There are maisonettes, there are mansions, there are bungalows…when it comes to real estate, you are spoilt for choice, so why apartments?
Apartments are a classic for getting your money’s worth in investment. They’re accessible, utilize space, and are quite a bit more affordable than other options. But that’s not why TSAVO does it.
Apartments are a great way to spread your risk. For the price of one bungalow, you can get several apartments and get a higher rental yield.
Of course, everyone wants a house to live in, so it only makes sense to invest in one, doesn’t it?
LEARNING THE HARD WAY
Say you buy a house at 12 million. One family will occupy that house at an estimated rent of 60,000 Ksh per month. Before arriving at that figure, you’ll have to take many things into account to make it more desirable to your clientele.
You have to source for a tenant who will be able to make the payment on a timely basis. So the hunting begins.
By some grace, you’ve managed to find a tenant. Now, how do you keep them? Managing a house is tough, a lot tougher than you imagined. You didn’t know that the tenant would call you at all hours of the day and night to solve issues, that you would need to follow up rent payment and everything else that came with the title ‘Landlord’. You wanted a house to own, not to manage.
As if that isn’t enough, the ones occupying the house decide they want to move, so now you have an empty house and the process begins all over again.
What if you used that 12 million to buy six studios (and have some left over) where management did all the work for you? No more tenant hunting, no more uncomfortable calls, no more dreaded “where’s the rent?” conversations, just you and your returns.
All you have to do is invest and the project takes care of itself. But why apartments?
Risk. Spreading your risk means there’s a lower chance of losing returns. Your tenant moving out of your 12 million house will hurt a lot more than a tenant moving out of one of your six units. And you’d have to look for the tenant yourself when it comes to the house.
Apartment’s affordability (especially TSAVOs) are what enable investors purchase more of them. It’s what facilitates the spreading of risk and is value innovative in that you get a lot more when it comes to returns and security compared to a single house.
The best reason however, would be that your investment will be passive. Working defeats the entire purpose of investment, and that’s where TSAVO comes in.
So, are apartments the way to go? If you want the best returns, yes, and if you want the best returns with minimal effort, then your best bet is TSAVO.