Residential Rental Investments - Where do I start?

Investing in a property with the aim of eventually turning it into a prolific rental, is something pretty enticing. Around the Maltese Islands rental investment is popular namely because of the increasing demands for such accomodation from locals, foreign students, workers and ex-pats who decide to retire here. For all of these, unless they want to own their own property, the first, most immediate housing solution is a rental.

Knowing what to Buy

The notion of buying to let is extremely titillating but before embarking on the purchase, one has to be aware of certain characteristics which tenants typically like to look out for. It would be wise to keep in mind important things that are a must for a tenant. As you view potential properties, you can check all the pluses and decide which ticks most or all of the required boxes. You can do this by placing yourself in the shoes of a tenant. What would he or she require? And then return back to base and ask yourself - what kind of property would make life simpler for myself as a lessor?

Choosing right

Remember that a modern property is always a better deal in these cases, possibly requiring less maintenance and upkeep both for the tenant and for yourself from the onset. If the property comes with furnishings, furniture and other amenities and is well finished, you are heading towards maximising your rental income.

Top or bottom

An apartment is generally the first best rental option to invest in, but there are a few things to keep in mind:

• A ground floor apartment may get to be very dark, so make sure there is some outdoor space and larger windows to maximise ventilation and light. Also take note of potentially high levels of humidity, especially in bathrooms and rising up walls.
• A top floor apartment can be very hot in summer. So unless it is superlatively covered by air-conditioning systems and unless you are prepared to invest heavily in installing such systems, do not bother. Having said that, if this is a penthouse with terrace, roof garden potential and a bit of a view, then you have good pluses to balance out the expense with.
• If this is a north facing top floor apartment or a penthouse, take a close look at any gypsum plaster walls or soffit ceilings which will help insulate heat and cold and are therefore a boon. Check where the sun rises and sets to determine whether the apartment is north or south facing. While south facing properties are warm all day, this may not be a good idea for a top floor apartment since it will be exposed to sun for long hours, equalling gruelling heat in summer. But do keep in mind that a north-facing apartment will be possibly dark and cold in winter. So you will need to balance out the light factor in the latter property with plenty of strategic windows.
• Make sure the top floor apartment is well served with an escalator.
• Check and double check, with the help of a reliable architect, that the roof is safe and sound and free of leakages.
• Confirm that the roof immediately above the top floor apartment or penthouse is not used by other tenants and does not serve as passageway for them. This to ensure noisy neighbours will not be using it for roof parties, evening BBQs or other possibly noisy events.

Some perks

Tenants will want and be ready to pay for all the latest gadgets and technological gizmos. Start with the staples such as an LCD monitor, air-conditioning units in the bedrooms and living area, dishwasher and electric kitchen appliances. An intercom comes in handy too. Make sure lighting is consumer-friendly with LED lamps where possible and dimmers to help the tenants maintain a lower consumption.

Maximise your rental income by choosing a property with a new or relatively new bathroom. Old, decrepit bathrooms should be changed and modernized to ones including non-slip bath/shower facilities, heated towel rails and easy to clean bathroom tiling.

The bigger the better?

Another price maker is size. Larger rooms in a one-bedroom apartment will call for a higher rent that a poky roomed place. And of course a duplex apartment or penthouse will surely tip the scales in letting your property out at a huge profit.

Yet, in many cases it may turn out to be a better investment if you purchase one and two bedroom apartments since you may achieve a higher percentage of rental income where at present rental income for residential properties fluctuates between 4 - 8%. There is a higher demand from younger ex-pats who seem to prefer to rent alone and independently rather than sharing their property with someone else. This is especially true of couples who like having a small apartment with an extra bedroom for visitors. If the apartment is small, and if you are aiming for long-term rentals, ensure there is plenty of storage space in the right kind of furniture you select.

Where to buy

Location is key where letting your property is involved, since this considerably determines the rental price you set on the property you are about to purchase. Top priced properties are located in and around Sliema and St. Julian’s, especially if the property is found in one of the the Special Designated Areas The further away you move, the lower the rental income may be, unless you find an apartment in a key location in the Three Cities for instance.

If you aim to buy to let, be aware that RE/MAX Malta boasts one of the largest professional teams of letting agents on the islands. All letting agents are trained specifically to provide you rental valuation, and assist you to eventually to rent the property as well as manage the property if need be. Consulting with a RE/MAX Malta letting agent will help you better decide what is the best way to invest in this sector of real estate.