As with any other type of investment, in the end, real estate investments are about earning good returns in a relatively short period of time with as little involvement on your part as possible. Thus, all general principles of smart investing apply here as well.
However, when it comes to securing the best investment property in Cyprus, there are also some special considerations that need to be carefully examined before making your final decision.
Here are the main things to consider when looking for an income property in Cyprus, grouped under three main categories:
The cost of acquiring property in Cyprus goes beyond covering the cost of purchase. There are several other expenses incurred on your behalf, including legal fees which are often linked to the price of the property youre purchasing, stamp duties, disbursements and transfer fees. You should consider all these expenses right from the start to make sure that the property youre looking into is within your budget. Knowledge of the actual cost involved in acquiring the property will also enable you to determine whether you can safely expect to get good return on your investment.
Proper due diligence is indispensable if youre to avoid the pitfalls usually associated with buying investment properties. Although the process is pretty straightforward, it goes without saying that you should seek legal assistance. To ensure that the lawyer you have appointed will act in your best interests, make sure he is an independent lawyer with no association whatsoever with the selling party.
Here is a list of legal considerations to be examined:
- Verification of Title Deeds.
- Mortgage liability. This is usually covered by an encumbrances search at the Land Registry. This is necessary in order to ensure that the selling party is the actual owner of the property and that there are no rights of third parties (e.g. right of way, right to harvest crops), or other encumbrances (e.g. mortgages, loans, claims etc.) associated with the property you’re considering.
- Compliance with Building Authority requirements. Making sure that all the required building licenses have been obtained and complied with will help you avoid any unpleasant surprises before and after signing the purchase contract.
- Disputed property. This applies in the case of properties in the north of Cyprus, where there are thousands of claims to ownership from people who were displaced in 1974.
- Investment property in the Sovereign Base Areas (SBAs). There are special provisions applying to the transfer of properties within the boundaries of SBAs.
- Taxes. Check out this page for the Property related Taxes fees in Cyprus
All other factors being equal, the best property is the one involving whole ownership of entities with an established cash flow.
Property Quality Considerations
This is the category encompassing all factors determining the profit making potential and future marketability of the properties under consideration. Here are some of the factors to be considered:
Neighborhood quality has a dramatic effect on the type of potential tenants your property will attract and the vacancy rate over time. Properties located in good neighborhoods, in low crime areas with growing employment opportunities and a wide range of public amenities such as parks, shopping centers, recreation venues and public transportation facilities tend to attract long term, timely paying tenants, which is the exact kind of people you’re looking for.
- Development Prospects
Although good growth areas are a plus factor, there is also a potential downside. Development often comes with increased competition, so keep an eye for areas where plans have been set in motion for additional housing properties which could bring down rent prices. When it comes to assessing the effect of future growth on the value of an investment property, you should carefully weigh the benefit of increased demand against the risk of increased supply.
- Average Rent
Rent is what will finally determine the success or failure of your investment in property. Accurately determining the average rent in the area where the property is located is essential in order to make sure that the rent will cover all the expenses (mortgage payments, taxes, maintenance and repair expenses). Rent fluctuation trends must not be neglected either. Listings and vacancy rates are good indicators of an areas potential. Low amounts of listings and low vacancy rates usually signify that property owners are able to set higher rents.
To summarize, wholly owned, quality properties with limited management requirements located in good areas offering good living standards and development prospects make for good investment properties.
George Dokuchaev has 10 years knowledge of real estate market and a loyal clientele of all over the world. He is currently working at Prime Property In Cyprus as a Group’s sales Director