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Wednesday, 25 January 2012

Making Money From Real Estate Investing With Small Savings


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Acquiring good investments is a great desire in people who save money. Unfortunately many Zimbabweans are unable to invest in these because of funds that are below the minimum required. Its therefore a pity that many holders of small savings end up losing capital as they purchase items that are more of consumables than assets.

Real estate is a genuinely great area for investing into which people the world over put surplus cash and then lock up capital for a lifetime. Small players should therefore take advantage of it. It is however unfortunate that these days many small savings holders are buying cheap motor vehicles of Asian origin. Despite the fact that these immediately begin to depreciate the moment they leave the showroom, their prices are falling also because they have flooded the market. But real estate on its side is in a situation made of many positive factors. Official records that state that there is a backlog of at least one million housing units bear testimony to this inference. Real estate can bring in rental income of about ten percent per annum. It is also true that the stars of this game like Robert Kiyosaki and Mukesh Ambami are making more than ten percent in few months through property development.  
                                                                       

For small fund holders to benefit from these and other advantages, a group of friends can contribute and raise say US twelve thousand dollars, which is then invested in lucrative property development markets. There is nothing difficult about this issue but the few things that are needed are just simple organizational skills and will power. A property consultant can give a straight forward and common sense advice on technical issues. Using the twelve thousand dollar figure as an example; with seven thousand dollars, a high density stand is purchased. Five thousand dollars is used for value addition and the property can be sold at around seventeen thousand dollars giving an approximate 40% return on investment within a reasonable period of time.

In terms of organization, these friends can grow themselves by forming a special purpose vehicle which they can use to acquire and invest in property. This is similar to the concept of consortiums that was made popular by large business players. I believe that if small players have managed “kutamba round” i.e. revolving personal loans, on their own and for years they definitely have the administrative know how, experience and mutual trust to administer their own consortiums.

In terms of marketing, it is important to know that when developing a property for the market, the level of investing is limited by the market segment or area within which the property is located. These segments have the so called price ceilings. Because of these, it’s likely that one can over or under invests such that he will get little or no return on the property. But with straight forward advice, this can be avoided easily. To this end I welcome comments, inquiries and suggestions on the subject of real estate investing for small players. My vision is to see people with small savings reaping the lucrative profits from property development just like big investors.

Cain Ndhlovu is a property consultant for inquiries on these and other property issues call/whatsapp 0772 997 229 or LEAVE DETAILS in pop up widget will come back to you.

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