Real estate by the sea: income from daily rent of apartments

Real estate by the sea is a profitable investment, the most successful of all types of assets; the price for it, in most cases, only grows. According to the international consulting firm Knight Frank, house prices on Turkey's Mediterranean coast rose by 29.2 percent in Turkish liras or 10...15% in dollars between June and August 2021. For the sixth quarter in a row, Turkey leads the Global House Price Index with a growth of +27.5% over the same period last year

This post will discuss one of the most successful approaches to generating passive income: advantages and disadvantages and profitability when renting flats daily.

Real estate investment income

There are two types of income in investing:

• For instance, if an apartment is sold for a one-time profit that arises from the resale of real estate, this is referred to as "residual income."
• Passive income is the production of a profitable asset regularly or continuously. Real estate is an established business in this case, and it allows you to make money by managing it. Renting out flats is considered passive income.

Buy and earn!

Daily rental housing is one of the most common residential real estate strategies. The advantage is that the owner does not need to manage the apartment independently.

Pros

Income up to 10% per annum

Attention to management has been reduced to zero: the management company itself finds tenants, moves in / out, monitors the property, orders cleaning, pays utility bills

Cons:

Slow payback in the first year or two after commissioning

Case #1. Renting an apartment in the center of Alanya (residential complex code on the website 00612, apartment No. 31): 1 bedroom apartment (1 + 1), with a total area of ​​60 sq.m in a new complex with a hotel infrastructure. Built the residential complex was in 2018 is located on the sea's first line.

The approximate income from daily rent will be:

June, July, August September:

€45 * 30 rental days per month (estimated occupancy) = €1350 * 4 months = €5400 - 20% (rental management fee) = €4320

April, May, October, November:

EUR 35 * 20 days (estimated occupancy) = EUR 700 * 4 months = EUR 2800 - 20% = EUR 2240

December, January, February, March:

EUR 30 * 20 days (estimated occupancy) = EUR 600 * 4 months = EUR 2400 - 20% = EUR 1920

Total: 10.500 euros - 20% (Hayat commission) - aidat per year 216 euros (or 18 euros per month) = 8.264 euros remains for the owner.

If we calculate the annual yield, provided that the owner bought this 1-bedroom apartment at the construction stage for 80 thousand euros, we get 10.33% per annum. If the price of finished flats at the moment, let's say 125 thousand euros, then we get 6.6%.

Case#2. Consider a short-term rental of an apartment in an ordinary residential complex by the sea in Alanya (project code on the website 00912). The project is currently under construction and will be handed over in January 2022.

Estimated cost of daily rent:

June, July, August, September: EUR 30 * 20 days (estimated occupancy) = EUR 600 * 4 months = EUR 2400 - 20

April, May, October, November:

EUR 25 * 20 days (estimated occupancy) = EUR 500 * 4 months = EUR 2000 - 20%

December, January, February, March:

EUR 20 * 15 days (estimated occupancy) = EUR 300 * 4 months = EUR 1200 - 20%

Total: 5.600 euros - 20% (Hayat commission) - fee per year 420 euros (maintenance of the residential complex) = 4.060 euros remains with the owner.

The yield of a 1+1 apartment worth 55,000 euros, which is currently on sale, will be about 7.38% per annum.

Case #3. Daily rent of an apartment in a premium segment residential complex in the Kargicak district of Alanya (project code on the website 00512). You will hand over the project in December 2021.

The estimated cost of daily rent:

June July August September:

EUR 65 * 27 days (estimated occupancy) = EUR 1,755 * 4 months = EUR 7,020 - 20%

April, May, October, November:

EUR 55 * 25 days (estimated occupancy) = EUR 1375 * 4 months = EUR 5500 - 20%

December, January, February, March:

EUR 48 * 20 days (estimated occupancy) = EUR 960 * 4 months = EUR 3840 - 20%

Total: 16.360 euros - 20% (Hayat commission) = 13.088 euros remains with the owner.

The owner purchased this apartment at the final stage of construction for 124,000 euros; the payment of aidat per month is 65 euros or 780 euros per year, we get a yield of 9.7% per annum. If the investor had purchased an apartment at the Pre-Sale stage, when prices were minimal, and the cost of this apartment was 65 thousand euros, then the profitability would have been significantly higher.

A key success factor for investing in short-term rentals is assessing the region's demand. To determine the direction in the area and understand the prices, you can look at the apartments on Airbnb and book. So, Istanbul and the Mediterranean coast are in Turkey's most significant demand for rent.

Further, it is essential to pay attention to such factors:

location of the project: the first line and the city center are always in price and are especially popular with tourists;

builder reputation: we offer projects only from trusted developers with a long and successful history in the construction industry;

the key highlight of the object: a direct view of the sea, unique design, equipment of the apartment with household appliances from the developer, minimum prices at the excavation stage, etc.

Such objects are much easier to rent in any season and are more expensive.