Solid return on residential investment

Mr. Wang entered the real estate investment field purely out of personal interest. He used to be the communications director of an international communications company in Asia, and his long-term work has cultivated his digital sensitivity. Now he has not only bought a number of residences himself as an investment, but he also founded a consulting company, real estate investment business consulting has become part of his business - not only involved in it himself, but also helping others with real estate investment advice.

"In the residential properties we buy now, the annual investment return can reach 10%-15%, so the cost of a suite can generally be recovered in 10 years or the like." Mr. Wang on his investment effect quite satisfied. However, most managers are not proficient in property investing and do not have much time to research. What principles should they follow?

Rational Investment Strategy

In fact, real estate investment is a branch of personal finance. Compared with other investment varieties, such as stocks, funds and bonds, the return period of real estate investment is longer, but the risk factor is small, and it is more suitable for managers who pursue stable returns. Those managers who have completed a home purchase and still have savings in their hands, investing in real estate has become a major choice for them. For example, only 25% of the home buyers of Xincheng International, a high-end residence in Beijing, live by themselves, and the rest are rented out in whole or in part.

Mr. Wang used to be in the stock market for several years, but was very unsuccessful, and then gradually turned to real estate investment. In this field, he is like a duck to water, and the business is smooth sailing. This added to his confidence to increase investment. These benefit from the "project implementation experience" he has cultivated over the years - thorough research, robust operation and everything based on real data.

"Before buying any property, you must know who your target customers are, so that you can buy selectively, not just on a whim." He suggested that the investment in home purchases should be implemented as a project, first of all To conduct a comprehensive project feasibility study, if possible, a detailed report should be produced to avoid blind impulses.

Several properties invested by Mr. Wang in Beijing are all aimed at foreigners who come to Beijing to work. Wang explained that he himself has worked in multinational companies for many years and has dealt with such people a lot. They are very credible, have high trust in payment, strong ability to pay, and they will not change homes unless there is a special reason. In addition, he has no time and is not willing to solve many detailed problems and disputes, so he chose this group of people as customers. When choosing a property, the first choice is the location where foreign companies are concentrated.

For example, he purchased a detached house of more than 200 square meters in the northeastern suburbs of Beijing. Due to its accurate positioning, it has now obtained a considerable return on investment (see sidebar). At the beginning of this year, he also purchased two large-scale residences with an area of more than 200 and more than 300 square meters respectively in Xincheng International.

The integrity of the developer is very important to the buyer. According to Ms. Xu Xiaobo, General Manager of Soufun Information (Shenzhen) Co., Ltd., the complaints in China's real estate market mainly focus on six aspects: 1. Housing quality; 2. Exaggerated, false advertisements, misleading consumers; 3. Contract breaches and promises 4. The area is arbitrarily "shrinking" or "rising water". Over-counting the common area, reducing the actual construction area, double-counting or even fabricating false areas; 5. It is difficult to obtain property rights certificates; 6. The property management problem is serious. All these issues are directly related to the reputation of the developer. The integrity of the developer will become an important basis for managers to maintain and increase the value of their investment in house purchases in the future.

Because residential purchases are often just "futures", in addition to researching the location, developers and even property management, it is also necessary to understand the rental prices of existing properties in the surrounding area before purchasing, as an important reference for calculating the return on investment. The way to find out is simple - do a site visit by pretending to be a tenant. It is best if you can understand the overall development plan of the surrounding area. After all, it is a dynamic process of area development.

Avoid the Four Mistakes

On the basis of rational investment, managers should avoid the following misunderstandings when making residential investment.

The higher the grade, the better Not all residences have to be aimed at high-end consumers. Managers should choose suitable target customers according to their own financial strength and local actual conditions when purchasing and investing in houses. The most important point is to choose those homes that are easy to rent and have great potential for appreciation.

Beijing's property market has a saying that "the east is rich and the west is expensive, and the south is poor and the north is cheap." Financial strength is a determinant of investment. Cheap properties are not necessarily good returns. It mainly depends on the price/performance ratio. In Shenzhen and many other areas with a large proportion of temporary residents or low spending power, low-to-medium and small units are more popular.

The construction of neglected property management housing is real, and you can see the quality of the construction immediately after the project is completed. But property management is a long-term and hidden problem that is often overlooked by homebuyers. The property management company directly determines the level of various services such as greening, environmental planning, and safety in the community in the future. Property management is also a major factor in determining whether the residential value will appreciate in the future! The recent news of conflicts between property management companies and owners has been reported in the newspapers from time to time, which has made some home buyers begin to understand and pay attention to this problem.

Mr. Wang also believes that the management level is an important factor in determining the future rental rate of a house. Expats in particular, who are more sensitive to service than price, need to know the background of developers and property management companies well. "In Beijing, there are many properties that claim to be foreign senior managers as their target customers. The location is very good and the building itself is good. However, after a few years, the rental price has plummeted and few people are interested. One important factor is that the property management level is too poor. We have seen too much of this situation.” Mr. Wang said that, in addition to recognizing its location, the more important thing when buying a real estate in Newtown International recently was the developer—Hong Kong Land and Property Management Corporation—the first An international background for Pacific Davis. Although he has not moved in yet, Mr. Wang is full of confidence in the future returns.

The supporting environment of the area is not independent of any real estate. It needs related facilities, such as shopping places, transportation, cultural education, club services, sports and entertainment facilities. The mature supporting areas have a direct relationship with future rentals. SouFun.com conducted a survey on the living conditions of white-collar workers in Shenzhen, and they generally live in rented houses. When renting a house, these groups pay a lot of attention to the transportation and living facilities, which is an important consideration for managers when purchasing houses and investing.

Missing the best time to buy a home After all, buying a property is a big expense for anyone. In addition, since it is an investment, that is to use the least investment to obtain the highest return. Generally, a real estate project has different price points in different sales periods. It is also very important for investment in purchasing a house to grasp the timing of the sale.

Using the Housing Bank

For managers who manage a lot of things, renting and collecting rents after buying a house is a big problem. First of all, the information needs to be released through various channels, and then there are a lot of details such as house inspection, price negotiation, monthly rent collection, and management. It will be more troublesome to manage if the tenant is in arrears in rent or changes frequently. So you need the services of an intermediary company.

The general practice of leasing intermediaries is to bridge the relationship between the landlord and the tenant. After the introduction is successful, each will charge a certain amount of commission and then it will be completed, and will not be responsible for any follow-up work. This form of intermediary work is often the owner who pays a commission to successfully rent out the house, but the troublesome work such as rent collection and service management after the fact falls on the owner for a long time. And distressed. Are there any intermediaries that provide full service to owners? Have. The concept of "Housing Bank" has appeared in developed cities. "I Love My Home" in Beijing and Shanghai, and "Jiajiafa" in Shenzhen are all such institutions.

The concept of a housing bank is to deposit housing in a "bank" like cash, managed by a professional services company. According to Mr. Zhuang Zengfa, the founder of Shenzhen Housing Bank and the general manager of Shenzhen Jiajiafa Housing Wealth Management Center Co., Ltd., the original intention of the housing bank is to integrate all activities such as renting, rent collection, and management by a service company. As long as the owner has an appraisal agreement with the housing bank and both parties determine a rental price, then the housing bank will do all the rest. The specific method of Jiajiafa is to deduct 45 days of rent every year as the rental work period, and for the rest of the time, regardless of whether the house is rented or not, the owner can receive the rent agreed in the contract as scheduled.

Jiajiafa Housing Wealth Management Center has been running for more than two years, and practice has proved that the concept of housing bank is feasible. According to Mr. Zhuang, the "no commission" commitment launched by the center is a big attraction for tenants. The company now has more than 5,000 houses. As long as the tenants have requirements, no matter the location, grade or size, they can always find suitable houses. The benefits of scale operation are becoming more and more prominent.

Mr. Chong's foray into housing banking was purely accidental. He himself came to Shenzhen in the early years and earned his first pot of gold through hard work. He owned more than 10 houses. He thought he could easily get returns by renting out, but he did not expect it to be so difficult to manage. "At that time, an inspiration suddenly emerged, which is to help those successful people who have houses but no time to serve and be their full-time housekeepers." The housing bank came into being.

Home banking isn't perfect. Xu Xiaobo of SouFun believes that the biggest problem is the lack of regulations. For example, in the face of different areas, different building ages, and different types of rental houses, the objectivity of rent valuation is difficult to control. Whether the on-site investigation, cumbersome evaluation, transparency and authority of the valuation can be recognized will undoubtedly increase the burden of the "housing bank" and restrict the rapid expansion of the "housing bank".

Solid return on residential investment

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