Dr Dolf de Roos took the PRISM conference stage yesterday (Sunday Nov 2, 2014) at the Mines Exhibition Center in Kuala Lumpur, and delivered quite a presentation.
One thing was clear for all, Dolf is a man of creative ideas and he is quite passionate about getting people to open their minds. As his speech gained momentum, a central point was highlighted over and over again, a point I was hammering at myself for quite some time, one that I whole-heartedly believe to be the biggest contributor to turning regular property investment activity into a huge success:
Property will yield as much return as YOUR CREATIVITY can allow…
Over the course of about an hour, he focused on commercial property and how it can be adjusted, amplified, and modified to produce more and more income than the initial rental yield a beginner investor would think they can get.
The idea is that buying property and flipping or renting it out as-is, produces below-average returns. It is through “Amplifying” a property that top investors and Propertypreneurs make the biggest bucks.
Here are the top five ideas inspired by Dolf’s presentation:
1- Billboards: Outdoor advertising billboards are indeed a simple no-brainer… we used it a lot in Dubai. A building that has a bit of a height advantage over its surrounding structures or a good vantage point, is a great place to put a large outdoor advertisement billboard.
Advertising Companies and their Corporate Brand clients would gladly take care of the design and erection of the billboard, and they would provide you as the property owner with a significant annual rental for the privilege.
2- Mobile phone cell towers: Just like the billboards, rental can be collected for something outside the building itself. Inviting telecom companies in your area to erect a mobile phone station on your commercial property gives your neighbors great reception, and gives you a comfortable ongoing fee.
The tower does not even have to be on top of a high building, it can be installed to its side, and it would work just fine on a standalone pole that the telecom company erects in the parking lot. They even disguise them as trees to preserve the natural view.
3- Automated Parking Systems: In congested city locations where parking spots are as precious as gold, having a small plot of empty land in the back can be used to increase the value and rental yield of a property, or even turned into a cash-generating passive investment with a return of its own. That is by installing one of those modern automated parking systems.
This system basically “stacks” cars on top of each other, making a small piece of parking area fit to carry five or ten more cars than before. You can install it at your office building to augment the parking facilities. By making more parking spots available for every tenant, you would be allowed to increase the rent (and consequently the property value). Alternatively it can be operated as a public automated parking, where the hourly parking fees collected create a passive stream of income on their own.
4- Modified purpose: Dolf revealed that in one case they had an apartment building which had a ground floor unit, and that unit was quite unpopular due to safety and noise issues. It was untenanted for a long time, so they knocked down the walls of that unit and turned it into a glass enclosed space that was gladly taken over by a restaurant. They not only serve customers from the street, but also deliver to the tenants of the building.
The same can be made with warehouses and commercial space all over the World. We had a warehouse in Dubai that was not renting out quickly enough. After finding a reliable operator that we can work with, we put in a minimal investment and equipment purchase to create what became the city’s first and most popular indoors go-kart racing circuit (in 45°C heat, nothing better than air-conditioned racing).
Warehouses have been converted into mansions even all over Australia. The sky is the limit with this. Just remember, the rental from a modified property can outclass the original setup by leaps and bounds.
5- Helipad: This one was new to me. I was not aware that it required so little investment of time and money. Dolf revealed that in a particular project they had in traffic-ridden Jakarta, a helipad was built on top of their office building for as little as $20 in painting supplies (in addition to a permit acquired from the aviation authorities).
Simply a good paint-job for the basic “H” on a basic flat supported rooftop (with no antennas) provided quick access for businessmen in the office building to and from the airport by allowing them to charter a quick helicopter ride straight from the office. It saved them from getting stuck in hours of traffic and that is very valuable for many senior executives.
The rent increase for the revaluation of having a helipad in the case study presented by Dr. de Roos was approximately US$200,000 a year, effectively increasing the valuation of the office building by around 2 million.
These five were not the only creative ideas you can do, but they were only part of a great avalanche that Dolf brought to the audience in that presentation. It was simply refreshing to see focus on amplifying property, in the middle of people being worried only about the right property to buy and when.
The mindset of the entrepreneur is the one that can create great opportunities and productive assets from a property that looks neutral and not particularly productive to others. This is how wealth can be created. Buying something and renting it out as it is, will most often NOT yield the best returns. You would be doing yourself as well as the community a dis-service, as well as leaving a lot of money on the table if you did nothing else.