Is it profitable to receive passive income from renting an apartment – stubborn facts

To make a profit by investing in financial instruments in the stock markets is quite difficult. Such passive income requires knowledge, skills and, finally, determination.

To rent an apartment can anyone – would have been available living space. But is it worth it?

The difficult fate of the landlord

The main problem faced by a professional landlord is a high initial investment and low liquidity afterwards. General Director of DNA Realty Anton Belykh says (see “Passive income: the fate of the rental business today,” Quadrum Media):

Buying a new apartment at the moment for renting is not at all like a business. If earlier the payback period for such investments was 12–17 years, now they have grown to 17–25 years. In other words, we are talking about a yield of 4 – 7% per annum – this percentage of profitability can be obtained by placing money on deposit in any large and reliable bank or several banks in order to get under the deposit insurance system.

Moreover, the costs will not pay off soon; over time, the object may also lose in price.

Residents are different: some people will treat others’ property more carefully than their own, while others will behave according to the principle “after us even the flood”. Speaking of floods and other communal disasters. Square meters in a block of flats is also a certain responsibility towards neighbors. The consequences of any misconduct of employers forced to rake the owner of the premises.

How to invest less and get more? And – quickly?

Suppose you try to be entrepreneurial at the stage of buying an apartment – try to find an undervalued object or invest in shared construction. Property value will decrease, but not fundamentally. In addition, you will have to deal with risks. Low prices sometimes have obvious objective reasons for themselves, and shared construction sometimes lasts for decades.

Good. We try to gain on the amount of rent. It will be possible to increase, if you rent an apartment for rent. The yield will not be 4-7%, but at least 8-9%. However, the profit will be much less passive – you will often have to answer the phone, meet with tenants, regularly invest in repairs and clean up.

No matter how cool, there is no way to quickly and effectively recoup the investment in residential real estate.

Renting a non-commercial premises makes sense when :

  • it is already there and it needs to be saved for the future – for example, for a growing child;
  • An apartment is convenient to purchase as a reserve as a valuable property in case of a crisis.

Separately, it is worth talking about the lucky ones, who, by coincidence, got square meters in a good district of Moscow or at least St. Petersburg. Capital real estate will be able to pass at a relatively high price. Such incomes will not feed the inhabitants of the megalopolis, but somewhere in the outback they will become a very significant addition to the basic earnings.

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