To invest in rental property, the investor has the choice between renting his empty or furnished property, according to his personal projects and his desires for development. In both cases, he will realize net financial profits.
However, nowadays many investors make money by renting out houses, apartments, rooms in their dwellings or even their room beds to travelers from all over the world.
In addition, there are a hundred travelers in the world, who rely on a simple budget to travel as well as to meet the local population. All this is in order to gain free advice and without spending the cost of the guide, but also, to benefit amply from traditions and customs.
These rentals are, in fact, at cheaper prices in comparison, for example, with hotel prices. To find out which is the most profitable, you have to make a detailed comparison of furnished and empty rentals.
Higher prices in furnished rentals
Generally, the rents of furnished rentals are more and more expensive in comparison with those of empty rentals. In this regard, a rental with a good location and a satisfactory surface, while being furnished, is rented from 10 to 30% more expensive than being empty. Indeed, the gross rental yield, defined as the annual price divided by the purchase price, will therefore be higher if the rental price is high.
Moreover, to assess exactly what kind of rental is profitable, you have to learn how to calculate net profitability to properly accommodate rental performance. In fact, it is this profitability that measures the income that an investor can obtain.
However, the calculation of the net profitability is to subtract the rental income, the property tax and the co-ownership charges in addition to any management fees and the cost of the insurance covering the rental deficiency and the prices due for investors who wish to be sure.
Renting empty a rental is also earning money
Investors in empty rentals also benefit from significant returns. Indeed, the rental of empty apartments reduces the risk of rental vacancies. The lease contracts signed for an empty rental are for three years, while for a furnished rental is from one year to nine months. Landlords receive rental prices regularly, thereby increasing the return on their investment.
In addition, when the premises are rented bare, the maintenance costs of the empty rental are lower compared to maintenance in furnished rented premises. The repair or renewal, in general, of equipment and repairs, after the departure of the tenant, are more expensive.
In general, a furnished rental is considered the most profitable rental compared to an empty rental. The rental costs in the first type of investment are greater and the tax system is considerably favorable.
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