Buy to Let properties are getting more and more attractive investments for many reasons: as a matter of facts, they will let you enjoy your second home in Italy and get a good income while you’re not using the house.
Let’s understand together how many types of Buy To Let properties there are and how much return you can achieve.
There are many kinds of Buy To Let Properties, like long-term rental apartments, holiday homes, hotels and B&Bs, etc. Our favorite is the holiday villa because it gives you a lot of flexibility and a good income in just a few months.
What are the main advantages of a holiday rental villa?
There are many advantages with a holiday rental villa. Among the main ones we list:
- First of all, it is your second home for the holidays: you can choose when to go and enjoy it, whether in the spring when the flowers bloom, in the summer for a nice dip in the pool or for the Christmas holidays. For the rest of the year, it will give you an effortless income.
- You can set a weekly rate: the more services you offer, the higher the rate can be. The advantage, compared to a B&B formula, is that you only have check-ins once a week or every two weeks.
- You are not bound by long-term rental contracts and you can stop whenever you like, regaining full possession of your property, perhaps to live there permanently.
What is the gross yield and how can it be calculated?
The gross yield is the ratio between the income you get from the rentals and the purchase price, expressed as a percentage. Calculating the gross yield is quite simple: just multiply the annual income by 100 and divide it by the purchase price of the property and you get the percentage.
For example, let’s suppose you buy a property for € 1,000,000.00 and get € 90,000.00 per year, your gross profitability will be 9%.
Why we consider it a gross yield? Because there are a few factors, which influence this percentage: cleaning and gardening costs, running costs (electricity, heating, etc), maintenance works, just to quote a few.
How shall I calculate the net yield?
In order to calculate the net yield, you need to take the annual income, deduct all the costs, multiply by 100 and divide the figure you get by the purchase price.
If your business plan is well done, you’ll see that the yearly costs will be completely covered by the rental fee and you’ll get quite a good income, which will pay back the purchase cost quite quickly.
What are the key factors when buying a Buy to Let property?
Among the key factors, you certainly need to take into consideration the location: keep in mind what target of guests you are aiming to attract, and it will be easier to identify an ideal location to buy your property.
If you are aiming to rent out your villa to groups of families with children, or to couples then you may prefer a quiet location in the countryside. This kind of guests normally prefer a villa with swimming pool, playgrounds and other tourist attractions in the surrounding area.
On the other hand, if you’re aiming to rent it out to young people, then you’d probably better buy a beachfront or seaside holiday property. The initial investment will be higher, but you will achieve significantly higher rental incomes
For more information or other insights, we at Italian Luxury Asset will be happy to assist you.