How to obtain 6% annual yield

Falling interest rates on deposits forced thousands of Bulgarians to seek new pier on their savings. Logically, one of them is real estate. Today we present a property whose annual yield is around 6%, or nearly two times higher than that on bank deposits in most banks operating in the country.

The apartment is located in the super luxury building Mercure between two of the most prestigious districts in Sofia - Lozenets and Dragalevtsi, on the Cherni Vrah Blvd. The 1-bedroom apartment is set on the sixth floor and comes with a total area of 67.46 sq.m., of which the net area is 51.04 sq.m., divided between a wide and bright living room with kitchenette, a spacious bedroom, a bathroom with WC.




The apartment is fully furnished and offers panoramic mountain views. The heating is achieved by local gas heating and air conditioning. The flat is equipped with telephone, cable TV, internet. The apartment is located close to the South Park, which is a favorite place for walks. Thanks to its unique location on the boulevard, the access to the center if Sofia is easy and fast.




The price of the property is 67,990 Euro and the commission fee and notary fees for its purchase account for 4,340 Euro. The total amount required for this investment amounts to 72,330 Euro, as it should be bear in mind that the apartment does not need repair and finishing, and it is ready to be rented out immediately. The property can be rented at a price of 380 euros per month, which makes 4,560 Euro annual income.




This makes 6.3% gross annual yield (without deduction of annual property tax, income tax from rental and other costs for owner). In other words, the investment can be recouped in nearly 16 years. In this case it is not taken into account the potential increase in property value over time and the potential increase in the rental price can be achieved.




Also, the calculation has been made if the purchase is financed by own funds. But if you use bank financing under current conditions of banks credit products and decide to apply for a mortgage of 60,000 Euro in order to purchase this property for a period of 30 years, the monthly payment is around 350 Euro, which can be paid by the monthly rental.

* This material is informative and it is not a recommendation for the purchase and sale of property. The above calculations are purely informative and do not constitute an offer for investment.

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