ĐẦU tư xây NHÀ CHO THUÊ tại QUẬN LONG BIÊN – hà nội e

INVESTMENT OF RENTAL HOUSING IN LONG BIEN DISTRICT –
HANOI
Preamble
Currently the population of Hanoi was still growing very fast and the largely
immigrant workers in Hanoi are from neighboring provinces to live and work.
Currently, Long Bien District in Hanoi has many projects which were put into
operation and the problem is always painful and peak housing situation for the
workers who work here. Housing prices in Hanoi today is too high compared
to the income level of the people, especially the workers and employees, so
rental housing is the solution that is almost done when they move to Hanoi to
work and live. In the eyes of investors, rental housing market can be profitable
investment, high profit, high investment costs and less risk.
I.

Project Description

1. Project overview
Currently, investor has 01 residential plot which was inherited. Large piece of
land is 300m2 in size 15x20 with the square land. Plot of land is with the 02
surfaces, 01 line in the wide area is 4.5 m2, and the other is 2.5 m2, cars can
take place in front of the house. The plot has prime locations, in crowded
residential neighborhoods, very near clinics; schools ... There are 02 options:
a. One is: Sell the land for 40 million VND / 01m2, earn 12 billion VND.

Deposit that amount into the bank and get interest rate at 9% per 01 year.
b. Secondly, invest in building mini apartments for rent. After 10 years, the

investor can sell the property for 50 million VND per 01 m2 or continue
trading more.
Investment rental property project is a 10-storey mini apartment, located in the
area of 300m2. The building includes 01 parking basement, 01 floor reserved

for sale or rental kiosk investment business categories serving life for families
living in the house and 09 floors are for rent. Lot location situated in Long
Page 1 of 18


Bien ward, Hanoi, near Vinh Tuy Bridge, Sai Dong Industrial Park, just 7.5 km
from Hoan Kiem Lake. The land is not in the plans, which have been granted
permission to use land permanently, which enables high-rise building. Photos
(Refer Appendix 1,2).
Currently in Long Bien district there are about 60 companies operating plants
in Sai Dong Industrial Zone A, B, Long Bien Industrial Park, Dai Tu. There are
also companies like 10 Garment Company, Duc Giang Garment company ...
the number of workers and staff members currently work falls between 20,000
people.
2. Detailed description of the project to build mini apartment for rent
a. House design
 The house was designed 10 floors with 01 basement floors. In which:
The apartment is with 02 lifts and 01 staircase. The total area of the stair and
hall on each floor is 60m2 including 20m2 for stairs, 8m2 for elevator and
32m2 for lobby.
 The basement is used for parking.
 First floor:
-

02 small rooms, each measuring 15m2 closed for security guards and house
management service.

-

01 room measuring 50m2 for catering services and health fitness.

-

01 mini supermarket large 70m2.

-

01 rooms with 80m2 area for café, breakfast, lunch business ...

 From the second floor to the seventh floor, there are 12 rooms in each with
the area at 20m2
 From the eighth floor to the tenth floor, there are 6 rooms in each with the
area at 40m2
b. The business services.
 Apartment for rent with 02 kinds: 20m2 and 40 m2.
Page 2 of 18


 Minimart has consumer goods such as fresh fruits and vegetables,

confectionery, beverages, tobacco, food, milk for children, the families of
consumer goods ...
 Café, fast food service
 Gym, fitness service
II.

Financial ratios calculation

1. The cost of the project (Unit: thousand VND)
a. Cost of construction: Apartment with 10 floors and 01 basement. The area

is 3,300 m2 (Unit: thousand VND)
No
1.
2.

Cost

Unit
Quantity
100
3300
4500
3300

Design
Construct
Total

Amount
330,000
13,200,000
13,530,000

b. The cost for the basement (Unit: thousand VND):
No
3.
4.

Cost
Unit

Quantity
Fire Equipment
200
10
Electric light
40
10
Total
c. The cost for first floor (Unit: thousand VND)
No

Cost

Unit

Minimart
1. Supermarket shelves
2. Stalls and equipment
3. Air conditioner
4. Fan
5. Electric light
6. Fire equipment
Exercise Room
7. Treadmill for fitness
8. Exercise Tools
9. Air conditioner
10. Electric light
11. Fan
12. Fire equipment
Food store

Page 3 of 18

Quantity

800
5,000
6,000
500
100
300

6
2
2
2
5
4

5,000
4,000
6,000
100
500
300

3
4
2
5
2

4

Amount
2,000
400
2,400
Amount
29,500
4,800
10,000
12,000
1,000
500
1,200
45,700
15,000
16,000
12,000
500
1,000
1,200
54,800


13.
14.
15.
16.
17.
18.

19.
20.
21.
22.
23.

Plastic tables and chairs for
dining
Cooker
Pots, dishes
Electric light system
Air conditioner
Fan
Fire equipment
Staff room
Small fan
The heater
Electric light
Sanitary equipment
Total

500
5,000
50
100
6,000
500
300

10

2
500
60
2
2
4

200
1,750
100
1,000

2
2
2
2

5,000
10,000
25,000
600
12,000
1,000
1,200
6,100
400
3,500
200
2,000
136,100

d. The cost for the 2nd floor to the 7th floor (Unit: thousand VND):
No
1.
2.
3.
4.
5.
6.

Cost

Unit price Quantity
1,750
72
1,000
72
60
72
60
12
60
6
300
5

The heater
Sanitary equipment
Electric light in the house
Corridor’s electric lamps

Stair’s electric light
Fire Equipment
Total
e. The cost for the 8th floor to 10th floor (Unit: thousand VND)
No
1.
2.
3.

Cost
The heater
Sanitary equipment
Electric light in the

Unit price
2,250
1,000

Quantity

60
house
4. Corridor’s electric lamps
60
5. Stair’s electric light
60
6. Fire Equipment
300
Total
f. Depreciation expenses of fixed assets, interest expenses.

Amount
126,000
72,000
4,320
720
360
1,500
204,900

18
18

Amount
40,500
18,000

36

2,160

18
6
5

1,080
360
1,500
63,600

From the above data, assuming construction costs amortized in 10 years,
equipment and tools has 05 year amortization. After 05 years, the equipment
Page 4 of 18


will be replaced entirely, we have a summary of initial investment costs as
follows (Unit: thousand VND):

No
1.
2.

Cost

Amount

Cost of construction
The investment cost of

Time
01

Total
13,530,000

02

144,000

02

02

4,800
272,000
409,800

13,530,000

equipment, fixed assets and
small tools
The cost for basement
The cost for first floor
The cost for 2nd floor to 7th

72,000
2,400
136,100

floor
The cost for 8th floor to 10th

204,900
127,200

floor
63,600
Total
14,488,000
In particular, the construction costs will be depreciated over 10 years.
Equipments are depreciated over 05 years. After 05 years, new equipment will

be completely replaced. We have the following table of depreciation
(Unit: thousand VND):
Year

Cost of construction

The cost of equipment,

Total depreciation
tools and devices
1
1,353,000
95,800
1,448,800
2
1,353,000
95,800
1,448,800
3
1,353,000
95,800
1,448,800
4
1,353,000
95,800
1,448,800
5
1,353,000
95,800
1,448,800

6
1,353,000
95,800
1,448,800
7
1,353,000
95,800
1,448,800
8
1,353,000
95,800
1,448,800
9
1,353,000
95,800
1,448,800
10
1,353,000
95,800
1,448,800
Capital is raised from 02 sources: Equity and loans from banks. In which:
Page 5 of 18


 Equity: 8,000 were raised from shareholders. Capital came from 04

members, in which each person is with 2,000
 Loans from banks: 7,000

Assumptions: Interest rate bank loans for home building and repair are now

12% / 01 years. The plan is for the 05 years, the interest rate is fixed for 05
years. Each year, the bank interest is 2,543,375.38 (211,947.95 / 01 months)
Borrowing costs by year table
Year
1
2
3
4
5

Interest (thousand VND)
2,543,375
2,543,375
2,543,375
2,543,375
2,543,375

2. Revenue calculation - business operations cost (Unit: thousand VND)
a. Sales - cost of rental operations
Assumptions:
 After researching the current market, we decide the price for renting 01 room
area 20m2 at mini apartment in Long Bien ward is 2,500 per month and
5,000 for the apartment with area 40m2. Total rental revenue is 270,000 per
month
 Assuming fixed equipment investment will be amortized in 05 years. These
small devices such as light bulbs, household sanitary housing repair and
replace itself when damaged. Therefore, all 01 year depreciation of
equipment from 2nd floor to 10th floor is: 53,700 / 01 years.
 Costs of electricity and water will be paid by households therefore it is not
included in this revenue - expenses table.

 We have monthly revenue from rental operations as follows:
No
1.

Category
Month
Rent 2nd floor - 7th
floor
Page 6 of 18

Unit price
Amount
12
180,000
2,160,000


2.

Rent the 8th floor floor 10
Cost of goods sold
Cost of sales
Difference

12

90,000

1,080,000

12
12

0
0

0
0
3,240,000

b. Revenue from supermarket operations.
Assumptions:
 The revenue each day of the supermarkets is 10,000 so the revenue in 01
month is 300,000
 Supermarket spends 150,000 on purchasing goods in 01 month
 Employees payment: 06 people (including 02 cashiers, 03 salesman and 01
security): 30,000.
 General expenses include: Electricity, water: 5,000.
We have the sales table as follows:
No
1.
2.
3.

Category
Month
Revenue
Amount
Revenue
12

300,000
3,600,000
Cost of goods sold
12
150,000
2,100,000
Cost of sales
12
35,000
420,000
Difference (1-2-3)
1,380,000
c. The resulting table service business fitness training
Assumptions:
 Exercise Room attracted regular 100 customers per month. Each person plays
400/01 month. Revenue is 40,000/01 month
 Electricity and water expense: 3,000/01month
 Salary for 02 employees: 10,000/month
No
1.
2.
3.

Category
Monthly Revenue

Quantity
100

Unit price

400

Amount
40,000

0

0

0

Cost of goods sold
Cost of sales

13,000
Page 7 of 18


4.
5.
6.

480,000

Total revenue per year

81,000

Total cost per year

324,000

Difference (= 4-5)

d. Restaurant operation revenue - cost table
Assumptions:
 The restaurant serves 100 times of customer for 3 sessions: morning,
afternoon, evening. Each customer pays 0.3 for a meal. The revenue in 1
month is 90,000 equivalents to 1,080,000 per year.
 The restaurant spends 30,000 on purchasing goods equivalent to 360,000 per
year.


Salary for 04 employees including 02 cooks and 02 serving staff is 20,000
per month equivalent to 240,000 per year.

 Utility expense is 3,000 per month equivalent to 36,000 per year.
No
1.
2.
3.
4.

Category
Revenue
Cost of goods sold
Cost of sales
Difference (= 1-2-3)

Month

12
12
12

Unit price
90,000
30,000
23,000

Amount
1,080,000
360,000
276,000
444,000

e. Management expense
Assumptions:
 Salary for staff including 02 duty staff, 02 basement car look, 02 serving
staff: 24,000 per month.
 Subsistence expenses for electricity services, water, sanitation, cable ...
No
12-

Category
Salary expense
Sub-activities

Month
12
12

Page 8 of 18

Unit price
24,000
5,000

Amount
288,000
60,000


3-

Total expenditure
management

348,000

f. From the above data, we have a summary of revenue - operating costs in
the first 05 years as follows (Unit: thousand VND)
No
1

2

3

Category
Revenue
Revenues from rental operations

Revenue from supermarket operation
Revenue from gym operation
Revenue from restaurant operation
The yearly cost
Depreciation cost
Interest expense on borrowing
Expenses Cost of goods sold
Cost of sales
Management cost
Difference revenue - costs

Amount
8,400,000
3,240,000
3,600,000
480,000
1,080,000
7,004,175
1,448,800
2,543,375
2,160,000
852,000
348,000
1,047,825

In the next 05 years of the project, borrowing costs will be paid off, there are
only operating costs and depreciation costs
No
1
2

3
III.

Category
Revenue
Expense
Difference revenue - costs

Amount
8,400,000
4,808,800
3,591,200

Financial indicators calculation (Unit: thousand VND)

1. Report on operations management in the first year:
No

CATEGORY

Note

1.

Sales of goods and services

2.

Deductible items

3.
4.

Net revenue from sales and
services (03 = 01-02)
Cost of goods sold
Page 9 of 18

First year
8,400,0
00
8,400,0
00
2,160,0


6.

Gross profit from sales of
goods and services (5 = 3-4)
Financial income

7.

Financial expenses

8.

- Of which: Interest expense

9.

Cost of sales

10.

Administration Costs

11.

Depreciation of fixed assets

12.

Net profit from operations
{12 = 5 + (6-7) - (9 + 10) -11}

13.

Other income

14.

Other expenses

15.

Profit (15 = 13-14)

16.

Profit before tax (16 = 12 +
15)

17.

Current income tax expense

18.

Deferred income tax expense

19.

Profit after income tax (19 =
16-17 - 18)

20.

Profit divided by shareholders

5.

21.
22.

00
6,240,0
00
2,543,3

75
2,543,3
75
852,0
00
348,0
00
1,448,8
00
1,047,8
25
-

Retained earnings reinvested
Profits additional net working
capital

Page 10 of 18

1,047,8
25
261,9
56

30%
40%
30%

785,8
69

235,7
61
314,3
48
235,7
61


2. Ten years business result management report
Assumptions:
 Interest rate unchanged at 12% in 05 years

 Profit divided by shareholders is 30%, retained earnings reinvested in the next year is put into operation in long
term savings with interest rate of 7% / 1 year, this section will not be included the production in activities of the
next year. 30% remaining will be added to the net working capital.
No

CATEGORY

1.

Sales of goods and
services

2.

Deductible items

3.

4.

5.

6.
7.

Note

Year 1
8,400,0
00
-

Year 2
8,400,0
00
-

Year 3
8,400,0
00

Year 4
8,400,0
00

-

-

Year 5
8,400,0
00
-

Year 6
8,400,0
00
-

Year 7
8,400,0
00
-

Year 8
8,400,0
00
-

Year 9
8,400,0
00
-

Year 10
8,400,
000

-

Revenue from sales of
goods and services (03
= 01-02)

8,400,0
00

8,400,0
00

8,400,0
00

8,400,0
00

8,400,0
00

8,400,0
00

8,400,0
00

8,400,0
00

8,400,0
00

8,400,
000

Cost of goods sold

2,160,0
00

2,160,0
01

2,160,0
02

2,160,0
03

2,160,0
04

2,160,0
05

2,160,0
06

2,160,0

07

2,160,0
08

2,160,
009

6,240,00
0

6,239,99
9

6,239,99
8

6,239,99
7

6,239,99
6

6,239,99
5

6,239,99
4

6,239,99

3

6,239,99
2

6,239,99
1

Gross profit from
sales of goods and
services (5 = 3-4)
Financial income
Financial expenses

2,543,3
75

2,543,3
75

2,543,3
75

2,543,3
75

Page 11 of 18

2,543,3
75

-

-

-

-

-

-

-

-

-

-


8.

- Of which: Interest
expense

2,543,3
75

2,543,3
75

2,543,3
75

2,543,3
75

2,543,3
75

-

-

-

-

-

9.

Cost of sales

852,0
00

852,0

00

852,0
00

852,0
00

852,0
00

852,0
00

852,0
00

852,0
00

852,0
00

852,
000

10.

Administration Costs

348,0
00

348,0
00

348,0
00

348,0
00

348,0
00

348,0
00

348,0
00

348,0
00

348,0
00

348,
000

11.

Depreciation of fixed
assets
Net
profit
from
operations {12 = 5 +
(6-7) - (9 + 10) -11}

1,448,8
00

1,448,8
00

1,448,8
00

1,448,8
00

1,448,8
00

1,448,8
00

1,448,8
00

1,448,8
00

1,448,8
00

1,448,
800

1,047,8
25

1,047,8
24

1,047,8
23

1,047,8
22

1,047,8
21

3,591,1
95

3,591,1
95

3,591,1
95

3,591,1
95

3,591,
195

12.

13.
14.
15.
16.
17.
18.

19.

Other income

-

-

-

-

-

-

-

-

-

-

Other expenses

-

-

-

-

-

-

-

-

-

-

Profit (15 = 13-14)

-

-

-

-

-

-

-

-

-

-

Profit before tax (16 =
12 + 15)
Current income tax

expense
Deferred income tax
expense
Profit after income
tax (19 = 16-17 - 18)

VI.30
VI.30

1,047,82
5

1,047,82
4

1,047,82
4

1,047,82
4

1,047,82
4

3,591,19
6

3,591,19
6

3,591,19
6

3,591,19
6

3,591,19
6

261,95
6

261,95
6

261,95
6

261,95
6

261,95
6

897,79
9

897,79
9

897,79
9

897,79
9

897,7
99

785,86
9

785,86
9

785,86
9

785,86
9

Page 12 of 18

785,86
9

2,693,39
6

2,693,39

6

2,693,39
6

2,693,39
6

2,693,39
6


20.
21.
22.

Profit divided by
shareholders
Retained earnings
reinvested
Profits additional net
working capital

30%

235,761

235,761

235,761

235,761

235,761

808,019

808,019

808,019

808,019

808,019

40%

314,3
48

314,3
48

314,3
48

314,3
48

314,3

48

1,077,3
59

1,077,3
58

1,077,3
58

1,077,3
58

1,077,
358

30%

235,7
61

235,7
61

235,7
61

235,7
61

235,7
61

808,0
19

808,0
19

808,0
19

808,0
19

808,
019

Spreadsheet savings rate investments and retained earnings
Year
1
2
3
4
5
6
7
8
9

10

Beginning
314,348
650,699
1,010,596
1,395,685
2,570,741
3,828,052
5,173,374
6,612,869
8,153,128

Interest
7%
7%
7%
7%
7%
7%
7%
7%
7%
7%

Page 13 of 18

Ending
336,352
696,248

1,081,337
1,493,383
2,750,693
4,096,015
5,535,510
7,075,769
8,723,847


3. The project cash flow
With the current corporate income tax is 25%
We have in the first 05 years OCF = 785,869 + 1,448,800*25% = 1,148,069
In the next 05 years OCF = 2,693,369 + 1,448,800*25% = 3,055,596
At the end of the 10th year, the entire house sold for 50,000 / 01m2 grossed
15,000,000. At the same time maturing passbook savings of principal and
interest received shall be: 8,723,847.
Year

Operating cash flow

Cash flow from

Year 0
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7

Year 8
Year 9
Year 10

0
1,148,069
1,148,069
1,148,069
1,148,069
1,148,069
3,055,596
3,055,596
3,055,596
3,055,596
3,055,596

investing activities
-14,009,000
0
0
0
0
-479,000
0
0
0
0
23,244,847

Total cash flow

4. The financial indicators decision:
a. NPV = 3,207,153.71 >0
b. IRR = 15%> 12%
c. ROE:
 In the first 05 years ROE = 785,869/ 7,009,000 = 11.21%
 In the next 05 years ROE = 2,693,396/ 7,009,000 = 38.43%
d. ROE:
 In the first 05 years ROE = 785,869/7,009,000 = 5.61%
 In the next 05 years ROE = 2,693,396/ 7,009,000 = 19.22%
IV.

Project Evaluation (Unit: thousand VND)
Page 14 of 18

0
1,148,069
1,148,069
1,148,069
1,148,069
669,069
3,055,596
3,055,596
3,055,596
3,055,596
26,300,443


Based on the results, we see NPV > 0 and IRR > 12 %. This shows that
the project is feasible and we can invest in.

ROE shows profit increased 11 % and 38.43 % after paying off the bank
loan interest. This is a high profit margin indicates that 01 out of the
capital, will be collected in the first 05 years at 0.11 and 0.3843 for the
next 05 years.
On the other hand, compared with the sale of the property at the present
time and take the profit savings banks have:
Interest = 12,000,000 * (1 +12 %) 10 = 23,605,816
The project brought the ending profit at about: 26,779,443 have a
difference of 2,694,627. The value of assets sold after 10 years is
15,000,000. In fact, with the current rate of development of Hanoi, the
value of the house after 10 years is much higher, so the difference will be
even greater. The advantage of the investor is not investing money to buy
the land by inheritance, less than the original cost.
After 10 years, instead of selling the house, investors can still continue
trading. The business now investors are not subject to interest received
ROE is 38.43 %. In 20 years, assuming the investor can keep the house to
live in and not sell it, then save the original interest received is:
31,951,509. NPV = 1,227,860.35 and IRR = 13 %. The plan is still
workable.
Plan above does not mention to the profits that the shareholders are
divided yearly (30 %). If the money is not divided but retained for
reinvestment of savings, after 10 years, the principal and interest savings
will be 14,129,260, profit will increase by 5,405,413 compared with 30%
profit sharing plans that are mentioned in the article. That is in addition to
the profits of this project, the shareholders will have a total of 5,405,413
if the money is divided to provide savings.

Page 15 of 18

References
1. Slide lecture by Dr. Nguyen Van Dinh
2. Policy Analysis and Investment Securities - Dr. Bui Kim Yen - HCMC
University of Economics.
3. Website: www.tailieu.vn; www.giaiphapexcel.com; www.saga.vn

Page 16 of 18


Appendix 01: Photograph of Lot Investment

Page 17 of 18


Appendix 02: Location on the map and the distance to Hoan Kiem Lake

Page 18 of 18