There are several ways of making money from real estate. One of the common ways is the collection of rents from tenants occupying or using a property. The general perception of most real estate investors is that of a landlord or landlady with tenants occupying their properties, and paying monthly or annual rents. More often than not, what these individuals have in mind are individual rather than corporate tenants. Many do not consider how they could turn their properties into a cash generating machine with or without the regular tenants.
One of the ways of making more money from your property is to change the use to commercial rather than residential. Residential properties are generally more lowly priced than commercial properties. Commercial properties, depending on their location, can easily command higher rents. In some cases, instead of using a fixed price, you could assign an amount to the cost per square metre. Other fees, such as service charges, could also be significantly higher. The overall value in terms of income that could be derived from this change of use is usually higher and better.
In recent years, due to the scarcity of recreational facilities and community halls, there has been a steady increase in the number of custom-made private event centres. These facilities are sometimes a product of modification of factories or other bigger properties. The beauty of this income generating model is that they not only generate a higher return than residential properties; they also carry with them less of the challenges that come with such properties. You technically have what could be referred to as a one day tenancy. Those who rent such facilities usually pay amounts that are comparable to an annual rent, but with less than 24 hours to use their lease and hand over vacant possession back to the owner or facility manager.
Another use of properties that is growing in popularity in certain quarters is the use of big properties as hotels and short stay accommodation. Several years ago, I knew a property investor who lived in a mansion that had over 20 rooms in a strategic part of one of the commercial centres in Nigeria. As he grew older and all the children moved out of the home to start their own families, he realised that living in that property had become a burden for him and his wife. After some years, the property was converted into a hotel. These days, properties that are located in some rural areas are equally finding more profitable uses as hotels or short stay accommodations. In some of these areas, every weekend is a celebration time with lots of people travelling to these locations, who need accommodation for one or two nights. Properties that otherwise would have been vacant have now become a beehive of activities that generate cash flow for the owners.
In addition, if your property is located close to a higher institution, you may consider using it for student accommodation. Most institutions of higher learning are overpopulated. Hostel accommodation is either non-existent due to policies meant to curtail student unrest, or they are grossly inadequate. The effect of this deficiency in the system is the creation of opportunities for those with suitable properties that could be used for student accommodation. Students are easier to manage and their tenure in the property is determined by their programme of study. They are often funded by their parents and are accountable to the school authorities if they become unruly. The income from these properties is usually steady.
Another possibility is the use of your property as a study or education centre. With the right permits, skills and structures, you can start a school. Education is a fast growing field with prospects. It is a big generator of cash flow once it is established. This is effectively turning your property into business premises. The challenge of this use property is that, it comes with greater administrative and financial involvement than the previous examples of property usage. It is also a long- term project with a higher degree of risk associated with it. But, if and when it does begin to generate returns on investment, the outcome could be amazing.
There are also add-on services that could be linked with the above use of property. Some event centres make provision for cooking or snack bars that their clients are obliged to use. Some also have cold rooms where their customers could refrigerate their drinks. Hostel accommodation for students could also include a restaurant or mini business center. The idea is to make more money from your property in as many ways as possible.
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