Any crisis is a time of opportunity. In a crisis, people are most afraid of depreciating their savings and losing their source of income. Such an asset, as real estate, can protect against these evils. But, of course, it is necessary to choose the object of investment very carefully. Only under this condition, the apartment will be able to make a profit or keep the savings, as well as become a source of permanent income. There is always a demand for liquid rental apartments in the metropolis.
When you’re exploring options for how to invest in real estate, it’s important to know exactly how you want to invest. Are you looking for short or long-term investments? Flipping houses for profit? Passive income through syndication and Real Estate Investment Trusts? Ultimately knowing how you want to proceed will inform all future actions.
People with foreign currency savings are, of course, the winners now. If a couple of months ago, for 100 thousand euros you could buy only a 1-bedroom apartment, now you can look for 2-bedroom or class above.
If enough only for the down payment on the mortgage – it is worth involving credit. We probably won’t see mortgage rates like today in the next two years. But this method is only suitable for those who are confident in their income and the demand for the profession. If income is not constant, it is better to put money on a deposit.
If there are enough savings to buy real estate, you should choose between secondary real estate or new construction.
Definitely do not invest in old real estate. It will not increase in value, and it will get cheaper. Especially if there are new houses being built next door.
You should choose a new building, but if you have enough money for a complete 1-2 bedroom apartment, study the market, compare objects. Choose the ones that are most conveniently located regarding the subway and the exit to the center of the city. Assess the reputation of the builder and the pace of construction. This will help make the right choice.
Is it profitable for investors to take out a mortgage, or should I buy only with cash?
In some cases, investors borrow money. It is especially justified if the projected rate of return on the project is at least twice the mortgage interest rate, and rates on deposits are low (as we see today). On the other hand, during the crisis, many investors are no longer going in the direction of increasing but at least preserving the original investment. For this purpose, any object in which prices are increasing at a rate of 7-9% per year may be suitable.
If you attract the purchase of such projects with a mortgage interest rate of, say, 8.5% per annum, you can earn up to 25%. It is worth making as large a down payment as possible, which allows you to count on a reduced rate.
Finding such real estate helps consulting companies and agencies that sell houses in Turkey. As a rule, experienced investors are subscribed to the announcement of all sales starts, which helps to choose the object and invest money with the greatest benefit. The novice investor can focus on the following factors: a reliable developer, the project is being built near the subway or near a future subway station, there are few or no competing projects nearby.
It is also important to leave the project before the commissioning, otherwise, part of the profit will be offset by the need to pay tax on the subsequent sale of the property. Also, mortgages are used to purchase apartments for rent. In this case, it is worth calculating the investment so that the rent covers or exceeds the mortgage payments.
What is more profitable today, buying a property for resale or for rent?
Resale is a faster tool for making a profit. Renting is slower, but more stable. Both tools are associated with risks: when reselling, you might not get the expected profit; when renting, you might be faced with a period of downtime or losses due to damage from tenants.
So, for example, buying a finished apartment in the capital for $ 200,000 and renting it for $ 1000 a month, the investor will receive an income of 12 thousand a year. Minus tax (say 6% on the patent system) – 11,280 $. Thus, the investment will pay off only after just less than 18 years, and only then will the net profit. But most likely over the years will have to make a few more times to make renovations.
Investing the same money in a new building (say, this object with the most attractive characteristics – from a reliable builder, near the subway), you can get about 10-15% per annum for two years. The income in such a way will be $ 30,000. It is obvious that this scheme is more profitable than leasing, but there are risks, as mentioned above. Therefore it is necessary to choose the object very carefully in order to get the desired price increase.
The highest yield can be obtained by investing at the start of sales in a new building at a low stage of readiness, and then leave the project closer to the commissioning date. By the way, now you can choose projects with sales through escrow, which protects the shareholder’s funds. So the risk of complete loss of funds, for example, due to bankruptcy of the company in such projects is completely eliminated. The bank will return all the money.