Passive income is money you earn without having to actively work. It can help you achieve financial freedom, fund your retirement, pay off debt, and more. One of the best ways to generate passive income is through rental properties.
Rental properties have many advantages as a passive source of income. Here are some of them:
Rental income:
You can collect rent payments from your tenants every month, which can cover your property expenses and provide you with a profit. Rents tend to rise over time, especially if you invest in a good location, while the repayments on the property remain the same when buying.
Capital gains:
You can sell your property for more than you paid for it. Property value tends to appreciate over time, especially if you improve the property and maintain it well. Since last year, the price of real estate in Hurghada has increased by 20% or more.
Building Equity:
You can pay off your home equity loan over time with the rental payments you receive, increasing your equity in the property. Equity is the difference between the property's value and the amount you owe on it. You can use your equity to buy another property.
However, rental property is not a get-rich-quick scheme. They require some work and involvement from you as the owner. Here are some of the challenges and responsibilities you may face:
Finding and screening tenants:
If possible, find reliable and trustworthy tenants who will pay rent on time and take care of your property. It's also a good idea to check their credit history, income, references and background.
Management and maintenance of the property:
It is necessary to ensure that your property is in good condition. You must also deal with any repairs, claims, emergencies or disputes that may arise. This can be stressful and expensive, and you may have to deal with demanding or disgruntled tenants.
Find a property manager:
You can hire a professional property manager to handle the day-to-day care of your property for you. This may save you time and trouble, but it won't be free. Property managers usually charge a certain percentage (from 20% or more) of the rent or a flat fee (for long-term lease) for their services.
It is important to find a serious and competent administrator who will protect your interests and maximize your income and will not only see earnings in your property but also great worries and responsibility.
If you want to succeed in rental property investing, plan ahead. Here are some tips to get you started:
Do your market research:
Find out the desirable popular location for your rental property. You should know rental supply and demand, vacancy rates, rental rates, appreciation potential, crime rates, amenities, and more. You should also compare different properties in terms of price, condition, size, features, return on investment and more.
You can find rental prices on booking.com
Set your budget and funding:
You need to determine how much money you can afford to invest in buying a property and how you will finance it.
In Hurghada, you can buy properties under construction with completion within a year with a minimum deposit of 30%, others within 3 years.
If the property is handed over later, the deposit is from 5% and the installments can be for up to 7 years.
Build your team:
You need to work with professionals who can help you with various aspects of rental property investing. They can be a real estate agent (who can help you find and negotiate deals), a lawyer (who can help you with contracts and legal issues), an accountant (who can help you with taxes and bookkeeping), an inspector (who can help you assess the condition real estate), a contractor (who can help you with repairs and renovations), a property manager (who can help you with management and maintenance), and more.
Rental prices for real estate in Egypt
The price really depends on the location, quality and equipment of the property
Prices at the Sheraton (hadaba, madares) range from 20-30 euros per night. At a monthly rate of 300-500 euros.
Kawther from 30-50 per night. From 400-600 euros per month
Sahl Hasesh from 50-80 Euro a night per month from 600 Euro above
El Gouna, Soma bay, Makadi like Sahl Haseeh.
It is a good idea to compare prices for the given property on online portals
Booking, trivago, Airbnb.
Season and rental occupancy in Egypt
In Egypt, the season is all year round.
But there are dates when the apartments are more occupied.
During the holidays (summer, spring, Christmas)
And the Egyptian holidays (end of Ramadan, Eid el fitr) are also important, when rents increase up to twofold due to the great interest of Egyptian clients.
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👉Complete the equipment of your property and based on your budget.
👉Management of the rental of your property.
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