Example scenario - Buy to Let

Client with savings of around £80,000 decides to purchase an investment property through Paradise Property World and after discussing his requirements he decides the "Buy-to-Let" investment strategy is best for him.

PPW investment advisors suggest one of their property developments, a newly completed "key ready" development with beautiful sea views and priced at £250,000which has been vetted and verified as a good investment opportunity and meets Client's criteria.

Initially Client pays a deposit of £3,000 to hold the property. He then adds to this the £72,000 balance to make up a 30% deposit of £75,000.

PPW recommend a regional mortgage specialist who arranges a mortgage for the remaining £175,000 at a rate of 4.75% (example only). This translates to a monthly interest only mortgage repayment around £980 which is equal to £11,800 over 12 months.

Client starts to rent his new property immediately and during the 3 months "High Season" he receives £2,000 per month in rental income. These rental payments cover £6,000 of his annual mortgage repayments and still leaves Client B with 9 months of rental potential to make a further profit.

If we assume that average rental rates for this new property are as follows (conservative figures):

* High Season - £2000 Per Month
* Low Season - £1300 per Month

Now we assume that the Client decides to go on a short term rental strategy maximizing his income over the High Period. He easily rents his property for 3 Months during the high period earning £2000 per month. After this period he has a delay in getting his next tenants but over the course of the year he rents his property for a further 6 Months only.

* 3 Months x £2000
* 6 Months x £1300
* 3 Months (void)

Total Rental income = £13,800 after subtracting the £11,800 Mortgage repayments Client has made a profit of £2,000.

This example does not include any rental management charges or community fees that may apply but also we have only assumed rental income for 9 months of the year. PPW have arrangements with letting agencies and many holiday makers now book private accommodation via the Internet so it is possible toi rent for longer period each year

Short-Term letting v Long-Term Letting.

The final decision to be made by the "Buy to Let" Investor is which letting strategy to use. It is generally accepted that the highest income is made by the property owner by letting out short term during the high season. However there is an argument that the overheads involved in finding numerous short-term rental clients along with maintenance costs between clients can detract from this.

The alternative is to offer the property on long term rental - this typically earns less on a month by month basis but requires less involvement by the property owner and the rental income is fixed over the course of the year.

It is even possible in some areas to combine these scenarios by arranging to rent long term - say for 6 months - during the low season and to offer higher short term rentals to holiday clients during the holiday season. The decision on letting options are generally dependant on the type of property purchased - some properties will allow short term holiday loans - apartments by the sea/near a ski slope - while others may rent more easily long term to locals as a semi-permanent home - this could be a 3-bedroom villa or town house or an apartment in the city. The advice of our experts is available to you while you decide which property and rental strategy is best for your circumstances.

Summary

The "Buy to Let" Strategy is not ideal for every investor - it is advisable to select property carefully as it needs to be in a popular location and easily rentable in order to maximize income while the capital value of the investment grows - during the time this property is being rented and even earning an income after payment of the mortgage - also serving in many cases as the Investor's own holiday home - it is still appreciating in value at one of the fastest rates in any country in the world. When taking these factors into consideration the "Buy to Let" model is a very sound option and investment in Turkey is currently allows the ideal deployment of this strategy.