Convinced real estate investors give a lot of arguments why such investments are profitable. Their opponents have no less convincing arguments about the advantages of bank deposits or other types of investments.
But it is noteworthy that often the top starter returns with a ready-made solution - and acquires real estate.
Real estate is often invested by people who prefer to get a small but stable income, rather than put money on a bank deposit and do not have confidence that they can get it back when they need it. Not to mention speculation on the stock market.
Those who have received money from the sale of other real estate, such as an apartment that was inherited and for whom it is almost the only property, prefer to invest in real estate.
In addition, until recently it was believed that, for all its reliability, investing in real estate is also quite profitable if it is rented out. The principle of 100 rents was often applied here - i.e. an investment is considered profitable if it pays off within 100 months of being rented out. However, this calculation has always been conditional, as it did not take into account depreciation costs (repairs, the need to buy furniture or appliances), periods of downtime and other.
But even if we take away these costs, the payback of yas acre real estate in Ukraine was still considered quite high - 7.5-9% or 11-13 years.
However, in most cases, when calculating the profitability was not taken into account one significant factor - the fact that the real estate market in Ukraine has been showing a downward trend for 5 years.
We decided to find out what the profitability of real estate investments is in fact.
To do this, let's simulate the following situation: in May 2009, a certain investor, right after the last price collapse, bought an apartment in Kiev in a condition that does not require repairs, expecting to rent it out. It is worth noting here that since 2009 the al hadeel abu dhabi prices for Kiev apartments have been determined in UAH, while the cost of apartments has been and still is calculated in dollars.
So, let's assume that our investor bought an apartment for $70,000 is an investment value. Let's also assume that he also rented it out for 4000 UAH per month, which at that time was equivalent to $500. This is a "dirty" operating income, which does not include depreciation costs and taxes. Thus, according to preliminary estimates, the investment should have paid off in 12 years. If we subtract the taxes and expenses for keeping the apartment in proper condition, the period will certainly be longer.