the villas to overseas guests, project management of major renovations and a realtor’s commission if and when the property was sold.
Complaints from owners and tenants can occupy much of your time and effort even outside normal working hours. You need good customer relations skills to satisfy the fastidious and sometimes irascible owner. Property managers are always on call, therefore you need to have systems in place to separate your work from private life. You will need a license from the Real Estate Board to manage multiple properties.
Have you ever wondered who is behind those building projects that transform parcels of empty land into clusters of houses or stately apartment blocks? Housing schemes such as Barnett Estate, Ironshore, Caribbean Estate, Portmore, Mona Heights, Oaklands, Coral Gardens are products of such land transformation. Land development is adding value to a parcel of land by dividing it into smaller pieces for resale. Some parcels are sold as raw land, others are sold with houses, apartments or offices built on them, Those who engage in this activity are referred to as developers. You need to be registered with the Real Estate Board if you are developing land into six or more units.
Land development is an extremely lucrative investment enterprise. It requires careful planning, submissions of copious documents to regulatory agencies, obtaining numerous permits and adherence to strict financial practices. You need a bit of “seed” money to acquire the land, install the required infrastructure and hire professional services. You profit from the sale of the value added properties. The more infrastructure you add for example water , light, roads, houses, the greater your profit, so is the greater your cost or investment and thus the greater is your risk. You need a team comprising of a banker, surveyor, sales personnel, lawyer and accountant. Above all you need to have sufficient time to allow all the steps in the approval process to be completed. When land development is done successfully, it can be a most financially rewarding source of real estate investment.
About the Author
Sydney Davis is the Managing Director of Sydney Davis and Associates. He is a member of the Realtors Association of Jamaica and licensed by the Real Estate Board of Jamaica as a dealer, and property manager. For almost two decades, Sydney Davis & Associates has offered sales, and property management services for residential, vacation, and strata properties in Jamaica. Our company specializes in providing our clients with investment opportunities in real estate. Through our blogs, ebooks and personal consultations, we provide expert advice about what you need to know about properties in Jamaica. Our office is located at 80 Constant Spring Road, Kingston 10, Jamaica.
Tel: 1-416 628 2915 (overseas); 876-628-2915 (Jamaica)
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