Advice
4 challenges you need to know before investing in rooms for rent
31/10/2017 16:40 | Source: Vnexpress
According to real estate expert Nguyen Hong Hai, many people mistakenly think that renting rooms is an easy investment without any risk. He points out 4 unexpected factors that every investor should know to avoid risks when investing in rental rooms.

4 challenges you need to know before investing in rooms for rent

1. Taxes account for 10% of revenue

Many landlords have not ever heard about taxes imposed on rental rooms. This will be an unexpected cost to investors who do not have detailed plans. As stipulated in current laws, the personal income tax on renting rooms is subject to annual revenue. Accordingly, if the annual revenue reaches VND100 million (VND8.4 million VND per month on average), the landlord must pay 5% personal income tax and 5% revenue. Therefore, before starting this type of business, investors should learn about this cost.

2. Complex security

Human management is harder than asset management. If the security issue for rental rooms is not guaranteed, there will be unintended risks for the landlords. Not all tenants are the same. Some of your tenants may be frequent drinkers, troublemakers, or even dangerous criminals. If the security is threatened, no one dare to live in your rooms.

3. Poor sense of fire prevention

Fire safety at rental rooms is often not supervised by the authorities, since the scale of investment is too small compared to the large-scale condominiums. This issue is also neglected because the owners don’t have enough time as well as necessary knowledge to remind and train tenants regularly. This risk has existed in many rental rooms for many years. Therefore, investors should pay attention to fire safety to avoid potential risks threatening the investment.

4. It is difficult to collect 100% of the rent at once

Investing a large amount of money to build rooms for rent and then collecting monthly rent is a formidable challenge for investors’ patience. Especially, you have to spend more time collecting money from late payers. In the hardest case, some bad tenants fail to pay rent, and the landlords will lose revenue.