Purchasing a buy-to-let flat offers significant advantages for protecting and growing your assets.
A flat as an investment generally requires less of your own capital to be contributed compared to a house.
It is therefore the ideal type of investment property to start your own real estate portfolio.
Discover below the greatest advantages of this type of buy-to-let property and be inspired by an interesting location for it.
Table of Contents
- 1 Why rental flats are on the rise
- 2 Advantages of purchasing a buy-to-let flat: Part I
- 3 Advantages of investing in rental flats Part II
- 3.1 Purchasing a buy-to-let flat as a hedge against currency devaluation
- 3.2 Hiring is in vogue among younger professionals
- 3.3 Locations where demand exceeds supply: Interesting
- 3.4 Significant capital accumulation for long investment horizon
- 3.5 Possible capital growth is nice bonus
- 3.6 Purchasing a buy-to-let flat for your retirement years
Why rental flats are on the rise
Whether you are taking the plunge and buying an investment property for rent for the very first time.
Or you may already have gained experience and wish to expand your real estate portfolio.
In both situations, the advantages of a flat as a buy-to-let property are endless.
Flats for rent continue to attract and lure a large crowd of retail investors.
This type of property is still a fantastic option for making a successful investment in the long term.
People need somewhere to live so there will always be a demand for clean and decent housing units for rent.
In addition, real estate is something tangible so you can see and touch it.
In some cities, there is also scarcity and a huge licensing problem, which should also push up the prices of such housing units in the longer term.
Advantages of purchasing a buy-to-let flat: Part I
Investing in real estate is one of the most reliable sources of investment.
This is because it is a tangible good that can be understood and controlled to some extent.
As soon as you look into real estate as an investment vehicle, combined with a defensive approach, you will immediately see its advantages.
Revenue from two channels
One of the biggest advantages for an investor in buy-to-let properties is the diversified yield components.
Purchasing a buy-to-let flat, for example, allows you to earn an income (and a return) in two different ways:
- The first income stream is through the rent paid periodically by the tenants of the property, and
- A second source of income is long-term capital growth (this is not a certainty and depends on where the property is located)
Regeneration areas and reconversion projects are increasingly in demand in various cities.
Given the scarcity of decent habitable property, combined with hassle and permit problems, property prices and rents are consistently rising.
Buying is not for everyone anymore
The time when everyone could buy their own home is behind us.
In reality, real estate is only getting more expensive, which is less interesting for people who cannot cough up the necessary funds to get a loan.
As a result, property rental is on the rise.
For investors in rental flats, this is definitely an interesting fact. It reduces the likelihood of your rental unit becoming vacant.
Fact: Even if a residential unit remains unoccupied for a while, the loss of rental income during that period can be compensated by the long-term increase in the value of the property.
Tip: Consider an all-in formula including a steward and rental guarantee to invest money in a flat completely carefree.
Reduced management and maintenance costs
Investing in flats is a great way to reap the benefits of rental property.
The cost of a flat is usually lower than that of a house or villa.
This means that as a real estate investor, you are faced with a lower entry threshold in terms of minimum equity to be invested.
Moreover, more compact housing units such as flats are more convenient for building up a property portfolio in a more diversified and effective way.
- Find out who the trustee of the apartment building is and what the costs are
- Ask questions and avoid hidden costs that could confuse your return simulations afterwards (such as obligatory contributions to a reserve fund!)
- So find out what all the costs of the trustee are if any
Certain locations are real tenant markets
Investors can benefit from finding reliable, long-term tenants.
This way, you as an investor/owner are assured of a steady and predictable source of rental income.
If you know the market well and do your research, with the right flat in the right location, you can enjoy the benefits of investment property quite financially.
It is therefore crucial to seek out tenant markets and invest in premium A locations that are stable in value and in terms of tenant demand.
Brussels: Where flats for rent pay
Are you still looking for inspiration about a suitable opportunity in the right location with a tenant market and with capital gains potential?
Then take a look at the offer of Apartments in Brussels as an investment to let, which will undoubtedly help you to make the investment decision of a lifetime.
Brussels is in fact the best place to invest in real estate in Belgium [AVAILABLE SOON] in terms of combination of investment parameters.
Advantages of investing in rental flats Part II
Investing in buy-to-let real estate for rent offers other advantages:
Purchasing a buy-to-let flat as a hedge against currency devaluation
A flat for rent is an investment whereby a private individual buys a flat in order to rent it out to tenants.
Now that house prices are rising almost everywhere as a result of large-scale currency depreciation (due to quantitative easing), more and more people are looking for alternatives.
After all, parking assets in EUR or USD is pure financial self-destruction.
These currencies are now being reprinted on a conveyor belt without any link to gold (which was once the case).
The euro and dollar currencies are therefore rapidly diluting, which has an extremely negative impact on the purchasing power of your assets.
Add to this the extremely low (and sometimes even negative) interest rates, and buying a flat for rent can be a great alternative to saving money in a savings account.
Hiring is in vogue among younger professionals
The attraction of a big city is great for anyone looking for a well-paid job.
That is why there is a healthy tenant market in various major cities with a stable and growing demand for quality residential units for rent.
In and around city centres, buy-to-let properties are interesting in terms of location because the tenants can live and work close by.
After all, why commute for several hours a day when it can be a quality and pleasant life in or around the city?
Studios and flats are therefore very popular with students, young professionals and young families.
Locations where demand exceeds supply: Interesting
The demand for rental flats is high in locations where there are many jobs at good conditions.
Although the property market fluctuates constantly (but much less than the stock markets), there will always be a demand for residential units for rent.
For an investor, it is especially important to choose locations where the demand for decent residential units for rent is greater than the supply.
Such an imbalance between supply and demand is to the advantage of owners who rent out.
This therefore offers excellent opportunities to invest in a property for rent.
In addition, the stable and increasing demand for residential units for rent is causing property prices to rise.
Significant capital accumulation for long investment horizon
Purchasing a buy-to-let flat can also help you build up considerable wealth in the long run.
Firstly, you can buy a flat with a limited equity by financing it largely with a loan.
You can then repay this loan (capital repayments + interest) with the incoming rents.
In other words, the tenants can repay your loan and at the end of the day you are the 100% owner of the flat!
While you yourself may have originally invested 25 or 30% of the purchase price! A good investment? Definitely!
Possible capital growth is nice bonus
In the long run, a flat may increase in value.
Capital growth is the profit you make on the investment, measured by the increase in market value.
Investing in new developments or reconversion projects in emerging areas can increase the value of the property in the long run.
Smart investors invest in areas that expect regeneration or are in solid growth because of the influx of residents and job creation.
Of course, capital gains at a later sale in the future is not a certainty.
So stay conservative with your expectations and return simulations and focus mainly on the return from rental income.
An added value in the future is then a pure bonus.
Purchasing a buy-to-let flat for your retirement years
Property prices rise and fall over time.
But in the context of pension planning, this does not matter much.
For what do you need in your old age? Indeed, passive income for comfortable enjoyment!
So, purchasing a buy-to-let flat can be a wise investment to generate additional monthly retirement income for yourself.
It does not matter much whether the flat in question is falling or rising in value.
For additional pension income, the monthly rental income from the property counts.
What the value of the property does in terms of fluctuation does not make much difference in terms of rental income.
Tip: If you go with a professional partner for the management, possibly in combination with a rental guarantee, you can enjoy life as an owner without worries.
That, of course, can be a good thing in your old age!