How To Evaluate Property Investment Opportunities In Turkey
The Turkey property market looks attractive to novice investors. It always seems easy that any blind investor can easily break into the market and leave with a lot of profit at the end of the day.
However, before any investor joins the market, it is always essential for them to understand how to evaluate potential real estate investment opportunities.
Key takeaways about investing in the Turkish real estate industry
Investing in the Turkish property market can be an easy way to create capital gains and also a great way to consistently earn rental income.
It is important to evaluate each Turkish property based on distinct properties such as its amenities, location, and layouts.
When it comes to evaluating the potential investment opportunities in the Turkish market, you can use 8 important metrics. This post looks to discuss each of these metrics in detail.
Price-to-income ratio
The price-to-income ratio is a useful evaluation technique that can be used to understand the viability of a real estate investment in Turkey. This is done by comparing the average household prices in a location to the average income per household. This figure has steadily fluctuated over the years.
Price-to-rent ratio
This is an important investment estimation tool that uses the average home prices and median rents in the market. To get this ratio, just divide the average house price by the average annual rent. This is used to generate the ratio. Generally, a rule of thumb here is for people to buy the property if the ratio is below 15. They can also go on to rent the property if it is more than 20.
Gross rental yield
Another important evaluation method for determining the potential of a property is the gross rental yield. The value of this for an individual real estate asset is estimated by dividing the yearly rental income of the property by the total cost of the property, then multiplying this by 100. This gives the percentage of the value.
Capitalization rate
The capitalization rate is a more accurate way to estimate property investment opportunities in Turkey. This is used by subtracting the yearly expenses on the property from its purchasing cost. This number is then multiplied by 100 to give a percentage. Some of the property expenses include vacancy costs, landlord insurance, taxes, repair costs, and so on.
Cash flow
The cash flow is the total amount of money that you earn as income regularly. If you can pay off your insurance, mortgage principal, interest, and taxes with your monthly rent, then the investment is a good one. However, you need to make arrangements for extra cash reserves to cover all payments in the event of a vacancy or payment for maintenance costs.
Property investment opportunities in Turkey
In Turkey, there are several opportunities for property investment among investors. While you can find the most expensive property to buy in Istanbul, there are cheaper options in other parts of the country.
Due to the high demand for Istanbul properties, apartments, villas, and penthouses all come at a premium. However, due to the nature of the Turkish property market – it is largely a buyer’s market – it is possible to find the desired property at an affordable rate. Available for investors are the following properties:
Apartments: In Turkey, you can find various apartments, which usually come in complexes or as part of residential high-rises. Available apartments include flats, duplexes, penthouses, and so on.
Houses: These include full houses like bungalows, townhouses, villas, and so on.
Hotels: Any type of short- or long-term accommodation.
Commercial properties: These include offices, shops, shopping centres, markets, bazaars, and so on.
