Creative Ways to Own Property
All aspiring enterprenuers have been advised that if they want their businesses to make an impact and survive year after year in this competitive world, their businesses must be solving a problem.
- Part 1._
Picture an old building that is on the verge of being auctioned. The building has four units and it is worth 10 Million Kenyan Shillings that belongs to Mr. Robert.
The building, however, is a wreck, from having a bad drainage system to having leaking roofs. Three of the four units have no tenants. Rent paid by the existing tenants is 50 thousand shillings per month but if the place is fixed, rent is potentially going to rise to 200 thousand per month. Therefore the value of the building could be up to three times if fixed.
Now here are some steps you can follow to creatively own such a building While spending little to no money of your own.
When you discover such a building, first do research on
a)The Property in Question.
Does it have the necessary documentation? Are the property rates paid up to date? Is it in a safe neighborhood? You definitely don't want to purchase a Property that has debts or lacks the necessary documentation.
b)The Kind of People that Own that building.
This is important because you need to know whether it's an old family property and if the family members are fighting for it, hence there is no distinct owner and that's why the Property is poorly managed. You don't want to be involved in a family feud.
However, if it's a property that the owner(s) are anxious to sell and divide the money amongst themselves, then it's worth going after.
Strike a deal with the owner for you to rent the empty units with the end goal of actually purchasing the whole building.
Once you have done a background check on the property and the person, then you can move on to making a deal with the owner.
Tell them you are interested in renting the two units but only if they give you an opportunity to occupy the particular units rent-free for the first six months and during that time, you will be fixing and renovating them.
Since he has no tenant and the place is in a state that is not entirely attractive, convince the owner that they have nothing to lose. In fact, they have more to gain.
Assuming they agree to let you rent the house with those terms, then the next step is to look for other people interested in renting the place, this is because you are not going to use your money to actually renovate those units.
Once you find them, make them the same deal you made, only this time, let them stay there for four months rent-free instead of six and after four months charge them 75thousand shillings for rent instead of 50thousand. Why?
Because you are going to start paying your rent in six months and so the money they start paying two months earlier, you can use to renovate the unit that you are staying in. Then in the coming six months, as they are paying you 75 thousand shillings, you pay the owner 50 thousand, therefore they will actually be paying your rent! Remember all this is legal in real estate.
Now finally, After the renovations, the value of the Property is definitely going to go up. Say it goes up to 25 Million shillings. Now buy the Property by signing the necessary documents with Mr. Robert. Get a master Lease that allows you to own the entire building and eventually take up his mortgage.
Now after that, go to the bank and present your documents that show the current Market value of your building and ask for a loan with it. All you need is the ten million against a Property worth more. Pay off the default mortgage payments and give Mr. Robert his part.
You now own a building with four units and each tenant pays you 200,000ksh that you shall use to finish up the mortgage.
Problems You Would Have Solved
~For Mr. Robert, he would have been able to get rid of a Property he was not only having a difficult time managing and taking care of.
He would have also gotten something out of a property he was on the verge of losing and getting absolutely nothing out of it.
~For the tenants you would have created more apartments to rent that are actually livable through the renovations you would have done using your creative ways.
~For yourself, you would have creatively owned property with little to no money, Just lots of research and good relations.
Eventually, after you pay off the mortgage loan, you will start getting money from the rent paid by the tenants.
At the end of it, you will not only solve a problem but also gain from it.