How to make money from Jamaican real estate?
Simply put, if you want to make money from real estate in Jamaica or anywhere else in the world, you either need to buy property first or act as a broker for a property deal, unless of course you’re inherited one.
Most of us will have to make a purchase first as per the first category, and so, we’ll be discussing this article from that stance. Legally, you are required to be an agent with a valid real estate licence before you can act as a property owner’s agent, that is, unless you’ve been given the authorisation to rent or sell the property by a member of your family, friend or partner.
After your real estate purchase, you either have to rent out your property or sell it in order to make money.
In order to make money, you’ve got to have money
So, if it were so easy, why aren’t we all going down this route?
- You need money to invest in real estate.
- You need to buy the right kind of property at the right time.
- You have to sell at the right time, when you can get a positive return on your investments.
- Real estate investing is not a get rich quick scheme. Investors have to think long-term.
Let’s talk about each of these challenges in more detail.
Finding Money for Real Estate Investing
Unfortunately, in order to make money, you’ve got to have money in the first place. As many of us Jamaicans can attest, getting the money to buy your first property is one of the most difficult hurdles you will experience. This is especially true if you don’t have a family member, friend or business partner who’s willing to hand you any of the seed money you need. For those of you in that category, all you can do is save little by little over a period of time until you can obtain a loan.
Buy the right kind of property.
Firstly, you’ve to find a property to buy. Often times, that choice depends on how you intend to earn money from the investment you’ve made. Sometimes, for some lucky few, they just sit on their real estate investment and make money without having to spend another red cent, by simply waiting for the right time to sell.
Regardless, whether or not you’re flush with cash, you should consider doing one or more of the following if you’re really serious about making money from real estate investments.
Minimise the amount of capital you need to raise
You can find yourself stumbling across great deals by taking the following steps in no particular order:
- Look at inexpensive properties.
You could then minimise the amount of capital you need to raise, and thus any deposit and/or repayment amounts you need to make. You could even purchase using cash if you’ve the money to spend.
- Assess bank-foreclosed properties.
When lenders place real estate on the market, they are often happy enough to accept a price below market value if they can get the property off their mortgage portfolio. You could get a great deal, so look at houses on auction or ones being advertise by lending institutions. The only snag is that you’ll likely need to do renovations because the properties generally require significant updating and/or repair.
- Consider the rent potential.
You could rent the entire property or just a single room. The important thing to note, is that you’ll be able to collect money once you start renting. Of even more significance, is the fact that your income will continue to roll in even after the property is paid off. The downside is that you’ll have the hassle of collecting rents, maintaining the property and paying property tax on a yearly basis. If you’re doing short term rentals (e.g., via Airbnb) there are even more hassles you’ll have to contend with if you’ve any intention of being a responsible landlord.
- Look for fixer uppers.
You may be able to make some money by making one or more property improvements regardless of whether or not you’re looking at residential or commercial buildings. However, you should first investigate your potential return from rents or reselling, to ensure that you can earn money from your investment even after all your expenses and taxes have been paid.
- Consider empty land.
Buying just land is not as expensive as getting a property with a building already on site. One option is to merely buy and wait for the value to increase. Also, depending on the property location, you could even consider leasing it out to local farmers while you wait.
Alternatively, you can enhance the real estate value before selling on. Flipping raw land is quicker and cheaper in comparison to doing building renovations. You can add one or more buildings, break the land up into smaller lots for sale, clear the land for development, or even adding infrastructure such as access to roads, running water, and sewers.
- Investigate unoccupied properties.
Check out properties that have been sitting around unoccupied for a few months or more. Chances are that the owners have no real long term interest in retaining the property.
- Investigate absentee landlords.
Similar to unoccupied properties, absentee landlords may have no objection to selling for the right price.
- Performing Title Searches before Buying Jamaican Properties
- Pricing Rental Properties
- Reducing Vacancy Rates of Rental Properties
Never wait to buy real estate
The right time to buy
The ideal time to buy is when there’s a downturn in the market.
In other words, when there are lots of properties up for sale and very few people are buying. It’s simple economics. With a large supply, you are more likely to purchase what you want for less money. You’ll know if there’s a hump in the market if you’re constantly looking at properties for sale to see how long they they’ve been listed, and how much the advertised price has fluctuated.
Buy whenever you can find a potentially good deal.
The other mantra, is that you should never wait to buy real estate, since you can be waiting forever for the ideal time to buy.
Sell when you can get the return on your investment as per you’ve targeted
The right time to sell
The best time to sell is when you know that lots of people will be willing to buy the property.
In order words, when similar properties being sold are selling for more than the asking price. It means that you’re likely to maximise the return on your investment.
Sell when you can make good money.
As a real estate investor, you need to ascertain how much money you’d really like to make for each property purchased, and when you’d be better off selling. If you don’t intend to hold onto properties long term, you should sell when you can get the return on your investment as per what you've targeted, so that you can free up more capital for other property deals. For some property deals, it might be within a few months of completing the purchase. For others, it could take years.
Consider holding onto one or two properties long term
Think Long Term
Many individuals get frustrated with the level of effort required to make money from real estate investing, and give up quickly. Whatever you do and no matter how much money you have, it is highly unlikely that you’ll make a lot of money quickly. You really have to think long term.
In a nutshell, you should be doing either one or both of the following over and over:
- Buying properties and selling on after a period of time.
- Buying properties and placing them the market for short or long term rent.
Regardless of whatever direction you take to investing in Jamaican real estate, you should strongly consider holding onto one or two properties long term, to ensure that you’ve residual income in the future for as long as it’s needed.
Now, get going and start doing your research. It’s time for you to make money from real estate in Jamaica.
This article is for general information purposes only and does not constitute property investment or property management advice. For more real estate related articles and news, check us out at Nohuts.com.