Buy-to-let Investment Turkey

Imminent changes to the law in Turkey regarding mortgages means that the demand for Turkish property is set to rise dramatically. People investing now can gear existing equity to take advantage of the low level prices offerred by developers before the property buying boom begins.

The term "Buy-to-Let" means simply the purchase and ownership of a property through normal procedure. Once completed the owner seeks to rent this property for a regular income usually exceeding annual mortgage repayments.

The "Buy to Let" Market in Turkey

Turkey is a very unique market. It has so much to offer the overseas property investor at this moment in time that it is becoming ultra popular with buyers looking for a new market in which to generate substantial return on initial investment. Usually emerging markets can present a high level of risk to an investor who purchases property with the view of using a "buy to let" investment model as they are relying on the growth of tourism to provide a constant stream of visitors wishing to rent their property. In Turkey this tourism is already very present and growing at an rapid rate, meaning that there is already a substantial and growing demand for "buy to let" property.

In addition to the massive potential for lucrative holiday rentals the huge Turkish population (70 Million ) also means that there is large scope for long term rental. Because of the quality locations and build specifications of many of the best developments along the Turkish coastline many Turkish nationals are keen to purchase holiday homes here and it is estimated that if EU inclusion is granted then Turkish nationals will generally have more available funds and be in a position to purchase quality property in quality areas.

The massive volume of tourism pouring into the main Turkey resorts is also creating a demand for long term accomodation for the tourist service industry, who are re-locating to the area to service the demands of the growing numbers of tourists.

In general the "buy to let" market in Turkey is very healthy and is a major reason why Turkey appeals to investors in overseas property.

Buy to Let (Example Only)

Case Study

John decides to purchase an investment property and he decides that the "Buy-to-Let" investment strategy is for him.

John has savings of around €80,000.

Investment property X is a new development with beautiful sea views and priced at €250,000.

Initially John pays his reservation fee of €3000 to hold the property.

Next John pays a 30% deposit of €75,000 (minus his €3000 reservation fee already paid)

Our investment specialists negotiate a mortgage for John for the remaining €175,000 at a rate of 2.75% (example only) this translates to a monthly mortgage repayment of €481.00 (interest only) which is equal to €5772.00 over 12 months.

John starts to rent his new property immediately and during the 3 months "High Season" he receives €2000 per month in rental income. These rental payments exceed his annual mortgage repayments and still leaves John with 9 months of rental potential to make a further profit.

If we assume that average rental rates for Johns new property are as follows (conservative figures):

  • High Season - €2000 Per Month
  • Low Season - €1300 per Month

Now we assume that John decides to go on a short term rental strategy maximizing his income over the High Period. He easily rents his property for 3 Months during the high period earning €2000 per month. After this period he has a delay in getting his next tenants but over the course of the year he rents his property for a further 6 Months only.

  • 3 Months x €2000
  • 6 Months x €1300

Total Rental income = €13,800 after subtracting the €5,772 Mortgage repayments John has made a profit of €8,028.

* During this example we have not included any rental management or community fees that may apply but also we have only assumed rental income for 9 months of the year and with many holiday makers now booking private accommodation via the Internet this is very achievable.

Short-Term letting v Long-Term Letting.

The final decision to be made by the "Buy to Let" Investor is which letting strategy to use. Its obvious that the highest income is made by the property owner by letting out short term during the high season. However you can off-set this against the increased overheads in constantly finding short term rental clients and the maintenance costs between clients. Long term rentals typically pay less on a month on month basis but usually require far less input from the property owner and the rental income is fixed over the course of the year. Some property owners choose to rent long term during the low season and then short term to higher paying holiday clients during the high season. The decisions to be made on your letting strategy are usually answered in part by the property you purchase. Some properties lend themselves to short term holiday makers and others to long term locals as a permanent home. Our experts will help you decide what's best and choose the property and rental strategy that's best for you.

The "Buy to Let" Strategy is not ideal for EVERY investor and it is essential that property for this strategy is chosen wisely as it needs to be a rentable property in a popular location to allow the investor to maximize income from the Investment.

The other benefit from this type of Investment is that during the time this property is being rented and earning the Investor an income and holiday home it is still appreciating in value at one of the fastest rates available. All in all the "Buy to Let" Investment model is a sound investment decision and Turkey is currently an ideal location to deploy this strategy.

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