Real estate investment keeps changing over the years. Investors keep innovating and getting new ways of making money from real estate. In this article, we will look at a very specific concept under residential income: pooled income. We will go over what it is, how it works, and why it is such a great opportunity for investors looking for high ROIs from their investments.
Residential Real Estate
In today’s real estate market, one of the easiest ways to make money is by owning rental units. They could either be commercial or residential units. What makes residential rental units a better option is the fact that basic shelter will always be an on-demand need.
Aside from land, which is literally the foundation on which all real estate is built, residential real estate is the most common form of real estate in the world.
Residential real estate investing has moved from people just buying homes to people buying units and renting them out long-term to people renting out units short-term. With inflation and increased prices for purchasing property, many people have postponed their goal of purchasing property for later.
The range of people looking for tenancy has seen a widening. The scope is from local to international tenants. Business people traveling the world on corporate assignments, tourists on their adventures, and those looking to relocate to new countries. Different purposes and needs are catered to adequate now, by offering ease and convenience. One such opportunity is serviced apartments.
Serviced Apartments
Serviced apartments are fully furnished and fully serviced units available for long or short-term stays. Serviced apartments are popular among the business community, expatriates, and frequent travelers. The efficiency and convenience provided by serviced units is unmatched. You do not have to undergo the stress of sourcing for anything on your trip, Simply just book, stay, and leave at your convenience. The services offered at such establishments ensure that you are able to focus on accomplishing the goals of your trip. Services offered may range from housekeeping, catering, and cleaning.
Serviced apartments may also provide amenities such as gym facilities, swimming pools, restaurants, children’s play areas, etc. All these facilities may be provided to enhance the living experience of the tenants during their stay. All in all, serviced apartments are meant to give the feeling of being home away from home to all the guests.
Serviced Apartments in Nairobi
Divine Residences
Although the concept is fairly new, there are a few serviced apartments in Nairobi. Most of these apartments however do not allow individual investors to buy into units and are usually rented out by the developer. The amenities offered at most of these developments are not very diverse and sometimes there aren’t any additional amenities. With the increase in global travel and both investor and tenant needs for great returns on investment, convenience, and comfort, there is a need for all-encompassing serviced apartment developments in Nairobi
VAAL Real Estate is providing such an opportunity to investors from all over the world right here in Kenya: Divine Residences by CityBlue.
The development will feature 1 & 2 serviced & furnished apartments in one of Nairobi’s most high-end, safe, and desirable locations. Divine Residence is the brainchild of an expert partnership by three of the world’s best real estate and hospitality gurus.
Riverside is a popular UN blue-marked zone that witnesses a large expat presence from organizations such as the United Nations and embassies such as the German, Dutch, Zambian, and Ugandan embassies. There are also many offices for multinational companies in the area as well as other social amenities for out-of-office meetings and unwinding.
Divine offers a range of luxurious amenities for the tenants to enjoy during their stay. They include a fully fitted gym, restaurant, heated swimming pool, lounge area, meeting rooms, and concierge services.
So, what is in it for me as an investor, you ask?
How is investing in Divine Residences different from investing in other Serviced Apartments?
Aside from all the amenities, and management services that are offered at Divine Residences, you literally get a once-in-a-lifetime investment opportunity.
For residential investment, the return formula is pretty straightforward. You rent out your unit to a tenant and at the end of the month, you get monthly returns in the form of rent. Divine Residences uses a slightly different formula: let’s get into it.
Usually without a tenant for your unit, you do not expect a rental income at the end of the month.
At Divine Residences however regardless of the fact you will still get a consistent rental income for your unit. How is this made possible? Divine Residences’ revenue income is put together into a pool that is then shared among all the investors at Divine. This concept is what is being referred to as “pooled income” in the case of Divine Residences.
The income from all the facilities at Divine is brought together and distributed among the investors based on the size owned. This means that whether it is the income from the apartment stays, the swimming pool, or the restaurant, all of it is put together and divided accordingly.
For example
If the income:
From the amenities at Divine = $20,000p/m
From the apartment stays = $30,000p/m
The total i.e $20,000+$30,000= to $50,000 is shared among the investors according to the size of their units
So assuming Divine has 2 investors and a total square footage of 200 divided to the 2 investors as follows:
Investor A with a 2 Bedroom unit of 115 square meters
Investor B with a 1 Bedroom unit of 85 square meters
The income will be divided in that ratio 115:85
Therefore
Investor A will get 115/200*$50,000 = $28,750
and
Investor B will get 85/200*$50,000 = $21,250
What Ensures High Occupancy at Divine Residences?
While it is good news that regardless of the state of occupancy you still enjoy rental return, occupancy would still increase the return percentage. Maximization is the main aim of all the investors at Divine Residences.
The partnership by VAAL Real Estate, City Blue, and Valor Hospitality, all global brands, means that Divine Residences is already exposed and attractive to people looking for stays in Nairobi from all over the world.
The expertise in hospitality and management from the partners at Divine is another contributing factor. The seamless running from the check-in, the stay, and the check-out will also be another testament in itself to the quality of service at Divine, one of the most stable ways of marketing is word of mouth. Divine will have guests raving about their stays for a while.
In addition to all these, there is a budget set aside annually to specifically market Divine to the segments of the market that may not already know. This guarantees that there will be news out in the market year in and year out about the residences. The consistency in communication should enable a consistent flow of interest and inquiries.
Conclusion
Great investments are by a big margin calculated risk, great choices, and plain old research. Being a smart investor and your research has probably led you to this article.
Divine Residence is designed for investors who like to take a chance on great opportunities.
What makes pooled income such a great investment concept? You get to enjoy stability in your returns. Forget seasons of uncertainty. Pooled income encourages the maximization of resources.
If you are looking for an investment that is international, with great returns on investment and shorter payback periods, Divine Residences is the perfect investment for you.