How much is the expected return for an investment in real estate?
When you buy a property for investment purposes, generally you tend to rent it to a third party in exchange for paying a monthly rent. With the elimination of fair rent the lease price is determined by free bargaining between the landlord and the tenant. On average, the gross return of investment property in one year (two rooms rented to third parties) hovered around 5-6%. It is a given strongly indicative that can vary depending on many factors and local parameters (for example in cities is higher by a few percent due to the high demand). It should however be considered that you are talking about gross yield. In addition to revenue (rent) the property owner will have to support each year a number of housing costs and tax charges. The net yield of an investment property is halved generally 3%. In any case, the net return on an investment in bricks and mortar is presented, however, higher than the net return on an investment in government bonds (Bot, BTP). E 'instead of a lower equity investment (but also less risky).
How to increase the performance of the investment property
The net investment income in the brick is given by the following factors:
purchase price of the
rent
costs and tax burdens
revaluation of the area
The owner of a property has no way to act on the factor 'costs and taxes'. For simplicity, just think that 50% of the gross returns received from renting a property goes to cover costs and fees. The rent is very maneuverable. It can be higher or lower than average but hardly differ much from the average price to lease an area for apartments with similar characteristics. Instead, what affects the extent of the return on investment is the purchase price of the property. If the buyer has made a good deal by buying the property at a price lower than its market value, you can rent it at the price of renting the area and average net return from investment property to get higher and higher in a capital gain when she decides to sell the property. Being able to predict the revaluation of an area is much difficult. If there is a future revaluation of an area (eg underground, moving companies and on-site offices, parks, etc..) Real estate prices tend to increase much earlier than the completion of the work because of the announcement.
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Source:
Italian version of ReteArchitetti.it