One of my investor clients asked me if it’s faster Ñuñoa a rental in Las Condes, Providencia and Vitacura.
The answer to this question is as varied as the experiences each has had real estate brokers.
Generally, the profitability of real property is between 5% to 6% and is directly related to the amount invested. That is, greater investment less profitable.
As a practical example, a department whose value ranges in the $ 45,000,000, – the return should be between UF + 5% and 6% a year while a department whose value is close to $ 280,000,000, – the revenue produced is $ 1,000,000, – per month which means an annual return of approximately 4.3% UF +.
An apartment for rent should be depreciated over a period of 15 to 20 years. The higher price higher amortization period. Continuing the example above, the department of $ 280,000,000, – should be amortized in 20 years so the annual return should be skirting UF + 5% and the monthly rent should be in% 1,170,000 – subject to variation generally down.
In the case of the department of $ 45 million, depreciation should be closer to 15 years so that the expected return is UF + 5.5% and the monthly rent, therefore, would be $ 206,000, – approx.
It is important that these values can vary significantly depending on location, proximity to Metro, the area where equipment is located the property, and so on.
So much for houses and residential apartments as compared to the income earned by commercial premises and offices they can overcome UF + 12% per annum to be cases of UF + 17% per annum above commercial premises located in locations Top. But this is subject of another article.
And, responding to my client, I can indicate that the higher the rental value lower speed of placement.
I would like to clarify certain points, in this response to my client.
The decision to invest in real property is subject to several factors including which is the target market to which we want to focus our investment, investment capacity, the depreciation of property value may repurchase or what is the loss of value time?, what kind of tenant we want or can get according to the object of our investment properties, how many bedrooms, full services, if the building has more or fewer features or simply does not have, and so on., etc.
The lower the amount of our investment will have more risks in terms of quality of the building and the tenant. Probably the purchase value will be severely punished at the time of resale, the tenant will care less for what maintenance will be higher causing damage to the revenues from the income of the property, and so on. Contrary position, the annual yield could reach 12% UF +. In general these yields are obtained in departments located in the commune of Santiago with the innumerable buildings.
In contrast, a property of higher value produces a comparatively low income tenants are however more viable subject, careful with the property, generally do not have economic problems and can take the high values of lease, the property does not lose its purchasing time considerably, and so on.
The question then that all big or small investor to do when deciding your purchase is precisely whether leased faster than in Vitacura Ñuñoa if not desire to assume much risk in my investment, how long will it take me to recover my investment, if tenants are reliable or not, if you look after the property or will start after several months without pay, the resale value will be much less than that paid to buy, and so on.