All real-estate investments call for reflection and analysis. In order to acquire a property that can be rented out profitably, various elements inevitably have to be taken into account, such as the location, the surface area, the price, the energy performance and the liquidity of the property. BuyerSide, your real-estate purchasing consultant, helps you make a success of your future acquisition by giving you a few tips.
The location of the real-estate property
This is the most important criterion to take into consideration. In fact, the location will weigh very heavily when it comes to letting your property. Urban centres remain very popular thanks to their proximity to facilities such as public transport, shops, schools, healthcare centres, etc. A great many tenants are in search of housing located at the heart of a strategic place. This is why city centres are always in demand. However, another element has been added to the proximity of facilities: the presence of green spaces. It’s true to say that tenants’ selection criteria have altered since the health crisis. Being close to the workplace is less important than it was because many people are working from home. As a result, properties located on the edge of big cities are becoming far more attractive.
The surface area: opt for bigger properties
The surface area and the location of a property are necessarily complementary. For example, buying a studio will make more sense in Ixelles or in the centre of Brussels, where there is a high concentration of students or expatriates in search of small spaces for a limited period, than in Uccle or Auderghem. The same applies as regards letting furnished properties, which are in greater demand in the centre than elsewhere.
So if you wish to invest in a property where the tenants will, on average, stay longer, it is advisable to go for apartments with several bedrooms. Since the health crisis, more spacious homes (with a bedroom that can be used as an office) including an outdoor area (terrace, garden) have a greater chance of being easily let.
Bigger apartments (three or four bedrooms), which were previously not in great demand, have become easier to let since the rise in apartment- or house-sharing.
The ideal solution, if your resources allow of course, is still to buy a building suitable for letting that contains units of several different sorts. This will give you a variety of apartment types under the same roof and avoid all the worries and charges linked to joint ownership.
The purchase price and the rental return
When you buy as an investment, it is advisable to analyse the building’s return. If the purchase price is too high compared with the rent that you can obtain from it, then the investment will obviously not be advantageous.
New buildings are inevitably more expensive than old. And with reason, as VAT of 21% applies to the purchase. But even though old real estate is less expensive than new, the cost of any renovation work must be analysed. This will vary depending on the condition of the property. Before buying a property as an investment, we therefore advise you to examine the acquisition costs, the work required, the various charges, the rent and the purchase price.
To calculate the gross return on a real-estate investment, simply apply the following formula: Rent x 12 (months) / purchase price + purchase costs + work.
For the net return, deduct the withholding tax on property, the insurance and the reletting costs from the annual rent.
The energy performance of the building (EPB)
Many potential tenants check the energy performance of the property. And rightly so, since the higher the performance, the lower the heating bills will be.
The same applies to the charges. In fact, the lower the charges, the more attractive your property will be to tenants. For the owner, if the joint ownership charges are small, this is definitely a great advantage because your return is higher. Finally, given that an EPB score of ‘C+’ needs to be attained by 2050, it is best to purchase a property that is well insulated or else set aside a renovation budget in order to meet future requirements.
The liquidity of the real-estate property: investing in a property that corresponds to the current rental market
It’s a matter of acquiring a property that is in line with the current real-estate market and that meets the needs of a large number of potential tenants. As explained previously, it will be easier to find a tenant for a liquid property. In this case, you avoid vacancies and optimise your return.
To sum up, if you wish to invest in real estate in 2022, go for housing with an attractive living area and an outdoor space, near all the amenities and green spaces, with low tenant’s charges.
The properties on the market usually go very quickly. Contact us to gain access to our off-market properties!