How to make your investment apartment profitable

The investment in a premium apartment can generate profit and there are various rental services and platforms on the market that help you find clients and handle in an efficient way all the operations necessary in this activity. 

A key indicator for the investment in an apartment represents the property’s annual yield which should be at least 6-7%.

An option for calculating the depreciation period can be simply done. You start from the acquisition price of the apartment and you divide it by the estimated gross value of the rent for one year. A more detailed method of estimating the income generated by the investment includes the cost and improvements or other repairs cost (aspects less necessary for luxury apartments) but also the additional expenses incurred by the owner, such as insurance and property tax. You should also consider the rental degree of the property in one year.

For example, some properties located in city center are rented to tourists along the year, while for other units a stable tenant who signs a contract for more than one year is preferred.

How does the apartment bought as an investment become profitable?

Listing the apartment on Airbnb helps you obtain a secure income for hosting tourists. The control is detained by the owner, which means you can settle your own schedule, payments and conditions for the guests.

The rental demand can fluctuate depending on the holidays and the financial situation of the tourists who stop in Bucharest. Despite the current situation, people continue to travel for business and the those living outside Bucharest come more often to the capital for entertainment and shopping.  

Airbnb allows the owners to list for free the property for rent on the platform and takes up a fixed commission of 3% of the value of each booking. The rental price  may increase if the property offers luxury conditions, as in the case of Luxuria apartments, and it is located in an area with quick access to the main points of interest in the city, especially in a central area. Luxury is defined by multiple advantages which create a pleasant experience and provides well-being, which generates recommendations and recurrence.

The cleaning and administration services between the reservations will be the owner’s task. It is good to know that Airbnb covers each reservation with a million dollars protection against material damage and another 1 million dollars insurance from accidents. The owner chooses how he/she wants to receive the money from the platform after the guest makes the check-in.

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Alternatively, the property can be listed also on Booking.com where the conditions are similar. However, the average commission Booking.com charges is 15%, but you will find out the exact percentage when you register the property on the website.  

Renting the apartment on a short term could be a challenge in this period because the tourism has been affected by the restrictions imposed for the sanitary crisis management.

At local level it has been developed an app which gives the owner the option to rent on a period of 1-11 months. Naiss mobile app accepts property listing and the final rental price includes the utilities cost. Renting on a several months period reduces the effort of managing the tenants, which can become very high in the case of significant turnover of guests with short-term stays.

Another service dedicated to owners who want to rent a property is offered by Milluu app. The company says it will find a tenant in 2 weeks and has the option to collect the rent up to 6 months in advance. The service also offers an insurance of up to 10,000 euros for household goods. The entire management process of the rented home is digitized, being a plus for maintaining an efficient communication between the owner and the tenant.

Another option can be a real estate agency which can assist you in finding a tenant who wants a long-term partnership. A real estate broker knows better the potential of the location and the optimum price range to secure a stable rental contract.

Usually, the owner pays a commission to the real estate agency, which is equal to the value of one-month rent. A real estate broker can clearly present you which are the costs for finding the tenant.

Managing the relationship with ANAF

If you rent the property as an individual, you must complete the single tax declaration within 30 days of the lease. The declaration is submitted for the current fiscal year. A 10% tax rate will be applied on the net income and the health insurance contribution (CASS) will have to be paid if the value of the net income exceeds the annual ceiling of 12 minimum gross salaries per country (26,760 lei in 2020).

The net income obtained from the rent is established by deducting from the gross income the expenses determined by applying the 40% quota on the gross income. If the calculated net income does not exceed the ceiling of 26,760 lei, the 10% of CASS will not have to be paid.

The single tax declaration can be submitted online, and you will find more information in a presentation made by the ANAF experts available here.

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Respecting the rules within the residential complex

If you have bought or if you analyze the option of buying an investment apartment in Luxuria Residence, you will have to respect a set of internal rules. These must be communicated to the tenants in order to respect them in turn.

The entire complex is secured and there are surveillance cameras to ensure a safe environment for the residents.

The owner who rents an apartment within the complex will be responsible for the potential damages made by the tenant, as the quality standard of the project standard will maintain at a high level.

Luxuria Residence apartments serve all the standards of a profitable real estate investment. The project is close to second phase completion (268 apartments) and the final development phase will be completed in April 2021, when 130 apartments will be delivered.

In April 2020, IMPACT Developer & Contractor completed the first phase, which totals 232 apartments.

Direct Rental on Luxuria Website

The market for investment apartments has become increasingly dynamic in Bucharest, and this trend has intensified given that the yields offered by other financial instruments are lower. The development potential of this niche is significant in the long run.

The customer community in Luxuria include enterprising people, businesspeople, who feel the opportunities and invest smartly. Out of the desire to create a bridge between those interested in renting their units and those looking for apartments to rent, we have implemented a dedicated section of Rentals on  Luxuria website and we look forward to offers for rent at: sales@luxuria-residence.ro with the subject “Rent notice”. It is now easier for those interested to choose their most-wanted apartment online.

Attractive rental units are available in Luxuria Residence, such as this 62-square-meter studio. And to get an idea of ​​how spacious the Luxuria apartments are, we invite you to click and see how we have arranged a 3-room apartment.

If you want support in arranging your apartment, do not hesitate to ask for our help.