Investing in apartments

The main idea of investing in apartments is that the investor buys an apartment and rents it and consequently, he gets rent income. The prices of apartments have been rising for decades, so the investor might also benefit from increased value.

Often a person who buys an investment apartment uses savings or heritage. It is also very common for an ordinary Finnish wage-earner to buy an investment apartment and raise a loan for the apartment from a bank and subsequently pay back the loan with the rent income.

During the course of the journey, he or she gains additional help from inflation, which makes the loan even smaller, and from the 100 per cent deduction right of interests in taxation. In time, the result of a very small personal investment is a dept-free apartment that yields a steady rent income.

The percentual rent returns on the capital invested in the apartment depend on the purchase price, on the amount of rent received and he maintenance charge.

Under the circumstances, it is very important to evaluate how much should be paid for the apartment and how much rent can be taken for it. Renovation needs in the apartment and possible future renovations in the apartment house must also be taken into account because they might constitute significant expenses.

It is also important to estimate how fast the apartment can be rented out and how often the tenant changes. Considering the profit, it is of course essential that the tenant actually pay the rent agreed. When Vuokraturva rents an apartment, the lessor gets an additional guarantee of rent payment for the first year. This greatly reduces the risks associated with the investment.

At best, an investor can earn relatively large additional profit from the possible increase in value of the apartment. However, things can also go in another way if the investor buys an apartment in the wrong area where the trend in prices is downward. It is therefore obvious that knowledge of areas is necessary while choosing an apartment to invest in.

There is also the social point of view. By buying an investment apartment and by putting it up for rent, you can also serve Finnish society; the tenant gets a home and enterprises and municipalities benefit from having rental apartments available for their employees. An investment apartment is an investment to Finland.

The tenant pays your loan for you

Investing in apartments can be viewed as a very interesting investment option because apartments are very well accepted as security and the interests can be tax deductible.

The bank will finance 70 – 100 % of the purchase price of an investment apartment. The loan interest is fully tax deductible from the rent income. The interest on all other apartment loans can also be deducted. If the investor also has a loan for his own home, it might be that during the first years he need not pay any taxes on the rent income.

Probably the greatest advantage of investing in apartments is that the investor can borrow money from the bank in order to buy an apartment and pay the loan back with the rent income. At its best, the rent income is sufficient to cover the instalment, perhaps even in full. In this case, the tenant pays the loan little by little “on behalf” of the lessor. This situation is possible if the purchase and rental of the apartment is optimized.

Almost any ordinary working person can get borrow the money to buy an investment apartment and he or she does not need to have other property or large amounts of cash. For some young customers of Vuokraturva, apartment investment is the first investment of their lives. But it is decisively important that the investment be made properly.

It is hard for an investor to find an optimum apartment to invest in, especially if he is searching for it while working. The best apartments disappear from the market in a moment, so you must have a thorough knowledge of the rent levels in an area and the apartment houses must exist beforehand. Often, the best apartments to invest in do not even come onto the public market.

Vuokraturva has developed a suitable service to solve this problem together with unions and other actors in the field. The investor can authorize Vuokraturva to purchase an optimum apartment to invest in on the “turn-key” principle. Thus, it is possible to both buy and rent the apartment safely and without difficulty.

If you would like to receive more information, please look at Assignment to purchase and References or fill in the request for contact below.