Today, Our Istanbul property expert warned investors to beware of false rental yield guarantees made by some developers and agents.
Tunc Kaynakoglu, from hotel investment specialist Armaya International, said: “Some rental yield guarantee schemes, typically offered over a period of two years, are actually funded by the purchaser buying the property at an inflated price. For example a property priced at $80,000, but worth $60,000, allows the developer to give back to the purchaser $20,000, fulfilling a guaranteed yield of $10,000, or 12.5 percent per year over two years. This ruse particularly applies to apartments, villas or hotel rooms, built in areas with poor occupancy rates and oversupply. The result is at the end of the guarantee period in the third year buyers are left with properties that earn them very little, if any, rental income, and a financial disaster.
“To avoid this, purchasers in the case of hotel projects must examine occupancy rates for the area and the managing company’s long term booking contracts. Similarly, for renting out villas and apartments purchasers must check where the demand will come from and whether there is oversupply in the area.”
How to calculate rental yield?
To work out a rental yield, the monthly rent X 12 months, is divided by the purchase price. A quick way to work out a yield in your head is that 5 % yield is approximately $1 of rent per $1000 of price. Example 5 % rental yield on a property at $120,000 purchase price would be $ 500 month rent.
Armaya International has properties available hotel apartments in Bahcesehir , within 30 minutes of Istanbul Grand airport, the country’s busiest airport.
Developing the Sheraton residences, one of the Turkey leading developers. The firm has a highly successful track record in creating major new tourist destinations.The Sheraton hotel apartments will be managed by Marriot hotel chains which is worldwide biggest hotel chain