Real estate investment is stable way to invest money and receive predictable income. There are two main options to earn money in real estate investment – capital growth and rental income.
In first option investor earns on growth of real estate property price e. g. buy now and sell for more in future. Such kind of investment fits well investors with “long” money and heavily depends on market entry point (buy when real estate market is down). To this category also belong “renovation” projects when property value increases through completed repair. We suggest investment in capital growth for more experienced investors who orient well on real estate market.
Second type of investment into real estate is purchase of real estate property for rental purpose e.g. Cash flow. Outlook for investments into rental market are positive with continuing modest rental fee increase over years, as demand for rental apartments in Tallinn is higher than supply and historical share of rented VS owned apartment is on a low level in comparison to developed countries.
Short-term rent of apartment is getting more popular as offers higher income compare to traditional rent of apartments. Most popular platforms for short-term rent of apartment are booking.com and airbnb.com. In case of short-term rent apartment appropriate location place is crucial for high income.
Below we will review 3 typical rental options of investment in Tallinn which suit well both for long-term and short-term rent
12-16 m2 in size, in good location, price below 30 000 EUR. Typical rental fee 200-220 euro per month.
Highest return of investment 9-10%. Low initial investment.
More frequent tenants, most buyers are investors.
Single room apartment
28-33 m2, location in popular districts, price range 51 000 – 55 000 EUR. Typical rental fee 280-320 euro per month.
Good return of investment 6,6-7%. High liquidity on real estate market. Highest demand on rental market.
Hard to find in good condition.
Double room apartment
45-55 m2, location in popular districts, price range 65 000 – 73 000 EUR. Typical rental fee 370-400 euro.