Hi there! Real Estate’s Value… It sounds like a serious topic, doesn’t it? Indeed, today we are going to talk about real estate and investments, its advantages and its disadvantages. What is better to be bought? A house or an apartment?
I think many of you know that it is a serious topic as it is associated with huge investments and risks. As much as it is connected with the property and its value. It is obvious then, that a bigger capital is needed in order of purchasing a house. However, does that mean that it is easier to buy an apartment undoubtably?
We will start with a mansion. I have decided to take a look at the houses in France.
You can notice that above we have a simple-created residence with a price of €499,950. Moreover, we have 6 beds (what is pretty important for our next steps). Hence, we can call it a villa. It is located in the countryside La Gondie and the distance to closest large cities - Nantes neither Toulouse - is quite big.
Therefore, according to the Limoges - so the closest city - a rent per month for the whole house is going to be €5,221. That is possible under the condition that all 6 beds will be rented. If we count different obstacles that might happen and we still stay focused on the positive result, we would take 67% from people who would rent a villa. That means that 4 beds would be rented from 6 available. Then, we would get a total income - €2,924. However, the profit depends on the contract and its conditions. For instance, if you agreed that clients pay just rent, you would get a lower income as you would be responsible for paying for water, electricity, and wi-fi. Nevertheless, you can imagine that you would have such a profit that you would not need to pay for utility bills. Then we can ask ourselves, how long would it take to cover the full amount of the purchase - €499,950? It is easy. If you get every month an income of €2,924 for the next 15 years, you would cover your purchase.
Let’s move on to the apartment. Below, you can see an accommodation for 2 people, listed for €139,500. Charente is the department of France in the region presented on the map below.
It seems to be alright. There are 2 beds, therefore the apartment is for 2 people. It is possible to get €2,250 per month. However, it is very unlikely for the price to be lower as the apartments often do not have separate bedrooms. Hence, even with 1 customer, it would be possible to earn a profit that is close to €2,000. We would need 6 years of inseparable €2,250-month payment in order to cover the purchase in this case.
To sum up, the apartment is better option as a lower capital is needed in order to start a business. Indeed, the house will bring a much higher profit as it has more space and bedrooms. But at same time, the house will have larger utility bills. Nonetheless, it is important to remember that after covering the purchase there will be almost a ‘’clean’’ income. I have used the word ‘’almost’’ because each of you can have unique agreements with customers corresponding to utility bills. Furthermore, if you buy a property in a right place, it grows in value. What is more interesting, you can create a leasing program. The customer would pay you all amount of money (periodically) that you have spent on the purchase plus income. Then, the house or apartment would belong to the customer – the new owner.