There are many ways to invest in real estate, whether you are looking for a source of income or a long-term investment. It is important to find the right kind of property to suit your specific goals and needs.
The purpose of this article is to compare different investment options. We will discuss the following options: rental with an SVK, student room, assisted living and flats. This is followed by a final comparison with a property investment in the Netherlands.
With this information, we hope you will gain a better understanding of the different investment options and thus be able to make an informed decision on the best option for you.
SVK rental
Basic
Investing in a flat to rent out with an SLA can start from €215,000 for an average area of 70m2. Benefit from a 15-year rental guarantee and expect a net return of 2 to 2.4%.
Tax
With a reduced property tax and VAT of 12%, SVK rental offers a tax advantage for property investment.
Management and rental
SVK rental offers a convenient rental and management solution, with an occupancy rate of 100% and no rental fees. Repairs and management are handled by SVK and indexation is granted automatically.
Exit
The SVK rental offers a smooth resale with an annualised capital gain of between 2 and 3%. The net return is between 2 and 2.4%.
Why SVK?
Renting out SVK means you rent out your property to a social letting agency (SVK). This is ideal for security and peace of mind.
The SVK provides
- most administrative tasks
- a tenant and the lease
- 100% occupancy rate: collection of rent and payment to landlord
- fire insurance
- the maintenance of the property, so you have no rental costs yourself
- tenant support
This leaves you with fewer worries as a landlord. The SVK does not charge a commission, but it does charge a fair rent. This fair rent is slightly lower than the market price so your net return will be between 2 and 2.4%.
Letting to an SLA also offers benefits to the landlord such as renovation premiums and reduced tax rates that are automatically applied for.
If the rental property is a new construction and you rent it to an SVK for at least 15 years, you are entitled to a reduced VAT rate of 12% (instead of 21%).
Student room
Basic
On average, a student room costs 180,000 with an average area of 25m2. Rental guarantee is sometimes available and the gross return is 2.5 to 3%.
Tax
There is no tax benefit for property tax and VAT is 21%.
Management and rental
The occupancy rate averages 80% and rental costs average 1 month's rent. Management and repairs are in-house and indexation is self-administered.
Exit
Resales are unpredictable and capital gains are also unpredictable. The net yield is 2 to 2.4%.
Why student room?
Investing in student rooms is popular in Belgium, especially in urban areas where many students live. As a result, demand for student rooms is high and rental income can be stable. If you have 2-3 children studying yourself, this could be an interesting investment for you.
However, renting out student rooms also brings additional responsibilities, such as finding tenants, maintaining the rooms and signing contracts.
The return on student rooms can vary, but can reach gross 3%. Although management and repairs are handled by the complex owner or a hired firm, you set the rent yourself and are responsible for indexing.
When investing in large complexes, it is difficult to find buyers and therefore resale and capital gains are also unpredictable.
Keep in mind that student rooms have shorter rental periods and rental income can fluctuate according to demand.
Home assistance
Basic
An assisted living home has an average price of 300,000 euros and area of 40m2. There is no rental guarantee. The gross yield is between 3 and 3.4%.
Tax
With a reduced property tax and VAT of 12%, an assisted living home offers tax advantages for investment properties.
Management and rental
Rental and management of an assisted living home is in the hands of the owner, with an average occupancy rate of 80%. Rental charges average 1 month's rent and indexation is automatic.
Exit
The resale of an assisted living home is unpredictable and capital gains are also unpredictable. The net return is between 2.4 and 3%.
Why assistant housing?
An assisted living home is a special type of property where people with limited care needs can live. These homes are equipped with special facilities and support for residents, and are managed by a care organisation. This type of property can be ideal to have a dedicated place of their own later.
Rental of assisted housing is often regulated by the government and rental income is paid by social care organisations. These organisations therefore provide automatic indexation of rents.
In reality, it appears that assisted living homes often do not get rented out, as older people prefer to live at home with home care for as long as possible, and then go to a retirement home. This is therefore reflected in unpredictable resales & capital gains. The VAT legislation explicitly provides for a reduced VAT rate of 12% for the supply of housing complexes intended to be used for housing the elderly. Real estate work (e.g. erection) or leasing of such complexes are also eligible for this reduced rate.
Note that investing in assisted housing is usually more intrusive than other forms of real estate investment, so it is important to understand the rules and responsibilities before deciding to invest in this type of property.
Flat in metropolis
Basic
A flat in the city costs on average 450,000 euros with an area of 70m2. There is a guarantee of rental.
Efficiency
Expect a gross return of 2.5 to 3% and a net return of 2 to 2.4%.
Tax
With 21% VAT and no benefit on property tax, there are limited tax benefits.
Rental & management
Occupancy is 80% on average. Rental costs average 1 month's rent. Repairs and management are responsibility of the owner and indexation has to be arranged by yourself.
Exit
The resale of the flat is going smoothly with an expected capital gain of 2 to 3%.
Why flat in metropolis?
A flat in a big city like Brussels, Antwerp or Ghent may offer an interesting investment with a gross return between 2.5% and 3% and is ideal if budget is not an issue. Here, for example, we are usually at an average purchase price of 450,000 euros.
To optimise the increase in value of your flat, it is important to invest in the right location and work towards a saleable and rentable property. A flat in a major city has the advantage of a higher number of potential tenants and possibility of easy resale.
Flat nearby
Basic
Invest in a flat in the area for €300,000 with an average size of 70m2 and expect a gross return between 2.5% and 3%.
Tax
There is no property tax benefit and VAT is 21%.
Management and rental
You are responsible for management and repairs and rental costs average 1 month's rent. Indexation must be done yourself.
Exit
Resale is smooth with a capital gain between 2% and 3%. The net yield is between 2% and 2.6%.
Why flat nearby?
A flat nearby is another option for property investment. The gross yield is between 2.5 and 3% and VAT is 21%. The occupancy rate is around 80%.
The average purchase price of a flat outside the metropolitan area is around 300,000. This type of investment is ideal for those who want to do the rental and management of the flat themselves. This gives you, the landlord, more control over the management and rental of your flat.
However, this option requires more time, effort and responsibility than other options, such as renting to an SIK or investing in a real estate investment trust. So make sure you have the necessary resources and expertise to handle this responsibility.
Dutch real estate: 6.28% yield
Basic
A house in Terneuzen costs around EUR 250,000 with an average area of 92m2. With this, expect a gross return of 6.28%.
Tax
There is an annual property tax of €800 and VAT is 21%.
Management and rental
Through a reliable partner like Momo estates, there is a rental guarantee. Management and repair costs are also taken care of through management. There are no rental fees and indexation is automatic.
Exit
Resale is very fast, up to 3 times faster than in Belgium, with a capital gain of at least 10%. The net yield is between 4.9% and 5.2%.
Why Dutch real estate?
Real estate in the Netherlands can be an attractive investment option. The net return on Dutch property in certain regions such as Terneuzen goes up to 6% and the occupancy rate is usually higher than 90%. In addition, the average purchase price of a property in Terneuzen is significantly lower with an average amount of around €250,000.
Compared to the other options in Belgium, Dutch real estate offers higher returns and occupancy rates in certain regions. Therefore, this is probably the best option for those interested in investing in real estate.
By partnering with a reliable real estate partner with expertise in the foreign market, you can be relieved of the burden of renting out your Dutch property. We look for interesting properties, renovate them if necessary and find tenants.
As a result, you do not have to worry about finding tenants, renting and managing the property. Contact us for more information.
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