Quote:
Originally Posted by georgihh
50% in 2 years time
Buy a studio in IC for 100000$ all in
Rent it out for 2 years at 40000net per year
Sell it for 465000DHS net after 2 years
Total net profit 180000 DHS
Can’t go wrong.
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These figures you give certainly seem like u've either plucked them from air or ur misinforming people on the forum, cause it all sound very nice hypothetically, but in reality property has peaked in world markets.
Yes you can buy a studio @ $100k dollars(365k dhs) and these prices are finished product prices, the initial capital gain was to be made when the project was launched.
Now, the profit to be had is in the rental return @10% gross, before taking into account maintenance which is 7-9k per year, agents fees 5-10% ,not forgetting trhe mortgage cost if one has to borrow this money and lastly if one isn't resident in Dubai one needs to pay taxes on their return.
The major crunch comes, at the moment lending rates are over 7% in Dubai from any bank. And these rates are on the rise. Lets assume if you get a rate of 7,5% on $100k, thats $7,5k interest alone.
Now, if you are making 10 % gross on rental income, once you take out the expenditure, like maintenance,agents fee, travelling to Dubai if not resident et..etc you are lucky if you can get a return of 6% nett. So, this invest ment is a loss on returns , now the second question is will it give you capital return, with the rates rising and flooding of new developments,completion of old, PEOPLE STRUGGLING TO MAKE PAYMENTS TO BANK AND GET MORTGAGES, I some how doubt it.
I say sell now and run!!!!!!!!!!!!!!