Rental properties. A profitable investment?
The purchase of properties has experienced a large increase in the last few years. Flats, houses, premises, etc are being purchased to be offered in the property rental market. Such a growing trend is partly due to the increased profitability of rental properties, and partly to the security granted by the rental investment compared to other types of investment that offer a greater liquidity but also have a higher
risk. Other factor to be taken into account is the good results achieved by the real state companies listed on the stock exchange investing on rental assets.
After several years of rising, the profitability of the rental properties is now at around 5%; nowadays a more than acceptable result which is difficult to find in other market products. Besides this fact, you have to keep in mind that such an investment is a safe investment so it is currently a unique product on the whole.
In a city like Palma de Mallorca the number of citizens living in rental properties has increased significantly compared to owner occupiers. Such a growing trend is mainly due to the difficulties faced to get a mortgage and to the problems faced by property acquirers who were unable to cover the mortgage payments and who have not only lost their property but also are indebted to the performing banking institution.
Despite the favourable perspectives it is not advisable to freely buy properties for rental, since market can vary reducing profitability. The actual situation offers a good opportunity for such a kind of investments but investors should avoid excessive mortgage risks by making an appropriate selection of the property to be purchased and setting funds aside for other investments. Do not forget that you can also invest on rental properties through real state investment companies, since in the event the market trends vary and profitability is reduced, it is easier to sale shares than a property.