Outrageous return on investment claims
Some companies marketing overseas property in Cyprus and property developers make outrageous claims regarding the annual rental returns investors will receive.
- Investors are often told that they will easily get enough rental income to cover their annual mortgage payments. Unfortunately, they soon find out that they've been conned!
- Others investors are told that they'll make a massive return by selling their property before it's finished and its Title Deed issued. They soon find out that they too have been conned! Not only is the market dead, banks will not grant mortgages on resale properties without Title Deeds - the risk is just too great!
Overseas property marketing companies receive as much as 15% commission on a sale. Some have very unprofessional sales teams who will lie through their teeth to achieve a sale. Some offer 'low-cost' or 'free' property inspection flights where investors get brow-beaten into submission.
It is essential that anyone thinking of investing in the Cyprus property market does their research properly and ignores the overseas property marketing companies' sales hype!
Buy-to-let property investment in tourist areas
Unless you have an exceptional property in an exceptional location, you will not get a good return on your investment from a short-term holiday let. You only have to look at the number of buy-to-let properties being advertised to see the sort of competition you'll be facing.
Remember too that you'll need to advertise & promote your property, furnish it, get someone to clean & look after it for you, make repairs, redecorations, replace breakages and pay telephone, electricity and water bills & local taxes.
If you're buying a property in a tourist areas, do not budget on renting it out for more than 14 - 18 weeks a year.
Some developers offer guaranteed rental returns of 15% per
annum for the first two years and I've recently seen developers giving
away cars and furniture to property investors.
Needless to say the cost of these 'incentives' has been factored into the selling price!
Buy-to-let property investment in residential areas
A more sensible investment strategy is to buy property in one of the residential suburbs of Nicosia or Limassol where there's a steady demand for long-term (one year and more) rentals. Although the weekly rate you achieve will be lower, this will be more than offset by the longer rental period. And your overheads too will be considerably lower.