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Primarily there are three major Investment Strategies:
Buy to Rent: which like buy to sell, involves purchasing off-plan before the development starts and then holding the property at completion for letting purposes, thus increasing both capital growth and income. With the right directions, the cost of mortgages and property management should be recovered by the rental income.
Buy to Rent Model
Which like buy to sell involves purchasing off-plan property before the development starts; then finally holds it for letting purposes and moving towards long term capital appreciation. The returns on rentals can be more than expectations and the mortgage options may vary, including CYP, GB £, US $, €, and Swiss Franc and various lengths of term. For this example it’s assumed that the outgoings and annual incomes are neutral and therefore the focus is on capital appreciation instead of income from rental, however, with the accurate approach a significant rental profit could be achieved.
- Annual growth as low as 8% produces a return of 127% over five years
- 10% annual property growth rate returns an ROI of 167% over five years
- 15% annual property growth rate generates an ROI of 279% over five years
Model 1 indicated below assumes that the villa is purchased at the current market price and the value is shown in UK £ for convenience, however, the present rate of exchange is around £1.20 to each CYP.
Buy
to Rent (1) |
Cost
of Villa |
220,000
|
|
|
|
|
Reservation
Fee |
2,400
|
30%
Payment |
66,000
|
Legal
Fees |
1,407
|
Transfer
fee |
12,768
|
|
|
|
|
Total
Investment |
82,575
|
|
|
|
|
Annual
Growth Rate |
Projected
Capital Value |
5%
|
8%
|
10%
|
15%
|
20%
|
Year
1 |
231,000
|
237,600
|
242,000
|
253,000
|
264,000
|
Year
2 |
242,550
|
256,608
|
266,200
|
290,950
|
316,800
|
Year
3 |
254,678
|
277,137
|
292,820
|
334,593
|
380,160
|
Year
4 |
267,411
|
299,308
|
322,102
|
384,781
|
456,192
|
Year
5 |
280,782
|
323,252
|
354,312
|
442,499
|
547,430
|
Profit
|
46,607
|
89,077
|
120,137
|
208,324
|
313,255
|
ROI
|
56%
|
108%
|
145%
|
252%
|
379%
|
Model 2 is derived same example, however, it assumes that the property is charged at 5% below market rate and this model indicates its impact on Capital Appreciation and ROI.
Buy to Rent (2) |
Villa
Purchased at 10% below market rate
|
Cost
of Villa |
220,000
|
Value
of Villa |
231,000
|
|
|
Reservation
Fee |
2,400
|
30%
Payment |
66,000
|
Legal
Fees |
1,407
|
Transfer
fee |
12,768
|
|
|
|
|
Total
Investment |
82,575
|
|
|
|
|
Annual
Growth Rate |
Projected
Capital Value |
5%
|
8%
|
10%
|
15%
|
20%
|
Year
1 |
242,550
|
249,480
|
254,100
|
265,650
|
277,200
|
Year
2 |
254,678
|
269,438
|
279,510
|
305,498
|
332,640
|
Year
3 |
267,411
|
290,993
|
307,461
|
351,332
|
399,168
|
Year
4 |
280,782
|
314,273
|
338,207
|
404,020
|
479,002
|
Year
5 |
294,821
|
339,415
|
372,028
|
464,624
|
574,802
|
Profit
|
60,646
|
105,240
|
137,853
|
230,449
|
340,627
|
ROI
|
73%
|
127%
|
167%
|
279%
|
413%
|
Other Great Benefits of Cyprus
- The climate makes this island one of the healthiest spots in the world with approximately 340 days of bright sunshine in a year
- High living standards but with a low cost
- The general property price level is lower than UK or even Spain
- It offers attractive tax benefits including pensions tax which is @ 5% on income amounts exceeding CY£20,000
- It offers an easy access to and from UK, Europe and other global destinations with over 30 major airlines and two main international airports in Larnaca and Paphos
- Outstanding inexpensive medical facilities
- Left side driving
- Modern and contemporary judiciary, accounting and financial services same as British practices
- Intellectual educational facilities
- Four lane motorways and highways connecting all major towns and international airports
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