Buy to rent

Buying property for rent

Buying apartments on the coast (next to investments in incomplete housing complexes and buying for your own home or vacation) is one of the most common reasons for property purchases.

Due to the rapid pace of construction in Turkey, the property management service is very developed. Many management companies help the owner to rent out their apartments.

There are two types of rentals offered by management companies:

1. Guaranteed rent. In this case, a contract is signed between the property owner and the management company, according to which the company undertakes to pay a fixed amount to the owner and puts the rest of the profit in its pocket. Such contracts are usually signed for one year. Management companies offer them remuneration at the level of 5-7% of the property value per year. The amount is small, but the owner completely shifts all the worries to the management company, which independently pays the aidat (rent), meter readings, taxes, etc. Under the terms of such an agreement, the owner retains the right to live in the apartment for 1-2 months a year (the owner informs the management company about the dates in advance).

Actual rent. In this case, the management company does not receive a fixed amount from the owner. Still, he rents the apartment on the terms agreed with the investor, informs the owner about each fact of delivery, and requires mutual settlements with him minus his commission (10-20% of the total profit). Rent after the fact usually brings more profit than guaranteed rent (8-12% per year), but this profit is not guaranteed and is paid after the fact.

Management companies are in high demand, with more than 90% of foreign-owned units being let through management firms. To be sure, running a rental business while abroad is challenging and unjustified. Only individuals who own several homes in Turkey and rent them out on their own or who have amassed so much real property that it's worth establishing their management

Developers frequently offer foreign property management services to their clients, but these are generally only available for apartments purchased from them.

Which apartments are most in-demand for rent?

Housing is most in-demand, subject to a combination of several factors:

• distance to the sea no more than 400-500 meters. A kilometer walk in forty-degree heat seriously scares off potential tenants;
• the apartments are located in a modern complex with developed infrastructure. Almost all complexes built in recent years have an outdoor pool, a fitness center, a sauna, a hammam, and a playground. A more developed infrastructure also implies the presence of an indoor pool, slides in an outdoor pool, a tennis table, billiards, and for elite complexes, there is often also a bowling alley, minigolf, a cinema, a spa, and so on. With a considerable number of rental offers in modern complexes, tenants are very reluctant to consider apartments in old houses, although this option is acceptable in a limited budget;
• apartments 1 + 1 and 2 + 1 are in the most significant demand and liquidity, less often - studios and large apartments;
• the furnishings of the apartment. It doesn't have to be chic, but Spartan conditions don't particularly appeal to anyone either. Therefore, a complete set of household appliances and good furniture are a prerequisite for a successful rental;
• proximity to urban infrastructure. Shops, markets, city parks, and transport interchanges should be walking distance.
• critical, although not decisive, is the notorious view of the sea

2. Seasonality of rent. The greatest rush demand falls on July-August, apartments for these months are usually booked in the spring and are as expensive as possible. So a 1+1 apartment in a modern complex is rented during this period for 1,200 - 1,500 euros / month. Prices for June and September are usually 10-15% cheaper, for May and October - even cheaper. From November to April, apartments can only be rented to Europeans at a low price. During this period, families from Germany and the Scandinavian countries actively come to Turkey, who come here to "overwinter" for several months.

Rental homes can also be rented out to local people or foreign workers temporarily working in Turkey. In this case, the apartment is used all year, and the management firm charges for its services at the cost of half a month's rent. A major advantage is that one long-term tenant already resides in the property, which improves the condition of the apartment and slows down furniture and appliance wear and tear. Yes, while the yield, in this case, is lower than that of monthly or weekly delivery during peak season, it is nevertheless significant.

When buying an apartment to rent it out, it is advisable to use credit funds. The loan is given for 50% of the cost of apartments for up to 15 years. The interest rate on loans in Turkish banks is generally 7-8% per year. It is simple to calculate that the rent covers the loan payments and provides enough profit for the apartment's owner. As a result, when buying apartments for rent, investors merely pay half of the purchase price and wait for the remaining portion to be dissolved via

For example, when applying for a loan for 25,000 euros at 7.8% for 15 years (the cost of an apartment is 50,000 euros), the monthly payment will be 236 euros per month (or 2,832 euros/year), and the profit from renting 4-6 thousand euros /year (8 and 12% per annum, respectively). Thus, the owner will receive 1-3 thousand per year in net profit. Without using a loan, this amount will be 4-6 thousand.

That is why, and about the overall rise in property prices in Turkey, purchasing apartments to rent them out is becoming more popular!