Making a budget for your buy to let property in Dubai is one of the most important things that you can do to ensure that you are enjoying the maximum return on your investment. Smart money management is essential when investing in Dubai property and without it, you could find yourself disappointed.
When you are looking at brochures and advertisements selling buy to let property in Dubai they will usually show you a simple calculation of rent minus mortgage equals profit. However, this is not completely true as this equation is too simple and doesn’t account for all of the other expenses that go along with renting out a buy to let property in Dubai. Your income will be from your rentals, but your mortgage will not be your only out-going expense.
In fact, renting out a buy to let property is a bit of a complicated financial endeavour which will require a lot of smart budgeting and clever planning. It is highly recommended that you keep a close eye on exactly what you are spending and approach the investment like it were a business, with an intention for maximising profits. If you are not adept at this, you might want to consider consulting the advice of someone who is such as an accountant.
Here are some important things that you should keep in mind when you are managing the financial side of your Dubai buy to let investment:
Use Realistic Rates to Make Your Calculations
When you are making a prospective budget for a real estate buy to let investment in Dubai, make sure that you are using realistic numbers to make your calculations. It can be tempting to optimistically estimate that your rental rates will be higher and that you will be able to get a cheaper mortgage but this might not happen.
Do real-time research to make sure that you are working with the most realistic and up to date rental rates, mortgage rates and other expenses.
Create a Maintenance Budget for Your Investment Property
When you are crunching the numbers and balancing your budget for your buy to let property, don’t forget to include the costs of property maintenance. As a landlord, you need to keep your property well maintained and you never know when a maintenance related expense is going to crop up.
Most of the time when you are investing in buy to let property in Dubai you will be buying brand new apartments which will mean that you will have relatively low maintenance expenses. However, anything can happen and there still might be the need to fix things when they fail or become damaged. Reserve some of your profits to cover maintenance so that this will not catch you by surprise.
Don’t Forget to Factor in Fees and Expenses
When you are calculating the expenses of your Dubai buy to let property, don’t forget to include all of the extras. When you make the purchase you will likely need to pay a land registration fee as well as the fees for the real estate agent. If you hire a rental management agency you will need to factor in the amount that you will be paying them. Also, don’t forget the cost of utilities such as Internet, phone and electricity (air conditioning costs in Dubai can be significant due to the extreme heat).
If you forget to factor in any of these expenses, they can take you by surprise and put a big dent in your budget.
These are just a few smart money management tips that you can keep in mind when making a budget for your Dubai buy to let property.