How to Turn Turkish Property into a Goldmine: Tips for Maximizing Rental Income

Turkey is a country that attracts foreigners with its beauty, pleasant climate, rich culture and developing economy. Many people dream of living or spending their holidays here, and some even decide to invest in Turkish real estate. But how can you make sure that your investment brings not only pleasure, but also a stable income? In this article, we will tell you how to choose the right property that will be in demand and profitable, as well as how to maximize rental income.

Let's look at a specific example that demonstrates how profitable investing in Turkish real estate can be. One of the most popular and sought-after properties is located in the tourist area of Alanya - Turkler. There is a shopping center here that sells commercial premises of various sizes. Let's take a store with an area of 60 m², the cost of which is 192,500 euros. This establishment already has a tenant who pays 16,042 euros per year for rent. This means that your annual income is 8.3% from the value of the property. At the same time, the payback period for the store is only 12 years, and the rent is fixed in euros, which provides protection from currency risks. In addition, the value of the establishment grows annually by 8-10%, which helps increase your capital. If you add up the rental income and the growth in the value of the property, you will get 16.3-18.3% per annum in euros - this is much higher than the income from bank deposits or other investments.

This is just one of the successful examples of investing in Turkish real estate. There are many other properties on the market that offer guaranteed rental income. You can choose the one that suits your budget, payback period and level of profitability. The agency is ready to help you make the right choice in the real estate sector so that you can receive a stable and reliable income from your investment.

Income and expenses when investing in Turkish real estate

Before we dive into the details of possible investment options, let's look at the main factors to consider. This will help you understand when you can set a higher price.

• The closer your property is to the sea, city center, attractions and transport, the greater the demand for it, which allows you to set a higher rental price;
• Turkey has high and low seasons that affect demand and prices for real estate. Summer is the high season, when many people come for vacation. Winter is the low season, but there is an opportunity to attract other categories of customers, such as students, businessmen or retirees;
• The better the condition of your property, the more likely it is that tenants will like it. Provide the property with everything necessary for comfortable living: furniture, appliances, dishes, bed linen, Internet, etc.

However, don't forget about the costs:

• There is a rental income tax in Turkey. It is 15-35% depending on the amount of profit;
• If you rent out your property through an agency or online platform, you will have to pay a commission (usually 10-30% of the rental amount).

To reduce your tax bill, include property expenses such as repairs, furniture, and utilities in your declaration. You can also save on commission by renting the property directly to tenants. It is important to draft the contract correctly to ensure flexibility in setting the rental price and renewal terms.

Short term rental property

Short term rentals provide a unique opportunity to rent out your property for periods ranging from a few days to several months, allowing owners to maximize their profits.

One of the main questions that property owners often ask is the question of the rental price. According to market analysis, the rental price of real estate in Turkey starts from 30 euros per day. If we talk about seasonal rent from May to October, then the cost per month will be approximately 900-1200 euros. At the same time, in the period from November to April, the price decreases and is from 20 to 25 euros per day.

However, to get the most out of your property, you need to take into account the latest changes in legislation regarding short-term rentals. According to the new rules, short-term rentals have become a strictly regulated process. Now short-term rentals have their own characteristics that you need to be prepared for. Among such requirements, the legislator highlights:

• Mandatory consent of all apartment owners in the building for short-term rental;
• Proper equipment of the apartment (availability of necessary household items, furniture, repairs);
• Availability of a license for short-term rental.

Although the process of renting out an apartment for a short term may be somewhat more complicated, it brings the owner significantly more income.

Long term property rental

Long-term property rentals in Turkey cover periods of 101 days or more, or 6 months or more. There are only two mandatory payments for long-term rental owners:

• Property tax;
• Tax on rental income from real estate.

Tenants pay rent, electricity and water meters, and cleaning after themselves. Internet and infrastructure usage (aidat) fees depend on the rental period. For example, when renting for 4-5 months, these expenses are covered by the owner, and for a longer rental period, by the tenant.

Let's look at a concrete example. Let's assume that we rented out an apartment for 550 euros per month, with the apartment costing 80,000 euros. The annual rent is 6,600 euros. Of this amount, the owner can write off 600 euros as aidat and 1,000 euros as a non-taxable amount per year. The tax on the remaining rental income will be 30,000 Turkish lira, which at today's exchange rate is approximately 1,000 euros.

So, the rental income for an 80,000 euro apartment is about 6,600 euros, leaving 5,600 euros after taxes. It is important to note that on average, property prices increase by 8-10% per year, which allows you to increase your capital by this percentage per year.

Commercial real estate

For those who prefer guaranteed cash flows and stable 8% annual passive income, it is recommended to pay attention to commercial real estate. In this case, we are talking about leasing specific premises and stores in shopping centers. Here are the advantages of this type of investment:

• The annual rent amount can be determined by dividing the cost of the premises by 12 months. This allows you to plan in advance how much income you will receive throughout the year;
• Immediately after purchasing commercial real estate, the lease terms come into effect. The rent is paid for a year in advance in the first half of January. This ensures stability and reliability of income;
• The rent amount is fixed in euros and the contract specifies the dates for receiving payments each year, which helps you plan your budget in advance;
• The costs associated with rent (taxes, utilities, electricity and water) are borne by the tenant. The owner of the property is obliged to pay only 0.4% of the cadastral value, which is on average up to 200 euros per year;
• Each tenant furnishes the premises at their own discretion and at their own expense, so the owner does not bear the costs of repairs, unlike when renting out residential premises.

Renting out commercial real estate in Turkey provides ample opportunities for obtaining stable and profitable income. Investments in shops and premises in shopping centers are significantly simplified and provide guaranteed profits.

Buying real estate for resale

Buying and flipping real estate is a strategy where you purchase a property with the intention of selling it later for a higher price. This method is suitable for those who are looking to make a quick and significant return on investment without having to rent or maintain the property. Buying and flipping is especially effective in the early stages of construction. The average increase in the value of a property from the pencil stage to completion is about 30%.

The advantages of this type of investment:

• You can pay for the purchase in parts, without any additional interest. Usually 30% of the cost is paid upon signing the contract, and the remaining amount - during construction;
• When reselling real estate, there is already a buyer at the time the house is put into operation, and the ownership right is registered to him through an assignment agreement. This allows you to avoid purchase and income taxes.

If you are buying a finished property for resale, it is important to improve its condition to increase its value and attract buyers. You will have to pay aidat, as well as take into account the annual property tax, which is 0.2-0.4% of the cadastral value, which is usually lower than the market value.

Calculating rental income from real estate

To calculate net rental income, subtract all expenses from gross income. Gross income is the amount you receive for renting your property. Expenses include taxes, fees, maintenance, repairs, and other expenses. The formula for calculating net income is as follows:

Net Income = Gross Income – Costs

Let's look at an example. Let's say you rent out an apartment in Alanya for a short term. The price of the apartment is 80,000 euros, and the rent is 50 euros per day. On average, the apartment is occupied for 80% per year. Then the gross income can be calculated as follows:

Gross income = 50 * 0.8 * 365 = 14,600 euros

Now let's take into account the costs. Let's assume that you pay 20% in property rental income tax, 20% in agency or platform fees, and 100 euros per month for maintenance and repairs. The amount that is tax-free in Turkey in 2024 is 33,000 Turkish lira, which is approximately 1,000 euros. You can also deduct the maintenance costs of the apartment. Then the costs will be:

Agency or platform commission = 0.2 * 14,600 = 2920 euros

Costs for apartment maintenance and complex service = 100 * 12 = 1200 euros

Tax-free amount = 1,000 + 2,920 + 1,200 = 5,120 euros

Taxable amount = 14600 - 5120 = 9480 euros

Income tax = 0.2 * 9480 = 1896 euros

So, your net income will be:

Net income = 14,600 – 2,920 – 1,200 – 1,896 = 8,584 euros

Your rental income from the apartment is 11% per annum, and the payback period for the property is 9 years.

Let's look at another example. Let's say you rent out an apartment in Alanya for a long term. The price of this apartment is 80,000 euros, and the rent is 550 euros per month. If the apartment is fully occupied for a year, your gross income will be as follows:

Gross income = 550 * 12 = 6600 euros

Now let's look at the costs. You pay 20% tax on rental income, but the 1,000 euros are tax-free. The tenant pays the rent and utilities, but you can write them off from the rent (600 euros). Then your net income will be:

Net income = 6600 - 600 - 0.2 * 5000 = 5600 euros

As you can see, different approaches can bring great profits if you choose the right property and manage it wisely.

The agency is ready to provide you with assistance on any investment-related issues. To receive individual advice on purchasing real estate in Turkey and calculating its profitability, contact us at +905495287051 or by email at infouptrendhomes@gmail.com