Many real estate investors want to own ready-to-move-in properties immediately with the aim of renting them directly, although the real estate market in Istanbul is a market that depends on investment by buying under-construction properties and reselling them later, as the annual returns of a property under construction may reach 50%. As for leasing Real estate, at best, will not exceed 10%.
So why do some investors choose ready-made properties rather than under construction?
- Because of their previous experiences with projects under construction that were not delivered at the agreed time and often outside Turkey, or they could be in suburbs far from the center of Istanbul, as through our long experience in this field, there was no delay from the agreed upon delivery of projects in the central investment areas in Istanbul .
- Searching for an immediate return, as the ready property can benefit from its returns directly, while the investment profits in the projects under construction are calculated upon resale later, which in turn takes place approximately 3 years after the date of purchase.
- The desire to achieve a long-term investment (more than 7 years), as it is known that the maximum benefit from investing in under-construction projects is to terminate the investment after the project is delivered, meaning that it is a short-term investment and loses part of its profits whenever its completion is delayed, while in ready-made properties the rental return The annual, although relatively little, is more suitable for a long-term investment.
- The lack of information needed to calculate the real investment return in under-construction properties, whether with the client or with the real estate consultant who is marketing under-construction properties that are not suitable for investment, which spread the idea that investing in unfinished properties is futile.
For us, whether the client’s request is a ready-to-let property or a property under construction with a high investment return, we have a lot of options all over Istanbul, and we are always keen to give the client absolute freedom to choose the right property for him after providing the necessary advice from us.
What are the types of lease contracts in Istanbul?
- Annual rent: the property is often rented without furniture in this case, and the tenant pays the rent and the monthly returns and takes care of the property during the rental period. From 2% to 4% in the best case, but if the property is furnished for annual rental, the rental return may increase by an additional 1.5%.
- Tourist rent: here the property is furnished at a luxurious level and offered for weekly or monthly rent to achieve an annual return of up to 10% if the property is rented most days of the year, and it is worth mentioning that the tourist rent rises with the tourism season and decreases in the winter due to the lack of demand.
- Airbnb daily rent: It is an alternative to hotels, as the property owner lists his properties on daily rental sites and receives customer requests, whether to stay in the property for one day or several days, and this option is preferred over hotels because the price is relatively cheaper and also because of the flexibility in the available options as you Get an entire house or a villa of your own You can also have one room in a house or even share one room with another client.
The rental return in this type depends mainly on the annual occupancy rate of the property. The return can range from 2% to 12% if the property is chosen correctly and managed professionally.
- Renting a hotel apartment: Many clients realize that they do not have time to manage their real estate in order to rent it out on a tourist or daily basis and at the same time the annual rent has low returns, so they choose to buy an apartment belonging to a famous hotel, and the hotel management itself rents this apartment for a portion of the profits it gets The owner and the expected annual returns start from 5% up to 10% after several years.
In fact, we believe that this type of investment is the most feasible among the previous options (in the event that the client is not able to manage his properties himself) and for the sake of far-reaching investment, the popularity of these hotels increases and the return increases with them year after year.
What are the difficulties faced by the investor when renting his property?
- If the rent is annual and the property is without furniture, his task is only to find the first tenant who will most likely stay in the property for several years (be aware that Turkish law protects the rights of the tenant if he wants to stay for longer than a year as long as he pays rent and royalties on a regular basis)
- The monthly returns are the services provided by the housing complex such as protection, gardens and recreational facilities. It is a monthly amount that the tenant pays if the contract is annual and the home owner pays it if the property is vacant or the rental is tourist or daily.
- Tourist and daily rental really needs a full-time person to manage the real estate, which will cause a clear erosion of the rental return, as this person receives the property every time and ensures the safety of the furniture completely before handing it over to the subsequent tenant, as well as cleaning services to carry out the necessary repairs.
- In the tourist and daily rental, finding one client after another to secure the highest percentage of real estate operation is never easy, especially in the winter season when there is a lack of demand for hotels in the first place.
- Financial follow-up to collect rent dues and ensure that the tenant pays the monthly returns in case the rent is annual.
- In hotel apartments, they are often sold with furniture, so the owner relieves the problem of securing suitable furniture, as well as the problems of advertising and promoting to get a new tenant.
What are the things that help in collecting a higher rental income?
- Determine the investment plan from the beginning. If the goal is to buy a property for investment in the long term, the property is to be purchased in an area that is slowly growing over time, so that when the investment ends, reselling the property is possible and profitable.
- If the plan is short term (less than 3 years) then it is better not to offer the property for annual rental because the tenant may not accept to move out before five years and therefore offering the property for sale with a tenant in it will be unwelcome by the new buyer.
- If you have the ability to manage your real estate yourself, it is better that the furniture you will choose is luxurious to get a higher return than the tourist and daily rental.
- The large number of real estate will not bring you an additional return for the same budget, but it requires you to spend more time and effort in managing it. Buying one property in a central area with 300 thousand dollars is better as a return and easier as a management than buying 4 properties in the suburbs of Istanbul, each for 75 thousand dollars.
As for the shops, the feasible investment should be long-term and at the same time with a high budget to obtain an appropriate return.
Always remember that getting a free real estate consultation from our qualified team before buying a property may help you make sure that your decision was correct or that the option that you thought was the most appropriate should be modified.
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