Investing in real estate is one of the most common ways to save long-term and generate passive income. In urban centers, where the real estate market is vibrant and prices are high, many wonder how long it takes for an investment to pay off through long-term rentals. On average, the time to recoup an investment (Alpe Adria Market) is approximately 20 years or more.
For instance, in Ljubljana: Purchasing an older two-room apartment will cost between 200K – 240K euros. For such an apartment, you can get a rental income of between 8,000 – 10,000 euros annually, depending on the location.
However, there are various ways to accelerate this process.
Case Study: Recently, a colleague surprised me with the news of how much he receives monthly for renting a small apartment in Ljubljana, specifically 800 euros per month for an 18 m² unit. When he told me who the tenant was, it quickly became clear why (a foreigner). The fact is that less restrictive rental conditions allow for higher rents. You know the ads: no pets, no children, singles only, no smoking, no students, no foreigners, etc. The investment in this apartment, purchased in 2019, will be recouped in less than ten years.
Alternative Ways to Speed Up Investment Recoupment
Besides standard long-term rentals, there are several ways property owners can accelerate the return on their investment. Here are some effective alternatives:
Short-term Rentals to Tourists via Platforms like Booking and Airbnb
Short-term rentals to tourists have become a very popular way to increase income from property. In urban centers or coastal areas where tourism is booming, opportunities for such rentals are numerous. Short-term rentals can yield significantly higher income than long-term rentals, as nightly rates can be charged at a premium, especially during tourist seasons.
In Croatia, for example, you can quickly earn more than 100 euros per day for a small apartment.
Renting Out Property for Business Purposes
Office spaces and coworking spaces are increasingly in demand. If your property allows for adaptation for business purposes, this can be an excellent opportunity to increase income. Offering favorable terms to tenants like startups or small businesses can help you recoup your investment faster.
Renting Out Individual Rooms to Students or Workers
Another way to increase income from your property is by renting out individual rooms. Students and workers often look for affordable living options and are willing to share apartments. This way, you can turn one apartment into several smaller rental units and consequently increase the total income.
Adapting Property for Special Purposes
Adapting property for special purposes, such as apartments for the elderly or people with special needs, is another option for faster investment recoupment. Such adaptations often bring higher rents, as these types of apartments are rarer on the market.
Conclusion.
Investing in real estate typically recoups in 20 years through long-term rentals. However, there are numerous alternatives that can speed up this process. Short-term rentals to tourists, renting out for business purposes, renting individual rooms, adapting for special purposes, and renovations are just some ways to increase income from your property. With a thoughtful approach and market-adapted strategy, you can significantly shorten the time to recoup your investment.
For those considering purchasing property by the sea (Croatia) or in Ljubljana (Slovenia), seeking proper advice and being well-informed is essential. Every investment has challenges and opportunities, so being prepared and well-informed is important. If you need assistance in finding your dream home or advice on investment opportunities, contact me. I will be a reliable partner on your journey to fulfilling your dreams.
