Surrender it immediately! All about renting property abroad
When buying a house abroad, we are well aware that it will not always be there. Some people manage to send their parents, children, and friends abroad, but most of them are faced with the problem: how to rent out foreign housing?
Rent is not only the joy of the fact that the house is not empty. This is an opportunity to ensure the safety of housing, as well as pay for utility bills or mortgages. However, renting out a property can be an end in itself, as it can bring a good income. Which one
How much can you earn on renting out?
In Bulgaria, rent brings about 4-6% per annum. Often, potential buyers are promised at least 6-8% of income, but market professionals warn to trust such statements, considering them to be incorrect. For Finland, in particular, Helsinki, rental income of 4.5–6.2% per annum is considered normal, for Italy, depending on the region of the country, 3.2–6.1%. In Germany in the market you can find offers with a guaranteed income of 9.4%. In the UK, the yield may not be very high - only 2.9-5.3% per annum.
In Sahl Hasheesh (Egypt), a 5% yield is considered too low. On such conditions, development companies offer to enter into guaranteed rental agreements with interest payments once a year. Considerably the best option is to rent a house through a real estate agency. In this case, the income will be 7% per annum and higher, and payments will be made to the owner’s current account on a monthly basis.
How long does it take to recoup the investment? The payback period is by simple arithmetic. For example, with a yield of 5% real estate will pay off in 20 years. Let's move from theory to practice.
How much should I invest to successfully lease?
Often when buying buyers are guided solely by the price of the object. However, realtors are advised to refrain from purchasing too cheap housing on the principle “if only a roof over your head was”, since you need to look ahead - in the future such housing will be very difficult to rent and sell. If the apartment is larger and more expensive, the rental income will be quite understandable, too, while the costs of housing will increase slightly, and as a result will make up a smaller part of the income.
The minimum cost of objects, interesting from the point of view of rental income, by countries - leaders of sales is given in the table.
|A country||Purchase budget, thousand euros|
|Bulgaria (Sunny Beach)||35,0|
|Spain (Costa Blanca)||70,0-80,0|
|Italy (Lake Maggiore)||90,0-100,0|
|Montenegro (Herceg Novi)||60,0|
|Czech Republic, Prague)||130,0|
How much can I take?
What rent can be assigned for housing depends on many factors. And if the owner is not compelled to hand over what he has already bought, and is only looking for the most successful option for further delivery, one should carefully select the region.
Take the Czech Republic. In Prague, an apartment of 1 + 1 (one room and one bedroom) in a brick house on the outskirts is rented at a rate of € 350 per month including utility bills. For similar apartments in the center you can request € 850 per month.
If you buy housing in the ski resorts of Bulgaria, you will have to forget about your own holiday on New Year's Eve - it is during the New Year holidays that rental rates and, accordingly, profits are the highest. If we talk about the regions, Bansko is generally more expensive than Pamporovo. In addition, international alpine skiing competitions are held annually in Bansko, which also increases the demand for rental.
In Finland, you can rent a house for permanent residence for € 1-1,500 per month, a cottage for relaxing on the lake - from € 500 per week. The range of rental rates for apartments is colossal. If in the center of Helsinki you can easily rent a three-room apartment for € 1-1,2 thousand per month, then in Lappeenranta - from € 300.
Those who wish to stay in Italy for a holiday in Italy will primarily mean "classical" Italy, that is, the coast of the regions of Rimini, Tuscany and Liguria. Therefore, to acquire for rent, for example, Calabria is not worth it. Here is a small apartment of 15-20 square meters. m more than € 500 per month did not pass, even in August.
It should be remembered that the season in many resort countries is by no means infinite, and it may well turn out that for at least six months the apartment will be empty, and even during the season it will not be possible to “keep” the maximum rental rate. For example, in Spain on the Costa del Sol in the peak period for quality apartments it is possible to gain € 700 per week. However, if a long-term contract is concluded, the fee is reduced.
What taxes on rental income need to pay?
Taxes on rental income vary considerably by country. As a rule, the size of the taxable base can be reduced by deducting property taxes, the cost of repairs and maintenance of housing, payments for condominium services.
Tax rates on rental income are shown in the table.
|A country||Tax rate|
But in Turkey, the owner is exempt from paying tax on rental income. However, only if only one property is rented - an apartment or a villa.
Tax evasion is meaningless, especially in Europe. The principle “maybe tax services do not know about me” does not work, since, paying taxes when buying a home, the owner already enters the taxpayer base. And the option that the fact of renting will remain relevant services "unnoticed", is practically excluded.
The penalty for tax evasion on property to be handed over, for example, in Spain is € 30 thousand.
Focusing on the minimum cost and hoping to at least partially donate housing, a small apartment in Bulgaria on the coast can be purchased for € 30 thousand. The high season lasts only two months - July and August. Maximum like apartments can be rented for € 40 per day. It is considered good luck if you managed to hand over housing for the entire period. However, the most realistic option is when it turns out to hand over housing for just one month. As a result, you get € 1.2 thousand. With the profit, you pay the annual maintenance of the object (cleaning the pool, cleaning the territory, etc.) - a minimum of € 200, as well as an annual tax of about € 50. The remaining money is paid 10% income tax. “Clean” you get € 855. This is only 2.85% of annual income. The apartment on the first line by the sea can be rented much more profitable, but it costs, naturally, more expensive.
Who to contact?
Option one (for risk lovers): to hand over property itself, without intermediaries. A plus in this situation is saving on agency fees. This is where the merits end. And the questions arise: how to find a tenant in a country with a different mentality and often unfamiliar language? How to organize the payment process? How to solve possible problem situations?
Option two (for your own peace of mind): entrust the process of putting the agent to the management company. As a rule, this is the structure of the developer, created in fairly large projects. In addition to renting, management companies are engaged in the maintenance of the building (planned and emergency repairs), cleaning the territory, cleaning the pools, mowing lawns, and also provide room-service. The cost of the management company depends on what exactly is included in its responsibilities. For example, in the Czech Republic the following option is possible: the owner pays managers 15% of income and "forgets about everything." The only thing you will need to pay taxes.
The process of renting in exotic countries should be approached with greater care. Market professionals point out that there may be difficulties with the management company in handing over housing to foreigners, and more personal participation in the process will be required.
In addition to management companies, you can contact your local real estate agencies. In the same Czech Republic, the cost of the services of the tenant search agency is equal to the monthly rental rate.
How to pass?
The landlord and tenant enter into a lease agreement. The contract contains the details of the parties and the object being handed over, the terms and cost of the lease, the rights and obligations of the parties. If the lease is carried out through the management company, the terms of the lease and the amount of payments shall be indicated in the contract.
If the owner rents a house on their own, you should know some of the nuances. First, the tenant, as a rule, makes a pledge. For example, it may be equal to the monthly rent. The deposit is for the owner a guarantee of the safety of furniture, decoration, etc. In the event that something is damaged, the deposit will not be returned to the tenant upon departure.
Secondly, if the tenant intends to move out earlier than the agreed time, he is obliged to warn the landlord about this in advance. As well as the landlord is not entitled to terminate the contract ahead of time. For example, in Germany, the law is on the side of the tenant. If the owner suddenly decides to terminate the rental agreement and enter his own home, it will be extremely difficult to do so. Especially if the tenant regularly makes the rent, and the owner permanently lives in Russia and this property is not his only housing. In the United States, on the contrary, no one will sue the “runaway” tenant before the end of the contract. However, this applies only to housing in the low-cost segment. And in Italy, you can rent housing to non-residents for a period of not more than three months.
As with residential real estate, there are also features in the segment of commercial properties. For example, in Spain, when renting a small business (cafeteria, barbershop), there is a non-refundable payment - traspaso. Its size is from € 25 thousand. In case of refusal to continue the lease, the tenant loses this deposit. The only way to return the security deposit is to find a new tenant. If in the future you plan to buy out the rented property, there is an opportunity to agree with the owner on the inclusion of transport in the price.
Rental tricks. much more profitable to invest?
The buyer purchases separate residential units for further rental. The most profitable regions with a year-round tourist flow: Prague, Vienna, Rome, Paris. Annual income is 6-10%.
Leaseback - a unique government program to attract private investment in real estate in France. In other words, it is a method of buying a home with guaranteed rental on certain conditions determined by the state. Income is 3-4% per annum.
You can rent a house by paying only a part of its cost. This is determined by law. Renting out after making the first payment for real estate is possible, for example, in Turkey and Spain. But in Montenegro, Serbia and Croatia, renting housing is allowed only after full payment.