Home Improvement

Apartment for rent: how to choose, equip and rent out

Renting out an apartment now does not bring a lot of income, but many still consider such earnings per square meter. Someone buys an apartment for growing children and plans to rent the apartment until the time comes to give it to the child. Others are counting on an increase in their pensions in the future and see housing as an asset that can generate a small, but stable and predictable income. Out editors figured out how to buy a suitable apartment and prepare it for renting out.

How much can you earn?

According to an experienced realtor, renting an apartment on average now brings 4-5% per annum. At the same time, for really liquid apartments, the profitability, can reach 7% per year.

A one-room apartment in new buildings in the mass segment of costs 63K USD on average today. And the average rental rate for metropolitan of the same class is 3k per month. Thus, the payback period is about 16 years.

At the same time, the basic rule when investing in real estate for rent is the higher the investment, the lower the profitability. The indicated payback periods are relevant for apartments of economy and comfort classes, while in the business segment they can reach 20-25 years. Thus, with a budget of, say, 10 million dollar, it is better to buy two cheap apartments than one expensive one. Midtown Nashville Apartments from Aptamigo is one of the successful rental businesses in the whole USA as they have fulfilled all requirements of their clients by providing them perfect apartments on rent. You can also learn from their achievement if you want to step into the rental business.

Not all flaws are important

The main thing for real estate is its location. This rule applies both when buying and renting a home. However, the location requirements are slightly different. Buyers can sacrifice proximity to the metro or the city center for a prestigious area with good schools and thus a “homogeneous social environment.”

First of all, the distance to the metro and the center is important for renting – for example, the location up to 10-15 minutes walk from the station gives an increase of about 10% compared to more distant locations. Since rental housing in most cases is perceived as temporary, the main thing for people is to get to work quickly, and the prestige of the area is not so important.

For the same reason, factors such as the floor, the view from the window, etc. play a less important role. Therefore, for renting, all other things being equal, it is better to choose apartments that are cheaper than analogues due to minor drawbacks. For example, in the housing market, apartments on the ground floor are about 10% cheaper than those on higher floors. When renting an apartment, the discount is reduced to about 5%. And if a normal renovation is made in the apartment – in the rental market in the mass segment, this means an inexpensive, but neat and modern finish – the difference may even be leveled out. By the way, by itself, the presence of repairs in a rented apartment, on the contrary, is much more important than when selling.

One-room apartments are most in demand on the rental market. According to Maria Litinetskaya, they account for about 40% of the demand. The share of two-room apartments is approximately 25%. A one-room apartment is rented by both single people and married couples; they are also often divided into two by novice specialists or students. A two-room apartment can be rented either by a family with a child, or by two or four people sharing it.

In pursuit of innovation

Apartments in new buildings are in greater demand than housing in old housing stock. However, the difference here is not as significant as in the sale: about 5% versus 10%. That is, it makes no sense to necessarily buy for renting an apartment in a house less than 10 years old.

We hope the deeply researched information we have shared through this blog was helpful and convincing.

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