When buying a house for investment, there are many aspects that should be taken into consideration. Investment in real estate is nowadays one of the most profitable investments, if it's combined with a loan and a good investment plan. Some of the most important things that you have to consider before deciding are:
- How are the prices in the area, compared to similar areas
- The rate for Return of Invested capital (ROI)
- The property rent value vs. loan monthly rate
- Property yearly appreciation rate
- Local property laws that can affect your home/villa
- Easiness to rent
- Easiness to buy
- How long you intend to keep this property
- Who will manage the property
- Price range of the property
Investing in a house nearby, a house that you have to look for yourself, is not always the best choice, even if it's the first thought. If the prices in your area are very high, your investment will probably not bring you the expected ROI. That's why; you should also consider other areas/countries for real estate investment. Let's take for example, one of the preferred investment countries last year - Cyprus.
Cyprus an European country located between Europe, Asia and Africa in the Mediterranean Sea. The Cyprus' most profitable industry is tourism. There are more then three visitors per year for every Cyprus resident. This makes any property close to the sea to be very easy to rent. Most of the tourists are from UK, coming for the long Cyprus summer - 6 to 8 months per year. The average staying period for a tourist renting an apartment or a villa is more then 1 month, and renting for long term contracts are usually signed for a year.
According to a study of Cyprus property value based on a sample of 1,000 properties across Cyprus, studios in Cyprus cost USD70.000 on average, 2 bedroom houses USD180.000, with an average monthly rent of USD430. The average rent for apartments is 6% of the apartment value, and for 1 bedroom apartments is 7%. Considering an investment of 25% (the rest of 75% funded by a loan), the annual rental represents 24-28% of the invested amount. Considering the annual property appreciation of 20% (in 2005), the total return on investment exceeds 100% in only one year. The rent can be used to pay the monthly installment, so no additional funds are needed. The recent join to UE made Cyprus a very attractive investment destination, for at least three reasons:
Cyprus property prices are much lower compared to UE and the cost of life is relatively inexpensive.
Cyprus government encouraged these investments by a property protecting Cyprus property law.
The long summer season made Cyprus a favorite holiday destination for many Europeans.
The property management can be done through one of the many local agents specialized in property management. The cost of it is usually 10% of the monthly rent. You can consult Cyprus Property Information for more information and for various investment plans, based on your investment budget.
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