Including property in your investment portfolio has always been regarded as a low-risk, potentially high-return strategy. However, it’s crucial to do your homework and weigh the pros and cons before deciding to buy Turkish real estate, whether for personal use or as a buy-to-let investment.
Real estate investments can be direct or made through pooled investments via various routes. Pooled investments may reduce the upfront financial outlay but also lower potential returns, and often require a fund manager, who charges a fee. Some options for pooled property investments include:
- Property Unit Trusts
- Shares in Listed Property Companies
- Real Estate Investment Trusts (REITS)
Advantages of Investing in Turkish Real Estate
1. Regular Rental Income Rent from Turkish real estate can serve as a consistent source of income, whether through long-term rentals or popular vacation rentals in Turkish coastal areas. Both options have the potential to provide healthy returns on your investment.
2. Family Investment and Inheritance Turkey has a relatively low inheritance tax compared to many other countries. This makes investing in Turkish real estate an attractive option for long-term family planning and inheritance without the high taxes imposed elsewhere.
3. Long-Term Value Appreciation While the property market does fluctuate, historical research indicates that real estate values increase over time. If you are prepared to hold your investment for the long term, you are likely to see a return.
Risks of Investing in Turkish Real Estate
1. Liquidity Concerns One major downside of property investment is that it lacks liquidity; it can take a considerable amount of time to sell a property. This means you cannot quickly recover your funds if needed.
2. High Upfront Commitment Real estate investments require substantial capital. Even if you find a good deal, purchasing property remains a significant financial commitment. Be prepared for the costs involved in buying and maintaining the property.
3. Maintenance and Additional Costs Properties need ongoing maintenance and upkeep, which must be accounted for in your budget. Repairs, updates, and regular maintenance can add significant costs over the years.
4. Mortgage-Related Risks If you are buying a property using a mortgage, there are additional risks involved. For example, will your rental income be sufficient to cover mortgage repayments? If you can’t keep up with payments, the bank or mortgage lender may foreclose and take the property. Also, be mindful of variable mortgage rates that could increase over time.
Mitigating Risks
Doing thorough research, creating a realistic budget, and being prepared for long-term gains rather than quick profits can go a long way in reducing the risks of real estate investment. Turkish real estate has shown positive trends in the past few years, but as with any property market, fluctuations are inevitable, and you should be prepared for these ups and downs.
Interested in investing in Turkish real estate? At Aegean Locations, we can provide you with expert guidance on buying property in Turkey, helping you weigh the advantages and risks for your unique situation. Contact us today to learn more and explore opportunities for your next real estate investment.