What to look for in a Property investment?
If you are interested in acquiring an investment property in Malta, in other words buying a property to let out that is not your primary residence, there are some important key factors to consider.
One’s primary residence is a personal choice, factoring in characteristics of the property that appeal to you, your family’s needs and lifestyle requirements. On the other hand, if you are looking at buying a rental property, the requirement criteria will be totally different. The rental property market in Malta is extremely buoyant and very competitive but it offers a wide variety of rental property options. We will be discussing some of the key elements to take into consideration depending on the rental market sector you are interested in servicing.
Initial points for consideration:
- Decide on a budget: this may seem obvious, but it will determine what kind of property you can afford and therefore the market segment options open to you
- Decide whether you are interested in short or long-term rentals
- Decide what kind of tenant you are interested in:
- The tourism sector,
- single professionals,
- newlyweds, graduates, school leavers
- Decide whether you initially have the time available to spend managing the property or would want a property management company to look after it on your behalf.
- Remember that you will need additional financial resources available besides the purchase price of the property, as this will
- Be your “kitty” for emergencies and repairs and
- Also see you through the times when the property is not rented out
Factors to consider when looking at potential investment properties
If you want to buy in popular, sought-after areas, it will be more expensive or the properties will be smaller, but this makes it ideal for expats, tourists and thus short-term rentals. Keep in mind that tourists want to be close to all the action and have easy access to beaches, cafes, restaurants, nightclubs and public transport. In outlying areas you will get more value for your money resulting in bigger properties qualifying for the same budget. These homes will be more suitable to locals or families and mostly be suited to long-term rentals.
Smaller properties are suited to short-term rentals or will suit single professionals or students if you are aiming for longer rentals. As said, the bigger the property in Malta’s popular areas, the more it will cost. Rather consider the best small property your money can buy in a popular area than going for the biggest property within the same budget in a remote location.
Types of Property
For short-term rentals a lock-up-and-go property is your best option. Tourists and single professionals do not want the hassles of larger properties, so look at apartments and penthouses, even bedsitters that are similar to hotel rooms. Remember these properties are not used for living; they are merely a place to sleep between going out, studying or having fun!
If you want a larger property on a modest budget as your first rental property, apartments away from pricey areas will be your best bet and these will appeal to the long-term rentals market and most likely be rented to a young family. Although rare, affordable and bigger maisonettes and townhouses can be found at reasonable prices in areas away from the popular east coastal belt.
Age of Property
The newer the property the better as it will mean less maintenance but keep in mind that newer properties are usually more compact. The older the property, the more likely it will be that rooms will be bigger, but you will face further costly expenses after the purchase such as renovating and upgrading bathrooms and kitchens and redecorating to bring it up to standards. Tenants, whether long or short-term, always prefer new or updated properties. If you are unwilling to update an older property, the chances of it standing empty for long periods are very likely.
Potential rental income
If you own a short-term rental property in the touristy popular areas, you will stand a good chance of making an above average rental income during the busy summer months. The same property on the other hand may stand empty at times during the winter when tourism takes a dip. If you opt for long-term rentals, you will make less of a daily income but you will have the peace of mind that money is steadily coming in and that the property is occupied. You will also have a better chance of tenants looking after your property when compared with short-term rentals.
Capital Growth Possibilities
Buying a Malta investment property for rental purposes or as a main residence has proven to provide above-average returns. The average growth rate for Malta is around 5.0% according to ceicdata.com and sometimes it was as high as 36.7% in Jun 2004, but the latter is an exception. Owning real estate is one of the best long-term investments anyone can make and unless the circumstances are exceptional, you will always make a profit.
If you want comprehensive additional advice on what to look for when buying any property in Malta, read our full guide here: https://franksalt.com.mt/buying/comprehensive-guide-to-property-investment-in-malta/ or contact your nearest Frank Salt Real Estate office. We have all kinds of investment properties in all budget categories available and we’ll be just too glad to assist you in finding the perfect investment!