April 12, 2021

Effective Decisions on the Right Condo Choices

It is sometimes said, with an investment in real estate such as Pandan Perdana apartment for rent, you incur a lot of misery. Or even: with real estate you can achieve exceptional returns. With these tips you can invest in bricks in an informed way.

First and foremost: whoever invests in real estate such as Pandan Perdana house for sale, has left for the long term. Money put in bricks is less mobile than an investment in stocks. Even then you do that with a long-term horizon, but you get out of stocks faster than from bricks.

Gross is not equal to net

Obviously, there are many advantages associated with investing in real estate. In this way you can take advantage of the triple return – rental return, tax return and capital gains return, which can yield a high return with a sensible purchase. However, do not count yourself rich: you cannot add those three returns together. Choosing the Pandan Perdana condo for rent is perfect as well.

Suppose you have a net rental yield of 3 percent, a capital gain yield of 2 percent and a tax return of 0.5 percent, then the total return is not 5.5 percent. That will be a bit lower because you will get a negative return on your investment in the first few years.

That is the case

Anyone who buys real estate pays depending on what you buy registration fees or VAT. You also need to pass through a notary and perhaps take out a loan. Those purchase costs can easily amount to more than 30,000 dollars. You will not earn that back in the first years with rental income. It is generally estimated that you need about seven years to recover all costs for a new construction and about four years for existing real estate.

With a new-build apartment of good quality, the net return is about 80 percent of the gross return, but with an older apartment with maintenance costs, the net return can fall to 60 percent of the gross return.

Choose a well-known region

A second important aspect is the region in which you want to invest. Here too, as a private investor, we would limit exclusively to the region that you know well because you live there, where your relations are, where you whether or not via your networks are kept informed of developments in the region, etc.

Lower returns are usually better

Also in real estate applies: a higher return also represents a higher risk. Even after deduction of the higher costs for maintenance, insurance and vacancy, an older or poorly located apartment will in many cases achieve a higher net return than a new-build apartment. And so it can be tempting to go for that higher return. For more articles such as this one, click here.

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