When looking for the best locations for high-income rental properties, there are many factors that you need to consider.
For example, if you were simply looking at high rental rates, Sydney would have to make the cut. However, there are many other important factors that influence the volume of rental property returns including the rate of income as compared to the original investment, the availability of short-term rental services in the chosen destination, the stability of the government and economy, and the long-term value of your rental property.
Investing in a city that boasts a high volume of short-term rental properties can provide higher rental returns. Short-term rentals have been shown to increase the return on an investment property between 25-75%. Plus, in most cities worldwide, the popularity of sites like Airbnb automatically increases the amount of return for property owners.
In this post, we’ve listed the five best places in the world to invest in property for short-term rental purposes. All of them have great fundamentals when it comes to the government and economy, and all of them enjoy a good tourist season.
So even if buying foreign real estate is just a pipe dream from where you currently stand, sit back and enjoy as we reveal where you can buy the best offshore assets.
1. Medellin, Colombia
In terms of long-term rentals, Colombia boasts high rental yields between 6.5%-9.6% as compared to only 4.39% in Sydney, Australia. Colombia is a highly underrated yet increasingly popular country for travellers. While it was once seen as the home of drug cartels and violent crime, it’s now considered the second safest economy in South America in which to invest.
The lively city of Medellin is wealthy, somewhat safe and fashionable. In fact, it’s one of the top tourist destinations for visitors from USA and Canada. It has a dedicated permit program to allow for short-term rentals from sites such as Airbnb, and it also happens to be strikingly beautiful.
For the savvy investor, buying in Medellin is a smart choice because the weather is summery for most of the year. There are lush forests and bird reserves just outside of the city, and an impressive public transport system to help visitors get there. Its rich cultural scene and phenomenal fine dining scene are the icing on the cake.
The excellent weather is an indisputable drawcard when it comes to Medellin’s potential for a short-term rental as tourists tend to visit all year round.
2. Amman, Jordan
If you are looking for some of the highest rental yields you can earn, the capital city Amman in Jordan should feature in your investment shortlist. With a long-term rental yield of 10.65% that has the potential to skyrocket to 15%-20% through Airbnb or other short-term rental services, Amman is hard to ignore.
Aside from very good infrastructure, Amman has idyllic weather with an average temperature of 25°C in July and 8°C in January. It has laws that are favorable to landlords, and transaction and maintenance costs that are very reasonably priced.
While it’s a thoroughly modern city in terms of lifestyle and culture, it has numerous ancient ruins and a richly storied history. Once treated as a mere pit stop on the way to Petra, Amman is now considered one of the easiest cities in which to enjoy the Middle East experience. Safe and spectacular – what more could you want?
3. Kuala Lumpur, Malaysia
Due to the depreciation of the Malaysian Ringgit, Kuala Lumpur is undervalued when compared to other Asian cities. Long-term rental yields sit around 5.75%. For short-term rentals, rental yields are at 7%-10%. Because the ringgit is experiencing a 20-year low, currency appreciation could boost rental returns as well.
Kuala Lumpur is Malaysia’s largest city as well as its capital. It has historic monuments, soaring skyscrapers, mega-sized malls and lively street markets as well as an exciting contemporary art and design scene. The weather is hot and humid year-round, which makes it perfect for travellers looking for an exotic summer vacation.
It’s undoubtedly the most popular tourist spot in Malaysia, and it’s quickly becoming a hotspot for property investors from all over the world. If you’re looking for a stable real estate market, this is the place: real estate prices have not gone down in 15 years, Airbnb is allowed by law, and the rental system is kind to landlords.
4. Wellington, New Zealand
Wellington, the capital of New Zealand, has excellent long-term rental yields of 6.88% to 8.43% that could rise to 10%-15% if you rent out your property on a short-term basis.
New Zealand has a strong legal system and a government that closely resembles Australia’s, Airbnb is completely legal. It has also been recognised as the least corrupt nation in the world, according to Transparency International’s Global Corruption Index. Plus, it’s beautiful.
The city of Wellington is known for its harbour setting and laidback vibe. With waterfront promenades and world-famous cuisine, it’s jam-packed with museums, theatres, galleries, boutiques and bars. In September, the World of WearableArt takes over the city – this renowned international design competition sees thousands flock to the ‘Land of the Long White Cloud’ and short-term rental returns can therefore be very generous.
In general, New Zealand offers a stable economic environment for investment. It was even ranked 1st for Investor Protection in the ‘Doing Business’ report by the World Bank in 2016.
5. Brussels, Belgium
Brussels has, for Europe, a relatively high long-term rental yield of 4.87% that may be raised to 7%-9% for short-term rentals. Airbnb is legal in Brussels, its economy is very stable, and its government makes foreign purchase and ownership of real estate very easy.
Brussels is the administrative capital of the EU as well as the country’s own capital. It’s a small city composed of 19 municipalities – tourists tend to be particularly drawn to trendy St.Gilles or upscale Ixelles. The weather is unpredictable, but fortunately a lot of the cultural attractions are housed indoors, so this doesn’t pose a deterrent to travellers.
Brussels is known for its vast green spaces and the shopping scene is also exceptionally good. Beer (and beer festivals) are obviously a drawcard, and travellers can generally get by speaking English without the need for a phrasebook.
Renting out your investment as a short-term solution for tourists can help you obtain a better yield than renting long-term, and the cities above are all designed to make it easy to rent short-term. There are so many good investment opportunities across the globe but these five cities are, without a doubt, some of the most likely to provide big bang for your buck. Combine this with a listing that syncs to the top 50 booking platforms, like MaisonNets, and you will maximize your profits.