Stability, guarantees, durability, without investment of time and effort - all this best characterizes passive income from renting out an apartment. That's what it is, this income? How much will you receive and how quickly will the square meters pay off? Is it really profitable to buy a rental property? We could say that if you don't try, you won't know. But THE Capital does not make baseless promises and does not scatter words in vain, therefore, instead of empty assurances about a happy future, we suggest that you strain a little and calculate the real profitability of the apartment. It is not necessary to take a calculator because everything is calculated for you.
Step-by-step instructions for calculating profit
We want to warn right away that the calculations can only approximately reflect reality. This is not because our mathematical abilities are lame, but because of more serious factors. No matter how far into the future you try to look, you can only do so based on the current situation. Life does not take into account your desire for stability and can sometimes turn in a completely unpredictable direction. Speaking about the real estate market, it is worth understanding that it is influenced by many factors. among which are the political and economic situation, seasonality, supply and demand fluctuations, and now a war with its consequences. May change over the years market value a href="https://thecapital.com.ua/hotite-kupit-kvartiru-ne-zabudte-o-nalogah/">taxes and expenses for its maintenance. It will not be possible to predict the fate of your apartment to the hryvnia of its rent. Therefore, the profitability calculation gives only an approximate understanding of how profitable it will be to purchase square meters. So, to determine profitability, you will need:
- indicate the rental income you receive for the year. This is easy to do - multiply the monthly fee by 12;
- understand what your expenses will be related to and how much they will amount to. Feel free to enter taxes > on real estate and agency services in the expenses column. Additional costs can be repair work (they can be carried out at will or as needed, so it is not a fact that they will be needed at all) and insurance (again, everything rests only on your desire). In some situations, it is necessary to take into account the payment of utility bills, but mostly it falls on the shoulders of tenants;
- calculate the net rental income. Subtract from your annual income the expenses related to the content of the real estate;
- determine the profitability of renting out an apartment or house. Finally we reached the final destination. It is necessary to divide the net rental income by the value of the object. Profitability is determined as a percentage, so the received amount must be multiplied by 100.
*all calculations were made without taking into account the potential period of time required to search for tenants
An example of calculating the yield from real estate rental
Let's imagine that you have already bought an apartment with our help Pechersk district. It is considered one of the most prestigious in the capital, so the prices here are appropriate. Your one-bedroom beauty cost $185,000. Of course, we are talking about an object in a top residential complex and with author's renovation. You can afford to rent out a similar property for $1,200, as our clients already do. Let's say you spend $600 a year on some minor improvements to your property. Now we know all the basic amounts and can start the calculations:
- annual rental income - $1,200 × 12 = $14,400;
- expenses – $600;
- net profit from surrender – $14,400 - $600 = $13,800;
- rental income - ($13,800 / $185,000) × 100% = 7,5%
The obtained result shows that in a year with the help of rent you will be able to return 7,5% of the amount you invested in the purchase zhitla. Your investment will be fully repaid in 13 years, which is quite a good figure.
Among the risks and additional costs that can affect the final result, it is worth including the bad faith of tenants and taxation on income from renting real estate. There are situations when the tenant refuses to pay, but our agency is not aware of such cases. Before signing, we definitely check the reliability of the parties, so the risk can be safely crossed out. As for taxes, the legislation of Ukraine stipulates that the lessor is obliged to pay an amount equal to 18% of the income and an additional 1,5% of the military levy.
7,5% seems to have had an inspiring effect on you. We suggest that you don't waste time and immediately familiarize yourself with range of apartments available for purchase. Contact our experts to get advice and choose the most profitable option.
