Should invest furniture for rental apartments ?

By
Real Estate Agent with RENTAPARTMENT

Have you just handed over an apartment and plan to rent this apartment again? What makes you hesitant is not knowing whether you should keep the raw status quo and rent or do furniture for the apartment?

When researching information on classified sites and real estate sites, you find out that there are countless apartments in your project that are being rented, most of which are rented and of course Rent is not what you expected. Not to mention that you know around your apartment there are countless apartments in other projects that are also competing with you in the rental market.

If you maintain the status quo, you may have to lower the price to be attractive to tenants. RENTAPARTMENT will discuss with you the current rental price of some high-end apartment projects in Ho Chi Minh city, Vietnam. Time of quarter 3/2019.

 

 

Thus, considering on average, a 2-bedroom apartment, with an area of ​​70-90m2, costing between VND 1.8 billion and VND 3 billion, you can rent this apartment with the price of VND 7-10 million. /month. If you calculate the annual rental value (assuming you lease 12 months / year), you see a profit margin of 4-5%, lower than the current year savings interest rate.

After consulting interior investment rates from a number of interior design and construction consulting companies, you are expected to invest to hire high-class guests / foreign guests. The level of investment needs to ensure adequate interior performance and aesthetics for the house, so that it can be attractive to buyers. Assuming an investment rate of about 2.5 million / m2, the depreciation period according to accounting regulations is 7 years, we have the results in the following worksheet:

 

rental-rate

Thus, on average, a 2-bedroom high-class apartment, if invested in furniture, will have an annual profit rate of this investment after deducting the depreciation expense of 30.5%.

Thus, financially, this is really an attractive investment. However, you also want to consider the risks when making this investment decision. There are the following risks:

Market risk: that is when your investment is quite high, causing the rental price to rise beyond the ability of the target customers to pay. Typically, this case mainly occurs when your apartment is a medium-class apartment and the financial capacity of the tenant is not high.

Risks of furniture damage caused by guests or caused by other objective factors. To avoid this risk, you will have to regularly check the appliances, equipment, especially electrical equipment, and clarify the responsibility to repair and restore the equipment in the contract with the lessee. .

The investment of furniture for rental apartments is a decision that brings a lot of benefits but also contains risks. It is important to make decisions and you must carefully consider the benefits and risks. Understanding the risks will help you find the best solution to limit and overcome.

If you still have concerns about how to identify the customers you hire? Financial planning and interior equipment options how to optimize benefits and limit risks? You can refer to companies specializing in the design and construction of apartments for rent and good luck to you!

---------------------------------------------------------

Peter Hoang,

Email: peter@rentapartment.vn

View apartment for rent in Ho Chi Minh city at RENTAPARTMENT: https://rentapartment.vn

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Peter Hoang

Peter Hoang - founder at RENTAPARTMENT agency
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