The pros and cons of real estate investing in Turkey
Investment in Turkey in general is a topic of concern to many foreign investors who are looking for the best place to invest their money and experience. Despite the risks involved in investment in Turkey, the opportunities associated with these risks are also great, which makes the subject stimulating and frightening at the same time, if we talk about real estate investment in Turkey, here we are talking about a large and often long-term investment and thus more opportunities and profits and more risks and threats
Therefore, we aim today from this article to expand the explanation of the pros and cons of real estate investment in Turkey to give the reader a clear background based on sound foundations in case he decided to start investing
In the beginning, after all, real estate investment is one of the types we have written about in the past
Now we have to know that the feasibility of real estate investing is based on several factors combined:
The investor himself has his investment plan
The investor's vulnerability to risk (the greater the risk ability, the greater the potential gain)
Investor's expectations regarding his / her investment (whenever the forecast is properly considered, the results are consistent with expectations)
Different variables in all fields have a significant impact on the feasibility of real estate investment such as the impact of inflation in the economy - supply and demand and change during the investment period - the rise or fall in the prices of building materials - the increase or decrease importance of the site itself - developments that may be subject to the property during the investment period .....
And each of the previous paragraphs if we want to expand them to become a long article and therefore we mentioned quickly, and we will return immediately to the main issue is the negative aspects of real estate investment in Turkey
We need to know that there are two main categories of real estate investment: residential investment and commercial investment and we start with each one of its negative aspects.
Commercial Investment: A property that is not intended for housing and stability by a single family but is available for commercial purposes such as companies, offices, hotels, factories and all that follows commercial purposes
Pros of real estate investment in the commercial field:
+ Imports in this section of investment are higher than imports of residential investment
+ The owner of the property is not responsible for the maintenance and development, but the leased companies often deal with companies specialized in the management of these matters away from the owner of the property
+ Tenants in this type are owners of companies or commercial projects and therefore have the funds always to pay rent or any increases without falling into trouble
Cons of real estate investment in the commercial field:
It takes a lot of money to start this kind of investment because it is generally huge
Tenants in the field of real estate are always inclined to change their place of work and therefore there is a permanent danger of the survival of the property without a tenant
Generally speaking, renting commercial properties is relatively small compared to residential properties and even when you decide to sell the property it will not be that easy
Residential area: It is the real estate that is invested in order to rent it to be in the form of housing for a family or students or.
The advantages of real estate investment in the residential area:
+ You can rent your property easily because the demand is high, especially in a state like Istanbul is full of expatriates from other states inside Turkey and outside Turkey
+ The founding cost of this investment is much lower than the previous type
+ Overcomes this type of investment because the tenants are stable or available well and therefore once the first tenant leaves, so you can easily find another and thus income here is continuous
+ Selling this type of real estate is easier than commercial real estate
Cons of real estate investment in the residential area:
Your direct handling will be with tenants and therefore you are responsible for finding solutions to their problems or conducting maintenance for them
You will bear the cost of repairing damages that the Tenant may leave upon departure
You may have problems in not paying dues in a timely manner
In fact, these negatives can be avoided by charging home insurance when writing a lease
If you like, you can see some investment opportunities in Istanbul.
As a reference to our words we would like to transfer a blog by the economic newspaper MAL talked about the advantages and risks of real estate investment in Turkey
"Every investment features attract investors towards him and make capital flows to enter it, and no doubt that the income-generating real estate as long as I knew its importance as an asset characterized much of the attractive factors of the most important and high returns, and access to finance, and hedge against inflation, but against the advantages there are cons must to take them and their knowledge and treatment of future Kmkhatr could get, and include funding, and the risk of changing interest rate risk, and the difficulty of bleed, and management. the advantage of investing in income-generating real estate income as with periodic returns to be achieved through real estate rental income, as well as through growth The value of the property during the period of investment, for example, when achieving 8 per cent as an annual income of a property purchased by one million riyals and then rose to 1.1 million riyals during the year, it means achieving 8 per cent as an annual income and 10 per cent increase in property value and thus the total return for that year 18 per cent, while in the case of foggy market forecast no growth in value would be at least the annual rental yield, which represents a cash flow continues to the investor is the basis of return, and the property income-generating originally considered preferable when many funding agencies, and this leads to a decline in the size of Cash to buy the asset, if the property is evil For example, many financiers can cover 50% to 70% of their value, known as loan to value ratio, so the investor will need only 30% to 50% as a cash to get the property In case of choosing the right property, this method will enhance the return against the cash that was paid. In contrast, the financing risk may turn upside down when the market conditions change, and the data assumed when making the investment. The value agreed upon may result in a taxpayer's claim The acquisition of the property and its management, and may even be liquidated if the rents no longer cover the agreed financing payments, so the financing of investment property is a double-edged sword either to enhance the investor gains in the event of improved market conditions or to increase the loss if the entry The market in which the property is in a recession or a decline in prices and rentals during the repayment period. The following risk that must be taken into account when investing in an investment property is the risk of fluctuating interest rates. What governs this percentage in the Saudi market is what is known At the rate of (Saipur), which was Stabilized at 1 per cent or slightly below the "three months" during the years 2009 to the third quarter of 2015 and then increased significantly to finally reach about 2.4 per cent, if it increased by approximately 140 per cent over the past year, These changes, of course, cannot be known because they are future events, but one form of hedging is that the investor and the financier will ensure that there is an appropriate difference between net Operating income of the property and the value of the asset To ensure continuity of repayment in the event of low rents or high interest rates, as well as the most important features of real estate investment that the long-term asset that maintains the growth of capital above inflation rates, find that the returns are often higher than the rates Inflation, on the other hand, is considered to be a difficult asset. This means that it cannot be converted into cash quickly. There is no doubt that the number of traders in the market has a significant impact on this property. The presence of a real estate market attractive to investments from all over the world reduces the negative of non-liquefaction , But this negative is getting worse When the market conditions are cloudy and the absence of the property is the most prominent feature, the seller may be forced to reduce the price below the fair value to get cash if needed for any reason, so it is difficult to measure the interaction of the real estate market with the surrounding variables quickly, difficulty bleed make his move relatively slow compared to other private financial assets, as well as the real estate investment need to manage ongoing and follow-up vary depending on the property type, Valphendeghi and tourism need to make great efforts in turning it and Syanthma the clock while office properties will need less effort or may You do not need any effort if you agree with the tenant to assume all the maintenance and operation of the property. Finally, the investor can reduce some of these risks by not taking advantage of certain features such as mortgage finance; this depends on his strategy in managing the real estate portfolio and the extent of risk tolerance. Quoting the economic "