|
|
|
Buying Property In Spain
You have made the decision to move to Spain and are now looking for a property to buy? Where do you start?
Firstly, I would suggest you go on to the internet and look at the various agents that are offering properties for sale in Spain. Many of...
Down Payments – Get Creative
One of the biggest hurdles to buying a home is the down payment. Saving up a chunk of change can be difficult, so getting creative is a key.
Down Payments
The amount of your down payment is dependent upon many potential issues, but two come to...
Home Equity – Foreclosure Often Not Necessary In Current Market
While driving around your community, you may have seen signs posted on telephone poles that offer "foreclosure help." These seemingly generous offers to help financially troubled homeowners who are in danger of losing their homes to foreclosure are...
Real Estate Investing First Deal Jitters
It’s very normal to get first deal jitters in real estate investing.
There are several real issues:
1. Real estate is a big investment, the dollars are large, so there is
great risk but also great rewards. Its much different signing a...
Rent Control Rehab for the Well-Heeled
For those who don't need it, rent control can become an addiction, resulting from too many years of a sweet deal. It can leave the real estate muscles paralyzed and the investment portfolio sick. "Penny wise" might have a "pound foolish" problem....
|
|
| |
|
|
|
|
Property Investment – How To Calculate Rental Returns
Before purchasing an investment property for rental purposes it’s always a good idea to calculate whether it will be cash flow positive or cash flow negative. That is, will the property generate an income (positive) or will it require a monthly cash injection (negative)?
This article will outline and briefly describe many of the main Purchasing and Annual Holding Costs incurred when buying a rental property. Please keep in mind that these items will vary from country to country and they do not take into account personal tax implications.
- Purchasing Costs
Purchase price – the agreed price for which the property will exchange hands.
Renovation Costs – money budgeted for renovations prior to the property been made available for rental.
Agents Fees – in some countries it is common practice for the buyer to pay some or all of the real estate agent’s selling fees/commission. However, in most cases these fees are paid by the vendor.
Stamp duty – a duty placed on the purchase of a property charged by the local government for the registration of the property into the new owner’s name.
Mortgage Application Fees – charged by lenders upon application to secure a loan to buy the property.
Travel Expenses – flights, car hire, and hotel costs incurred when travelling to personally inspect a property.
Solicitors Fees – payable to the solicitor for all of the relevant legal work for the transfer of the property.
Research – books, local suburban reports purchased to research a suburb.
Accountants Fees – the property may be purchased in the name of a Trust or Company. There may also be a crossover here with the solicitor’s fees.
Council Rates Cutover – A vendor may have paid rates up to a time after the transfer of the property. The amount is then split between the buyer and vendor on a pro-rata basis.
Independent valuation / Engineers Report – a vendor may choose to pay for their own independent valuation or engineers report to highlight areas of concern.
Miscellaneous – this will include postage, telephone calls etc. It’s also worthwhile to include a contingency should some of the above costs be more than anticipated.
- Annual Holding Costs
Mortgage Repayment – payable to the mortgage lender to repay the loan used to purchase the property.
Property Management Fees – if a
professional property manager is appointed they will either charge a percentage of rent or a monthly flat fee.
Council/Municipal Rates – charged for collection of waste and upkeep of local services. Sometimes these are paid by the tenant.
Maintenance – costs for repairs and maintenance on the property and it’s fixtures and fittings.
Bank Fees – account keeping fees charged by the bank.
Landlord Insurance – protection against theft, damage, non-payment of rent, legal costs.
Letting Fees – some property managers may charge a letting fee for finding new tenants.
Pest Control – protection against pests and termites.
Cleaning – the property may require a thorough professional clean in preparation for new tenants.
Travel Expenses – incurred when visiting the property at times such as showing it to potential tenants or collecting rent.
Local Income Tax – may be charged by some local governments for the rental profits after any allowable deductions.
Land Tax – an annual tax on the value of the land on which the rental property is built.
Accountants Fees – payable for the administration of legal structures if a property is owned by a Trusts or Company.
Miscellaneous – again, this will include a contingency should some of the above costs be more than anticipated.
Once all of these costs have been factored into your calculations you will be able to determine whether a property will be cash flow positive or not.
Visit http://www.bulgarianpropertybuyer.co.uk/freetrial.htm to download your free “Estimated Returns Calculator” which allows you to quickly calculate the net return on a potential investment property.
In closing, it is imperative that you seek professional legal advice before you make any investment. This will clarify the process according to your own personal situation and the county you are investing in.
Happy investing!
About the Author: Tim Wright is an international property investor and regular article contributor. He is the author of "Bulgarian Property - The Overseas Buyers' Kit” available at http://www.bulgarianpropertybuyer.co.uk
Source: www.isnare.com
|
|
|
|
|
|