How to calculate the real estate profitability in Turkey?

ROI (the return of investment) is one of the most important indicators motivating foreign entrepreneurs to invest in real estate in Turkey.  The local market offers a wide range of residential and commercial properties.

Real estate in large cities and tourist areas is the most popular. A high profitability rate distinguishes them, and they are highly competitive locally and at European and international levels. Investors find many options with a significant return on investment and guaranteed profits in cities like Istanbul, Ankara, and Alanya.

Content:

• Why do you need to calculate profitability?
• How to calculate profitability?
• ROI (the return of investment) in commercial real estate.
• How to improve profitability?
• Help from our experts.

Why do you need to calculate profitability?

ROI is a comparative figure that examines the relationship between profit and property value. ROI is crucial as it reflects the income-generating potential of indirect real estate investment assets.

At first sight, many apartments in Turkey look perfect and seem like a good investment for potential buyers. But any property can hide flaws and expenses that no one will think about in advance. Therefore you need to consider all indicators of economic efficiency before making a purchase. ROI or profitability is the most important of them.

High profitability means that the received profit compares favorably with its real estate value. Comparing potential buy-to-invest properties, you need to focus on this indicator.

How to calculate profitability?

When a potential buyer finds a property that he believes will bring high rental income, the first thing he does is to analyze its profitability, or ROI. This rate shows the level of investment profitability; in other words, it calculates the ratio of possible profit to the unit's value.

To calculate the return on investment in Turkish real estate, you need to collect information:

1. about the property: the property and repair costs, the area in m²/square metres and the number of bedrooms;
2. about mortgage: loan terms, down payment, closing costs, and interest rate;
3. about rental income: calculation of expected income per month;
4. about monthly rental expenses: expenses for the property maintenance and repair, monthly utility bills, payments for the management company;
5. about annual rental costs: yearly property taxes and insurance costs.

These details will help the potential buyer decide if the chosen property meets their investment goals.

There are many methods for calculating profitability, but the most common formula is:

A good ROI in rental property is usually higher than 10%, but anything between 5% and 10% is acceptable. ROI does not constitute right or wrong. Different investors take on different risk levels, so knowing your budget and analyzing potential profit is essential.

Investment profitability in commercial real estate

The profitability of buying commercial property is almost always higher than residential. The last few years confirm this trend with growing real estate prices.

In Turkey, commercial real estate is one of the safest assets for investments because of the guaranteed return of funds. According to statistics, the rental income of a store is between 8-10%, while the rental income of a housing unit brings 4-8% on average. Rental agreements for commercial real estate are signed for 3 to 10 years on average, while residential real estate signs for 6 to 12 months.

Foreign entrepreneurs often invest in:

1. Stores. The Turkish real estate market has a wide range of shops. Due to the high-profit level during the tourist seasons, they are in high demand.
2. Warehouses. Warehouses are an excellent investment for commercially active Turkish cities such as Istanbul.
3. Hotels and hotel apartments. Turkish hotels and guesthouses are known for their long-term return on investment due to high demand from tourists.
4. Offices. Office space owners benefit from renting out properties to companies that are permanently active in the developed cities of Turkey.

How to increase profitability?

Investments in real estate bring many benefits such as asset diversification, tax reduction, rental income, and capital growth. Achieving a 10% ROI is easy enough if you know what to do.

To get a high ROI property, you should follow these recommendations:

1. Preparation of real estate for rent. Successful landlords prepare their property before looking for renters. This process may include property renovation with cosmetic or other significant repairs. Purchasing new carpets, painting walls, and replacing broken home appliances can significantly increase rental value. It also helps to attract responsible renters who will be careful with the property. This will decrease repair expenses as a result. All these factors will lead to the profitability growth of renting an apartment.
2. Advertising. Even if the property is in perfect condition and ready to be rented out, potential renters may not even know if it is on the market. Asset advertising is essential as it helps win recognition from the target audience and announce your presence in today's competitive marketplace.
3. Choosing a reliable real estate agent. ROI can reach and exceed 10% if the investor invests in the right properties. You need to study the real estate market before making a purchase decision. Ideally, you should consult with a financial professional who has a deep understanding of real estate investments. Experts from Turk.Estate has earned the trust of experienced entrepreneurs in the Turkish market.

Help from our experts

In Turkey, commercial real estate and residential houses are attractive assets to add to the investment portfolio. The first task for high profits is choosing the right property. Experienced investors entrust this issue to specialists from Turk.Estate, who have excellent competence in Turkish real estate.

The agency offers a wide range of residential and commercial properties and vacant land plots for construction. The site contains up-to-date information that makes it easy to understand the unique features of the Turkish real estate market on your own. Contact Turk.Estate specialists select a profitable investment unit and get their full support throughout the process.