Hello Fellow Hive Learners
I was a Land Lord years ago. I learnt to be a Land Lord from my early days of working. I was in some circle, full of self employed people. We always talked that one day we would no longer capable to do work, then what should we do when that day arrives? Join in some Multi Level Marketing?
There were two big clusters in that circle. The first one was people who believed in financial instrument, they bought some mutual funds, place their money on gold, put money on stocks, and many more. Many of them were successful, although some were not that lucky.
I was in the second cluster, which were people who belived in property. We believed that we could not create land and space, so the more lands we secured, the better our future would be. This cluster was populated by people who kept buying houses and apartments. Same as the first one, many of us were successful, sadly not all could be like that.
In the past we are called as social creatures as a human we rely on connection and cooperation with others to live. The history has told us that our ancestors were forming tribes and our parents were making and joining communities.
Before Covid 19 came, I had 11 apartment units, and a few houses. I even owned an island Was I a billionaire? That's a big question that time, regarding my assets were big and so was my debt. it was a mini empire built by loan. Then Covid 19 came, I lost most of them and I had to sell the remaining below the market price to provide some food and medication to some people. It was literally like letting them go below half price.
So right now I am not a Land Lord anymore. I still own a house and an apartment, because those two what are left unsold during the pandemic. Here I do not wish to tell sad stories, but let me share you what I have learnt during my days as LandLord, hopefully it could give you some insight about being a Land Lord. However you need to know that I live in Jakarta - Indonesia, some details might be differ for you based on where we live.
Define Yourself What Kind of Land Lord You Are
This will be a long one, the answer you must seek is not easy, it's a bit complicated for some people. However let me try to guide you here. Becoming a Landlord is not about owning a house or a room then rent them out. Yes you are a landlord if you can do that, but not a true landlord.
There are many kind of landlords out there. For example, in the past my friends and I liked to ask..
are you a landed one or a bird nest ?
Yes, people who are excell at owning and renting out Apartments won't be as good like that when they rent their houses. There are Landlord who are specialized on Landed house, big houses, or maybe Villas. My close friend right now owns more than 20 villas, with a net wealth worth more than 10 millions Dollar. He knows how to get lands, build a good villa, and he knows how to seek cheap one and renovates it into a luxurious one.
He is really a successful landlord, however is he good at aparments? The fact is that he is avoiding owning any apartments. It is not his forte, and he prefers to focus on what kind of properties he is good at.
So if you want to be a good landlord, you can not be jack of all trades own all kind of assets. Focus on what you are good at.
Which Market do you pick?
Here the fact. My aunties has almost a hundred of small houses. She rents them cheaply individually however she really makes a big fortune from those small houses. She is very good, might be one of the best for small houses landlord.
She knows about luxurious villas, however she doesn't bother to invest on them. She says she only invest on the market that she knows well the buyers. She is a rich lady but she knows well how poor people will pick their houses, and she knows well how cheap or how high she should set the price, so her customer will not leave that houses for decades.
So we are talking about SES here, Socio Economic Status, or whatever that categorized your market segment. Do you aim poor people, mid to low class, pure mid class, or mid to high class? maybe you aim the highest there.
You need to know your capacity
We are talking about investment here, so sky is not the limit but it is your wallet. You need to measure yourself how far you can stretch, because this is a long term investment.
A landed house could generate you 2% to 3% APR with some capital gain. An Apartment should at least give you 8% APR and you can not expect any capital gain because the maintenance would compete with it. Basically if you are a landlord, you need to endure six to ten years doing this investment without taking any out, all rolled in again until your properties mature and generate steady income.
Well you can sell some and buy newer one, however do not expect to enjoy the yield in the first five years. This is why you need to know your own capacity, do not overinvest or being FOMO in buying some units in trending zone.
What I Was Before
So let me talk about myself here, and I hope my case can be a reference for you too. I am a birdnest one, I seek mid to low apartment. There are reason why I pick that segment 1. My budget is very limited. I was working with a pay above $1000 a month but no more than $2500. A mid to low class apartment, a single bedroom or a studio, could cost me around $ 20K, so I could get one in every two years. But thanks to the loan leverage, I could start with 3 units. It was a pain staking one, but luckily I could finish the loans that time. You could not be a landlord with a single unit rent only, you won't get any learning curve from it. 2. I find that segment is very profitable. For a building or apartments, you could only get APR more than 8% in the mid to low class and a very high or luxurious class. For a luxurious unit, you can get 10% or above, but like I have said before, my resource was very limited so I did not dare to aim this segment.
So I have been in mid to low class apartment landlords for a decade. There is something that I could share to you so you do not do common mistake.
I just saw this teaser from a friend, he tries to sell his apartment. To be honest, it is ugly. I am not saying the ads, I mean the unit. This is what most people do this wrong. They go to IKEA, buy some good furniture and put them into their units. They think they have a good unit and try to sell it or rent it.
Trust me, it does not work well. You need to be very lucky to be able to market it with good price.
Allow me to show my units, It is the last one and it is rented continuously without any break.
For an apartment, you need to make it custom. Do not use standard furniture to build up your layout. Look at my living room there, I make an infinity mirror (a mirror facing another mirror, making an infinity reflection). I use custom design to make the TV area looks unique, not generic.
But I will be honest here, my sofa is cheap, from the reflection you can see my refrigerator is small and cheap too, and my tv set is actually very standard.
This look unique like a hotel, but all of them are actually cheap.
My bathroom is cheap too, I only put a custom glass partition and a custom drawer for the wastafel. Those are cheap, about $100 but it can give a vibe that my bathroom is different than other people bathroom. I give no shit about the shower and other closet.
This is my bedroom, looks like a hotel room, right? Trust me, all are cheap. I do not use high quality plywood for the bed, all are cheap materials that have a good endurance.
So the point is make your room look exquisite by getting a cheap designer do their job making it look great using custom made furniture with cheap materials that last long.
This is the basic trick if you want to have a good rent rate and high occupancy rate in mid to low class apartment.
Ok I think I have spilled too much here, see you next time.
Thank you for coming and reading my post. I live in Jakarta, Ex-Capital City of Indonesia. I used to live by making money online, that's why I like being here, on HIVE, and in #PIMP - (Paper In My Pocket) community.
