A buy to let guide for Turkish real estate
Turkey has shown real signs in recent months that it is still going to stay a popular destination for those looking to invest in a Buy-to-Let. Since 2013, the number of foreign investors purchasing property in Turkey has increased by 66%.
What needs to be done in order to become part of the property rental market in Turkey?
What sort of rent can be expected?
Investors often ask these questions so the following guide will help to bring together useful advice that can put investors in the know.
Managing a property in Turkey is dependent on several factors. The first is whether the investor plans to live in Turkey for a long period of time or whether the property will be purchased and then managed from the home of the investor so that the property is seen as a holiday home or an investment.
If it will be managed from a different country it is wise to use a property management company that is located in Turkey to deal with everything related to the property, such as paperwork, the tenants as well as any problems that may occur. There are advantages to using a management company located in the same area as your property. It will bring an element of security as the property will be watched, they will be able to converse with the tenant as there will be no language barriers, they will deal with all administrative tasks and they will deal with short term and long term lets. The usual cost of this is one month’s rent so putting that amount to one side will ensure that costs are covered.
When it comes to putting the rent in place it is wise to arrange to have a contract drawn up, this will ensure that you are protected should anything go wrong. A deposit should also be taken from the tenant to cover any damage and repairs, this figure usually sits around the cost of one month’s rents. The agreement with tenant should cover the cost of the rent as well as any other costs that may be involved.
To understand the amount of rent that will be charged it is important to find out what other properties cost in the area as well as the demand, however, the condition of the property will play a part in the final rental figure. If the property has been modernised and is located in a sought after area then it is possible to charge a higher rent. Research is key though, and it is always vital to understand the demand to ensure that the investment will provide a return.
If a management company is used then they will be able to deal with the deposit as well as provide information on the rental market and deal with any problems that may occur throughout the tenancy. Turkey, unlike the UK seen tenants paying 6 months rental in advance and it is also usual for them to pay a further 6 months once they have confirmed that they wish to go ahead with the rental.
If the property has been bought as a holiday home then the property will have to be set up in a way so that is it prepared for holiday makers who may want to rent for periods ranging from 1 to 3 weeks. Usual practice for this is to charge 40% of the total cost as a deposit so that the property can be held for them and then request that the remainder is paid 3 weeks before their arrival. This is a good plan as it also provides a back- up should the rental fall through.
Any income earned through renting will be susceptible to tax, in the same way as it is in the UK so the property will have to be registered with the local tax office when the title is transferred. It is possible to manage the accounts in person or if preferable hire an accountant who understands the tax rules in Turkey.
When it comes to offering a property to rent in Turkey, it is often a simpler task than it is in other countries but there are some potential downsides that could cause problems.
Credit checks are not carried out so this could be problematic when selecting a tenant whilst the laws favour the tenant in general. When it comes to evictions, this can take up to 1.5 years in some cases and they do not have to vacate the property at the end of a fixed term lease if they are not informed at least 15 days before it expires.
When compared with other locations, Turkey has a lot to offer with far better prices. If the main factors are covered and a reliable property management company are put in place then there is every chance that the property can turn into a profitable investment.
Author Bio
Hopwood House are experts in property investment in the UK and across the globe, with properties for sale in Turkey, Dubai, Egypt, Spain and the US.
