Determining Factors of Rental Income
It is common sense that property that is well located with good maintenance and reasonable price is a strong source of income. While renting, the property manages to maintain its value while having an income for the owner. Considered one of the most secure and easy ways of making money, there are many factors that should be examined in order to make the best of your rental income. Several questions need to be answered in order to maintain a good rental income.
Before taking a look at factors of your rental income, first, you should be able to calculate your rental yields. Rental yield, in essence, is the rental income compared with the property’s expenses and value. Knowing the yield of your property, it will be easier and more efficient for you to plan your rental income.
Gross Rental Yield
In order to calculate your gross rental yield, you will have to sum up your annual rent charge. Divide your annual rate by the value of your property. Finally, multiply by 100 to get your gross rental yield. If you wish to make the best of your property by renting, you should have at least a 3-5% gross rental yield if your property is located in an urban area.
Net Rental Yield
Calculating net rental yield sometimes could be challenging to do because of the variety of conditions. In order to calculate your net rental yield, you will have to subtract your annual expenses for the maintenance of your property from your annual income. Rest is as same as calculating gross rental yield.
Factors That Increase Your Rental Income
Whatever the value of your property is, good management is the key to have a profitable rental income. With poor management of the property, tenants, maintenance, and many more features, you will not be able to make a valuable profit out of your property. There are many ways to manage your property most efficiently, having someone manage for you being one of them. Just by a small amount of fee, your property will be able to provide you a stress-free passive income every year.
Each different spot of the same street has varying property taxes. While choosing a property to invest in, property taxes are something you should be aware of. Don’t forget that an extra amount of taxes may not always be a sign of downside for you to invest in. It’s likely that there will be a reason why the same building next to another has a higher amount of property tax. This could have various causes: upcoming projects, more firm architecture, high-quality services and many more reasons that result in a higher amount of taxes.
The main factor that determines the value of a property is its location. The importance of location is vital while investing in a property. Every aspect of a specific location increases or decreases the value of the property. Let’s compare two different residential areas from Istanbul in contrast.
With its financial power and central location, Beşiktaş has high property value. Home to countless job opportunities and high-quality universities, demand for rental properties is never-ending in Beşiktaş. Levent Prime provides the crucial benefits of Beşiktaş and is a promising property with its high rental income – with high demand.
Beylikdüzü is the shining star of Istanbul. Despite being far from the city center, Beylikdüzü promises a bright future. With its planned city structure and accessible, efficient transportation manners, Beylikdüzü is on the top list of many investors. With many projects with low prices, such as Lapis Square, Beylikdüzü offers excellent possibilities of income in the near future.
Everyone wishes to live in a place safe for themselves and their children. A community where people help and support each other is every tenant’s wish. A neighborhood in which food, health and vital services are easy to access is always demanded and high in income. One other subject that the neighborhood you choose affects is your pool-of-tenants. If your property is located near a university, it’s very likely for a student to make up your possible tenants.
One of the most important criteria for tenants while searching for places to rent is the crime rates of each area. This kind of information could be acquired with the help of local police or government officials. Make sure to check the rates of criminal activity and if it’s declining or increasing. No one is interested in living where criminal activity is high.
Especially in urban areas, traffic and public transportation are the primary causes of stress for people. The closer your home is to your job, the happier you are. This works almost for everyone. So, be sure to look for future job openings and opportunities while buying a property if you wish to rent it.
These are merely limited factors that you need to consider to determine your rental income. There are many more complicated aspects existing to increase your profit by investing in a property and renting it. Our professional and talented advisors are always here for you if you wish to make the best of your investments. Efficient management and our client’s satisfaction are our essential values. Contact us for future inquiries.