How to choose right rental guarantee property in Istanbul
Rental guarantee property in Istanbul.Today, our Istanbul property expert, Tunc Kaynakoglu, is sounding the alarm for investors. He’s warning them to be cautious when encountering rental yield guarantees made by certain developers and agents in the Istanbul real estate market.
Right rental guarantee property in Istanbul Turkey
Tunc Kaynakoglu, a prominent figure in the hotel investment sector and associated with Armaya International, has shed light on a concerning practice. He states, “Some rental yield guarantee schemes, often spanning two years, are deceptively funded by inflating the property’s price. For instance, a property with a real value of $60,000 is marketed at $80,000, allowing the developer to refund $20,000 to the purchaser. This creates the illusion of a guaranteed yield of $10,000, equivalent to 12.5 percent annually over two years. This deceptive practice is especially prevalent with apartments, villas, or hotel rooms located in areas characterized by poor occupancy rates and oversupply. The consequence is that at the end of the guarantee period, in the third year, buyers are left with properties that generate minimal, if any, rental income, resulting in a financial disaster.”
To safeguard your investment, Tunc Kaynakoglu advises that for hotel projects, buyers must assess the occupancy rates in the area and scrutinize the long-term booking contracts with the managing company. Similarly, for those considering renting out villas and apartments, it’s essential to evaluate the demand dynamics in the area and determine whether there is an oversupply of similar properties.
How to Calculate Rental Yield?
Understanding how to calculate rental yield is a valuable skill for property investors. To calculate rental yield, simply multiply the monthly rent by 12 months and then divide it by the purchase price. A quick rule of thumb is that a 5% yield translates to approximately $1 of rent per $1,000 of the property price. For instance, a property with a 5% rental yield and a purchase price of $120,000 would yield a monthly rent of $500.
Armaya International offers a range of property options in Istanbul, including hotel apartments in Bahcesehir, a mere 30 minutes away from Istanbul Grand Airport, the busiest airport in the country. These rental apartments are managed by the renowned luxury hotel chain Ramada, promising attractive rental incomes.
Additionally, for those interested in Airbnb-style rentals, there are traditional Istanbul city center apartment buildings in Balat with a 10% rental guarantee, providing another avenue for lucrative investment opportunities in the heart of this vibrant city.
Investors are encouraged to be diligent and discerning, considering all factors before making property investments in Istanbul to ensure their financial success and peace of mind.