Tanesha, a reader of this blog, wrote recently for advice on how to get into the real estate business. She described herself as a young woman who always had a passion for making it in real estate. But she became redundant two years ago, and is still unemployed, so she wanted to know if she can still realize her real estate dream even though she has no money to invest. Her question prompted me to highlight another easy way she, or anyone else, can get into real estate without investing any money in ownership.
In a previous article, I described the concept of wholesaling, a term used when you search for properties below market value, bring them under contract and assign them to a third party at a profit. You do not need any investment capital to engage in this activity. Another way to enter the real estate market without any investment is through Subleasing. You lease a residential or commercial property (house apartment, office, hotel) and turn around and sublease all or part of it at a higher price than your lease. The difference is your profit. You are not required to invest in the ownership, and your profit flows to you regularly. Does this concept appeal to you? Its success in part, hinges on selecting properties in the right locations that rent at the “right” price. Enquire of your Realtor for such rental properties and acquaint yourself with prices in different locations.
If you are just starting out, I recommend you choose an Unfurnished, two-family house which has separate entrances. There is a big demand from potentially good tenants seeking these types of properties, to whom you can sublease. Start with a long-term sublease agreement, six months or longer. Where do you find these houses? In Montego Bay your Realtor will search areas as Bogue Heights, Coral Gardens, Bogue Village or Westgate Hills. Houses in the Molynes Gardens, Havendale, Meadowbrook, Zadie Gardens in Kingston and St. Andrew are prime choices. Your Realtor will discuss with you, your budget, and help you get started. As you gain experience in the business, you may rent hotels, offices or warehouse units.
Short Term Rental
The lucrative, often overlooked market of short term – two days to a month – rental is better suited for more experienced practitioners. You require a fully furnished house and a license from the Tourism Product Development Company (TPDCo). Overseas visitors, and intra-Island travellers, looking for alternatives to higher-priced hotel accommodations are your sublease clients. My own entry into the investment real estate market was through the doors of a business of short term Subleasing. I started with a villa on the north coast in the mid 1980’s. Later I carried the concept to Kingston and ran a business along the same lines for a few years. Today, the demand for these places is even higher than it was twenty years ago.
The first inviolable rule of a Subleasing business is that you must receive the owner’s permission, preferable in writing, before you engage in any sublease arrangement. Decide if you are going to sublease on a short term or long term basis, and work with your Realtor to select the right property. You too can get into the real estate business without investing any money in ownership.