Buying property for investment purposes

By the word "investment" each person means different options. I will not go into the various options in this article, but will only consider the issue of investing in real estate for the purpose of renting. This option is very relevant in Turkey, as probably in many countries of the world.

Since under real estate, you can consider options for land, commercial real estate and residential premises. In each of these issues there are differences, serious differences and nuances. Considering each option in one article is a difficult and sometimes thankless task. Therefore, we will consider only one option "Rent of housing stock" (hereinafter -housing).

You can rent out housing seasonally (this option is aimed at renting out housing for vacationers, visitors and tourists), or you can rent it out for a long time (this option is aimed at those who permanently resides and works in Turkey). 

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Long term rental

In this option, housing is rented for a period of 6 months or more. To do this, a housing lease agreement is signed with the tenant, a deposit is taken in the amount of 2-month rent, which is not returned by the owner in case of termination of the contract and / or eviction at an earlier date. The deposit consists of one month's rent in advance plus such amount as security for the landlord's property.

The advantage of this type of rental is a constant monthly income, no need to furnish an apartment, etc., the disadvantage can be called low rent, and the inability to live on your own and use the apartment if necessary.  That is, you will not be able to violate the lease agreement unilaterally, since the laws of Turkey are mostly on the side of the tenant. 

Such an agreement must be registered in notary offices and entitles the foreign tenant to obtain a residence permit for rent. 

 

Short term rental

Short-term rentals are generally seasonal. Basically, this type of housing rental brings good dividends during the tourist season and may not generate income in the winter. Although recently, housing has been excellently rented out of the tourist season, but at more affordable prices. It is not possible to predict 100% the cost of such a rental housing due to a jump in prices in the rental market.

The tourist season on the Mediterranean coast, and especially in Alanya, is usually longer than in other regions of Turkey and the Mediterranean as a whole. Excellent weather conditions, the availability of fresh vegetables and fruits, and other factors mean that rentals here are in demand all year round or so. The total annual income for short-term rentals, as a rule, exceeds the profit for long-term rentals, it is only a matter of choosing a good realtor and establishing the real cost of renting housing depending on the market.

Short-term rental of housing to tourists for recreation - allows the owner to plan his vacation and use his housing himself, and rent out housing in his spare time. Perhaps this is the main difference between the two lease options, with the exception of the amount of rental income.

 

Conclusion

The situation in Turkey, and in the world as a whole, is changing rapidly every year. Therefore, it is not realistic to make an accurate calculation of profitability, taking into account the events of the last two or three years. As a result, I will not take such responsibility either, I can only say that the yield from long-term rental, on average per year, is about 6-8% of the cost of acquiring housing, and for a short-term one it can be about 8-10%. If someone tells you that you can get more, then most often this is a hoax, or this can happen in exceptional cases, which I would not recommend that you count on.

But, since we consider investments, it is necessary to consider not the direct rental of housing, but the increase in investments. And here the calculations are completely different. Housing prices in Alanya are measured in euros. It's no secret that the euro is a freely convertible currency. In the foreign exchange market, the main competitor of the euro is only the US dollar. Despite the construction boom, housing prices in Alanya are constantly rising, in my opinion, they have not yet reached their peak and therefore there is still room for growth in property prices. On average, the price of real estate in Alanya is growing by 20%. Thus, the growth of your investment, taking into account the lease, will be about 30-35%. Today, no real sector of the economy can provide such a return on the growth of funds in euros.

I presented you the main calculations, I had a detailed analysis earlier. Unfortunately, he has neither the time nor the desire to make up-to-date detailed calculations on a monthly basis. Although I am ready to make individual calculations for a fee. Based on the foregoing, I believe that every potential homeowner in Turkey must decide for himself and take all the risks on himself. Just remember this and do not blindly trust "advisers".

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