Property Investment Newbie

[smoke]

Hey guys, i am new here so bear with me !

I would like to learn a bit about property investment in Dubai. Currently i am working in UAE earning a good salary and would like to use some to invest in buying a place and renting it (or selling it at the correct time).

Would you give me some guidelines ? I've asked my bank and they quoted a 4,5 % interest, is it acceptable according to the market? What other expenses you have as a landlord?

Lets say i want to buy a property around 1,500,000 aed with yearly rent of 70,000 will i have to give extra money to the bank or the rent will be able to cover the costs? If not how much % more do you assume its going to be approx? From your own experience do you usually buy property on a new area (like now for example sports city) and then wait for the rent to increase?

I'd like to apologize if some of my questions feel stupid and i'd also like to thank you for your time

 

[totallyproperty]

Hi Smoke

First of all welcome to the forum and we hope that you enjoy your time with us.

I do not have first hand experience of the Dubai property market but like you I have noticed that it is very very strong at the moment. While some are concerned that the market may be moving too far too quickly, the Dubai authorities seem more organised this time with suggestions that they will limit available finance and introduce new restrictions if the market moves towards "bubble" stage.

I would be interested to hear your views on the market.

Regards,

Mark

 

[Kevin.V]

Hey Smoke..

Hi..

Its a gr8 thing to think bout the future, very few do.
All questions u have are valid.

Investing in an older project is much wiser as you can check its stability over the years in terms of rental returns.
Newer projects on the other hand cannot give immediate response to your investment.
As for loans the info the bank has given is correct however, its all based on investment type. As you plan to rent the apartment, it should cover your EMI's.

(moderated)
Cheers,

Kevin

 

[elwood]

hello smoke

Hello Smoke

First of all you are wise to be thinking of investing, I am new also to UAE and finding my feet a little bit as well !

I do have a friend who is a experienced advisor and he would be best to advise what the banks will or will not allow and the full requirements, every bank is different and will stipulate accordingly.

Myself, I am concentrating on Arabian Ranches, but if you need help with area best to invest vs the rental return, I can ask some colleagues for you, First of all, I would recommend getting to grips with all the fees you are likely to pay, and keep a bit extra aside, just in case.

I will help where I can

Kindest regards

 

[LawyerProperty]

I am a newbie here too nice but not a newbie to property laws and investment I can guide u although I do not believe in taking out a mortgage there is something called rent to buy too have u looked into that option?

 

[UmAlam]

Hi..

Investing in an older project is much wiser as you can check its stability over the years in terms of rental returns.
Newer projects on the other hand cannot give immediate response to your investment.

I am too in far of investing in the older projects because as it is said that old is gold. Moreover the old has faced all the difficulties, pros and cons, environmental and financial interests on a time travel.

Again the older projects may give you the clear cut idea that how people have their opinions about the projects that how much it has worth. So it is an advice from my site too to move further for investing in the old projects.

 

[mrpr]

I am also considering a 1BHK flat and did some research on the costs involved in owning a property in Dubai vs. recurring costs. I think its imperative to be more calculated as we need to consider the worst case scenario too..

I am sharing my calcs. There might be some mistakes or info that I overlooked. Hence would appreciate if the prop. gurus here can add / update my info.

------------------------------------------
700000 Property Value, 1BHK, appropx. 1000SFT
150000 Down Payment, 20%pct
550000 Bank Loan
4.25% Bank Interest
-------------------------------------------

Extra expneses to look for:
-------------------------------------------
Fees Description
-------------------------------------------
14,000 Broker fee
28,000 Land Dept Transfer Charge
4,000 Administrative costs for transfer
1,750 Land Dept Mortgage Registration
7,000 Banks Processing Fee
3,000 Bank Valuation Fees
630 Life Insurance
245 Property Insurance
5,000 Developer NOC Cost (AED1500-5000)
5,000 DEWA utilities connection (approx.)
---------------------------
68,625 Total Extra
---------------------------

Recurring Costs Per Month
---------------------------------------
Housing Fee 250
Maintenance fee 500
DEWA Bill 500
Bank Installment 3500
---------------------------------------
Total 4750
---------------------------------------

Extra Costs associated with the purchase of the property are calculated using below data:
1) Real Estate Broker Commission @2% of property purchase price (indicative).
2) Land Department Transfer Charge @4% of property purchase price
3) Land Department Mortgage Registration @0.25% of the Finance Value
4) Developer NOC Cost, 1500-5000 AED, varies from Developer to Developer
5) Banks Processing Fee @1% of Finance Value (varies from bank to bank)
6) Property Valuation Fee- AED 3,000 (varies from bank to bank)
7) Life Insurance Cost @0.09% for joint ownership, To be indicated by the insurance provider
8) Property Insurance @0.035%, To be indicated by the insurance provider

MRPR

 

[GregRalph]

I have a 2 bed shoreline apartment on the palm that I rent out, the below are approx monthly overheads

Monthly rent AED25K
Less 15% agent commission
DEWA (electricity/water supply 700
Palm cooling-chiller consumption charges 350
Palm cooling - monthly capacity charges 346
Lootah gas-supply 150
Du (telephone TV and internet) 279
Annual service charge of approx 20K
Club house fees approx 4K
Net return after all expenses approx 17500 per month

 

[kokni001]

I have a 2 bed shoreline apartment on the palm that I rent out, the below are approx monthly overheads

Monthly rent AED25K
Less 15% agent commission
DEWA (electricity/water supply 700
Palm cooling-chiller consumption charges 350
Palm cooling - monthly capacity charges 346
Lootah gas-supply 150
Du (telephone TV and internet) 279
Annual service charge of approx 20K
Club house fees approx 4K
Net return after all expenses approx 17500 per month

What about tax costs to be paid to the authorities if you are based abroad?

:dancing::dancing::dancing:

 

[Mark007]

I have a 2 bed shoreline apartment on the palm that I rent out, the below are approx monthly overheads

Monthly rent AED25K
Less 15% agent commission
DEWA (electricity/water supply 700
Palm cooling-chiller consumption charges 350
Palm cooling - monthly capacity charges 346
Lootah gas-supply 150
Du (telephone TV and internet) 279
Annual service charge of approx 20K
Club house fees approx 4K
Net return after all expenses approx 17500 per month

Hi Greg, This is a great return, I assume this is on a monthly contract through short term lets? If not this is a lotto be paying the agent...