Investing in real estate business with a limited budget

Investing in real estate business with a limited budget

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By Calvin Manika

OWNING a house is everyone’s dream, the desire grows high to those living in the towns and cities. The economic recession and financial challenges in Zimbabwe have resulted in rentals going up beyond the reach of many people.

With most of potential real estate investors spending their initial capital into office setup, company registration and marketing. One can even start the business solo and register the brand as time goes for reputation purposes.

The past decade has seen many Zimbabweans seeking homes at whatever cost, in the process unsuspecting home seekers being duped of their hard-earned cash. The perpetrators are the land barons and unfortunately the city council through corrupt officials.

The need for houses in Zimbabwe is an opportunity for entrepreneurs to invest in the real estate business. With the previous experiences which left many potential clients with scars, people expect a real estate developer with a registered and reputable company. A reputation of delivery, a feat which is difficult to achieve for a start-up real estate entrepreneur.

Speaking to the Entrepreneurial Magazine a real estate agent Mike Chipuriro said from his more than decade working experience in the real estate business, he has seen simple but robust start-ups who have shown confidence within their clientele base.

“I think with determination you can start from humble beginnings. I know of a guy, who bought an unfinished house in Harare. He finished the construction, added value to the structure by putting state of art facilities including a sliding gate. He sold the house at a higher price, in the process making profit. That’s how he started and people seems to like that approach of buying a finished beautiful house, than controversial stands,” Chipuriro said.

Real estate business is a multi-million industry and involves large sums of money. The business seems unattractive to the ordinary man and woman, with the majority remaining tenants and ready to continue parting money in rentals without trying their hand.

Currently, Zimbabwe is facing a critical shortage of houses and where the land is available; there are also fraud and legal issues which is not attractive to small investors.

“I have been renting for more than 15 years, relocating from one place to another. My children have grown up now. I can’t continue this way. I need to own my house, at least I will have dignity and privacy, currently I am a member of a housing co-operative. Any time we will be allocated stands,” Memory Tigere said.

At the time the majority wants at least a house to own. Few men and women feel they can invest in the real estate business and start an entrepreneurial journey.

Kudzai Chideme, a lawyer and real estate agent said owning personal properties in various places can be good real estate investment which can be turned into viable business of renting them out.

“Most of the people can’t even start because they aim high. They want a big lot of land and start a housing project, apportion people stands and make a lump sum.

“That approach works for the rich. Ordinarily, one can have a house or two in every city. With a good investment in 10 years one can have 20 houses being rented out. You can then register according to the laws for reputation purposes and security of your properties. That’s real estate business without legal challenges or battles with people,” Chideme remarked.

In Zimbabwe, apart from normal company registration, a business needs to register with the Estate Agency Council (EAC) to legally operate a real estate agency. The size of the company depends on the number of agents. Estate agents are normally paid a commission when they conclude a deal.

“Even a communal farmer can be a real estate mogul in 15 years if he is determined. One season of farming soya beans can provide capital of buying and constructing of a grocery store at a nearest growth point and rent it out, so in 15 years one would have an owner if 15 commercial buildings at a growth point. That’s is money,” Chideme added.

“Investing at growth points is the way to go, because in the past years these areas are fast developing and turning into towns. The unavailability of residential stands in cities is forcing people to look for land in growth points and local boards, so the buildings are gaining value. For example, Murehwa, Mutawatawa, Magunje, Lupane and many other places,” Chipuriro said.

Startup Biz Zimbabwe, an online business advisory platform says real estate business do not need big premises. One can use a room or two at one of his properties or create working stations in a big room to attend to clients.

“Your company may choose to specialise in property sales only, rentals only, or both. While rentals will allow you to make quick money and keep your business liquid, sales have better returns. Doing both is more advisable but you need to hire the right agents to keep both sides of the business going,” said an expert at Startup Biz Zimbabwe.

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