Maximum Profits from Properties in Turkey

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Every city in Turkey has its unique character, and its neighborhoods vary in their features to suit the tastes of all investors.

Each neighborhood has its own identity and lifestyle, differing from other neighborhoods based on the people living there and the places surrounding it.

And location is one of the most influential factors on the value of properties and the possibility of achieving high profits.

In this article, we will answer the most important question that preoccupies investors when looking for a property:

Why is location so important for real estate investment?

Table of Contents

Importance of Property Location for Investment
Principles of Choosing a Property Location
How to Evaluate My Property for Financial Returns

Importance of Property Location for Investment

Whether you’re buying the property to become your dream home and provide stability for your family, or you’re aiming to purchase it for investment purposes, in both cases, the location of the property is one of the most important factors that determine the success of the purchase process. No matter how much property prices fluctuate, the property purchased in the ideal and integrated location in terms of its service facilities and its proximity to transportation and healthcare centers remains one of the most vital factors that preserve the relative value of the property in the long term, especially if the property is in a place expected to witness future prosperity.

Because a good location improves the value of the property. When the house is located in a desirable neighborhood, its value is likely to increase over time. You can do maintenance or update the designs of your apartment, but you can never change the location.

Here is an article about the most popular areas for foreigners in Istanbul, click here.

Principles of Choosing a Property Location

The engagement of investors in the real estate market involves several principles and correct steps that ensure their success and achieve their dream in the world of real estate. So, what are these principles?

Principles of Choosing a Property Location Based on Laws:

The laws related to real estate vary from one country to another and from one type of property to another. Therefore, the investor must know the laws applicable to the location where they want to buy the property and make sure they align with their interests and goals.

As a foreign investor, it is essential to know the restrictions, limits, conditions, licenses, and permits related to the design and construction in the country where you intend to buy your property before making any purchase. Therefore, you always need to communicate with consulting and legal companies before making any decision.

Our team at Damas Group Real Estate helps you understand the legal rights and obligations of the owner, buyer, tenant, investor, broker, and other parties involved in the property. Our lawyers always strive to keep you constantly informed about all the updates in the conditions, procedures, documents, and fees required to complete the process of buying, selling, renting, or investing in the property, in addition to the latest updates related to tax law and fees.

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Also, take a look at the best properties in Istanbul

Principles of Choosing a Property Location Based on Price:

The price is one of the main factors that affect the decision to buy a property. However, the price isn’t everything, as there are other factors that determine the value, attractiveness, and future of the property. Therefore, real estate investors should consider the principles of choosing a property location in relation to the price and not be swayed by cheap offers without study and analysis. This study is based on the principle of comparing the price of the property that the investor wants to buy with the prices of similar properties in terms of area, condition, and design in the same area or neighboring areas. This helps to determine whether the price is appropriate, inflated, or discounted. It also helps to evaluate the supply, demand, and competition in the market. By calculating the expected returns from the property, whether from rent, sale, or investment, this helps to determine whether the price is worth the investment or not. It also helps to determine the payback period, breakeven point, and profitability ratio.

It’s important when calculating the price to remind the investor of the need to add all the additional costs that may be incurred in buying, using, maintaining, or improving the property. These costs include fees, taxes, mortgages, insurance, maintenance, and renovation. These costs affect the actual price of the property and the realized returns from it.

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Principles of Choosing a Property Location Based on Local Facilities:

Local facilities play a significant role in determining the quality and standard of life in a property. Local facilities are the services, establishments, and institutions provided by the government or private sector for the local community in a specific area, such as schools, hospitals, shops, restaurants, parks, etc. These facilities play a crucial role in improving the quality of life, education, health, culture, and security for residents. Therefore, local facilities are one of the most important principles that increase the value, attractiveness, and demand for a property in the market. Properties located near local facilities are considered more suitable, appropriate, and desirable for buyers, tenants, and investors, which raises their price and returns. Whether you aim to settle in the property or invest in it by renting it out, the availability of local facilities offers advantages and benefits to the residents in the property and improves the quality of their life, comfort, satisfaction, and happiness.

Bashak Shehir area is one of the best areas with its modern facilities. Click here for more details.

Principles of Choosing a Property Location Based on Transportation:

A property is one of the most important investments that a person can make in their life. Therefore, the buyer or real estate investor should carefully and wisely choose the appropriate property. Among the factors that affect the purchase decision, transportation stands out as an important and decisive factor for the success of real estate investment.

Transportation increases the value, attractiveness, and demand for a property in the market.

Principles of Choosing a Property Location Based on Healthcare:

The more services and facilities available in an area, the greater the value of its properties. The availability of healthcare centers and hospitals near the property is an important factor that many investors who are looking for a higher quality of life are looking for. Areas that include one of the largest and most famous hospitals are usually equipped with all the service facilities that contribute to increasing the comfort of its residents.

Working in the medical field is one of the most professions that require the doctor to be close to their workplace in many specialties

Principles of Choosing a Property Location Based on Education:

Choosing a property in locations that include the strongest and most famous schools and universities contributes to the cultural advancement of the area, creates an educational environment, and improves the standard of living for the residents in the area In addition to being areas serviced by many transportation means that facilitate students’ access to their schools and universities, they also have a lot of essential services such as shops, restaurants, cafes, and cultural centers.

Purchasing a property in such areas represents an investment opportunity for renting the property due to the high demand for housing by students, professors, and employees in educational institutions

In the end, it is not enough to inquire about the technical specifications and previous principles and what the location includes of important facilities, but it is necessary to resort to a specialized company to visit the place and conduct a field tour to get to know the general surroundings and all the details like the future of the area and test the feeling that the place arouses in the heart of the investor before making any investment decision12. The presence of well-lit streets, green spaces, attractive shop fronts, designs, and family atmospheres will give you a feeling of satisfaction and psychological comfort.

You can always rely on the services of our company, Damas Group Real Estate, which starts from the moment you arrive at the airport to the stage of choosing the appropriate property through free field tours, in addition to getting all the free real estate tips and consultations provided by our specialized team.

How to Evaluate My Property for Financial Returns?

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To evaluate your property for financial returns, you need to consider several factors. These include the property’s location, the local real estate market conditions, the property’s condition, and its income-generating potential if you plan to rent it out. You can calculate the potential return on investment (ROI) by subtracting the property’s original cost from its total return. This will give you the net profit or gain on your investment. To calculate the percentage ROI, divide the net profit by the original cost of the investment and multiply by 100. This will give you the ROI as a percentage. It’s also important to consider any additional costs that may be incurred in buying, using, maintaining, or improving the property. These costs can affect the actual price of the property and the realized returns from it.

All the basics we have mentioned earlier are not enough factors to make a decision to buy a property. Therefore, it is necessary to take advice from experts to conduct a detailed study to evaluate the return on the property. This is because investing in real estate requires a relatively long period of time with the provision of a large capital. Therefore, the expected profits must be commensurate with the invested amount and the required time period, otherwise, there is no benefit from this investment.

Evaluating the property to know the profit resulting from this investment and knowing its economic feasibility is one of the most things that occupy the real estate investor. Therefore, we have devoted this paragraph to delve into ways to evaluate the property and ways to calculate the investment return, which is known as the indicator used to measure the success of the real estate investment in terms of profitability, which can be calculated in two ways: Simple Return on Investment (ROI) and Adjusted Return on Investment (ARR).

The Simple Return on Investment (ROI) is the ratio between the net profit from the real estate investment and the original investment cost.

The net profit is the difference between the total revenues and total expenses from the real estate investment. Total revenues include rental income and sale value. Total expenses include the cost of purchase, maintenance, mortgage, taxes, and fees.

It can be calculated using the following formula:

Simple Return on Investment = Net profit from real estate investment / Original investment cost Net profit from real estate investment = Total revenues – Total expenses

Let’s assume that you bought your apartment for an amount of $120,000 and sold it after two years for a value of $144,000. During this period, you received a monthly rental return of $520, and you paid monthly expenses of $200 for returns, maintenance, taxes, and fees. In this case, the Simple Return on Investment can be calculated as follows:

Rental value over two years = 520 * 24 = 12480. Total revenues = Rental income + Sale value Total revenues = 12,480 + 144,000 = 156,000

Total expenses = Property price + Taxes, fees, and monthly returns = 120,000 + (200*24) = 124,800 Net profit from real estate investment = Total revenues – Total expenses = 156,000 - 124,000 = 31,200

Simple Return on Investment = Net profit from real estate investment / Original investment cost

Simple Return on Investment = (31,200 / 120,000) * 100% = 26%

This means that you made a profit of 26% from your real estate investment over two years.

The Adjusted Return on Investment (ARR) is the ratio between the annual net profit from the real estate investment and the original investment cost. It can be calculated using the following formula:

The annual net profit is the net profit divided by the number of investment years. The same numbers from the previous example can be used to calculate the Adjusted Return on Investment as follows:

Adjusted Return on Investment = Annual net profit / Original investment cost

Annual net profit = Net profit from real estate investment / Number of years = 31,200 / 2 = 15,600

Adjusted Return on Investment = (15,600 / 120,000) * 100% = 13%

This means that you made an annual profit of 13% from your real estate investment.

These are two common ways to calculate the return on real estate investment. But there are other ways like Rental Yield, Capitalization Rate, Cash on Cash Return, and others.

In conclusion, staying up-to-date with the latest trends in the real estate market is extremely important. Therefore, we at Damas Group Real Estate offer you a price analysis and sales volume data based on the location factor through our long journey and experience in the real estate market so that you have a complete vision before making your investment decision and avoid committing costly mistakes to achieve your dream of success.

FAQ

The location is one of the most influential factors on the value of properties and the potential for achieving high profits. A property situated in an ideal and well-integrated location with essential amenities, proximity to transportation, and healthcare centers helps maintain the property's value relatively over the long term.

You should study the real estate market in the area to determine if home prices in the chosen location are rising and whether there are many homes for sale or if there is high demand, leading to quick sales.

The criteria to consider when choosing a property location include laws related to real estate, price, local amenities, transportation, and healthcare and education facilities.

Real estate investors should consider the criteria for selecting the property location in terms of price and not be swayed by cheap offers without study and analysis. This study is based on comparing the price of the property the investor wants to purchase with prices of similar properties in terms of size, condition, and design in the same area or adjacent areas.

Choosing a property in locations that host strong schools and universities contributes to the cultural advancement of the area, creates an educational environment, and improves the residents' quality of life. Additionally, these areas are well-served by various transportation options, facilitating students' access to their schools and universities. They also offer a range of essential services such as shops, restaurants, cafes, and cultural centers. Purchasing property in such areas presents an investment opportunity for renting out the property due to the high demand for housing from students, professors, and staff in educational institutions.

You can use Simple Return on Investment (SROI) and Average Return on Investment (ARR) to evaluate the property. SROI can be calculated using the formula: Simple Return on Investment = Net Profit from Real Estate Investment / Original Investment Cost. You can refer to the detailed example in the previous article for more information.

Damac Group Real Estate offers a range of services starting from your arrival at the airport to the stage of selecting the right property, including free guided field tours. Additionally, they provide all the necessary advice and free real estate consultations offered by their specialized team, along with post-purchase services.