Investments in overseas property are not always profitable.
Often, investors consider houses and apartments abroad as objects of investment. There are two reasons: the opportunity to earn money by renting out a house and saving during your holiday. Optimism of international investors in every way fueled realtors. Nevertheless, it is necessary to evaluate objectively the profitability or loss of such investments with specific examples.
Firstly, we would like to disappoint fans of savings on rental housing during their own holidays. Practice shows that people tend to desire to see the world and visit different cities and countries. Therefore, the investor will return to the acquired house in the conditional Spain in approximately three out of ten cases.
Secondly, those who arrive for a period of 10 days, it is more profitable to rent housing than to buy it. Suppose the owner put the price at 50 euros per day. For 10 days, it is 500 euros. However, it is always to possible find conditions that are more acceptable. The main thing is the ability to analyze available information. Ten years at 500 euros – is 5000. Is it possible to find a property for such an amount? In no case. In the countries with the cheapest real estate, the purchase of a studio apartment starts from 20 thousand.
Consequently, buying modest housing for 20,000, you will pay for it in 40 years. This is on condition that you do not want to visit any other resorts.
However, let us assume that a person spends on vacation 20 days a year. In this case, the annual payback of hypothetical housing will be reduced to 20. 60 days, held annually in his home abroad, will recoup the investment over 7 years.
However, we have forgotten one important item of expenditure. Any house and apartment require repairs, furniture and monthly utility bills. If in your absence real estate will work, you will be able to recoup the investments and enter the profit.
Investments in overseas property for rent
For such prospects, the legislation of the selected country should be studied. Spain and Turkey by some signs disappear. Independent rentier activity is prohibited there. The law can be circumvented by hiring mediators. Next, you should explore the seasonality of the resort. It is possible that the room will be claimed only when you yourself want to live in it.
There are also countries where package tourism is more popular than renting accommodation. It can be assumed that buying property in places that are popular all year round (for example, in the center of European capitals) is more profitable than at sea or in the mountains with a season length of 3-4 months. However, in the low season, the occupancy rate of tourist real estate is also present – about 20%. The landlord will have to fight for customers by providing a variety of services – from the sauna to the roof area.
The formula for calculating the attendance of real estate is as follows. 70% in the high season and, as noted above, 20% in the low. If the high season lasts 90 days, then of these 63 days the property will work. Rental price – suppose that 50 euros per day. Consequently, the dirty income in the season will be just over 3,000 euros.
In low season, the apartment will be in business for 15 days and the rental price will drop to 40 euros. This means that the total income per year will be 3,750.
From this amount, one should take away the commission of aggregators from which customers come. At Booking.com it is 18%. Other expenses (utilities, realtor fees) should be determined based on the realities of the selected country.
