How to Buy Property to Make a Profit on Rental
Buying a house or a flat is always an important decision. It is an excellent investment of money for your new home. But there is another possibility: what if you buy it to be someone else’s home? That is, what if you invest in property to provide it for rent? We have to start with a critical aspect, how to buy property to make profit on rental.
Is it worth investing in purchasing a property and then renting it on platforms like estaga.com to make a profit? In this post, we will analyze the factors you should consider before investing in a housing rental.
So here is what you should consider.
Find out what people are looking for in rented apartments
Whether we talk about space or price, you will not get more money for making a lower investment. You must consider what people are looking for—it is the key to success. Some studies say people want around 180–250 m2 of space. That is, people know what they are willing to pay for what they are looking for. Therefore, get to know your area’s demand for property space before investing.
Studying the market is essential
As we said before, if you do not know your potential clientele, you will not know how to make a good investment. Here are several things to consider:
Study the city’s different areas and the existing rental demand. This will help you see which areas are good to invest in buying a home, even if you have to pay more money.
Look at statistics of what people are looking for, the square meters, and the number of rooms they are looking for. Saving money by buying a small apartment will not guarantee you anything. You may even lose your investment.
Be realistic—if you are willing to invest in real estate, do it well, but also be aware of how much you can risk. Make your calculations based not only on the ads found on rental portals. Be sure to talk to people who rent apartments or houses. This will help you understand the market better.
Be clear about your goal
If you are determined to take action, you must have a clear objective to make it viable. Once you are clear about your audience, it is time to take action. First, let’s try to calculate the potential return on investment.
Investing in housing to rent: is it profitable?
Each particular case will be different, so a good cost analysis should be carried out to see if it is profitable for your case. You will find profitability by dividing your annual fee for a year’s rent by the value for which you buy the property.
But within this calculation, you must consider the expenses you will incur during the acquisition process and the fees you will incur as an owner of the property for rental, like possible repairs, etc. Moreover, find out more about the taxation system so you can deduct the taxes that have to be paid from this kind of profit.
To be successful with the purchase and subsequent rental of your new property, the most win-win solution is to acquire property in the center of the city you live in. In this way, you will be able to target not only permanent tenants but also tourists. This will provide you with a larger target audience and more opportunities to make a profit from rentals.
Also, pay attention to the neighborhood where the property will be located, the municipality, how close it is to hospitals, schools, or shops, and if it is close to public transport.
As you can see, a lot of factors must be considered before investing in real estate for rental. If you hesitate, it is better to entrust this matter to an investment counselor, who will help you with the evaluation and even provide recommendations on the property selection.