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movetoportugal.com - Potential

Why Property?

Why Invest in Property?

  • Widely regarded as one of the safest types of investment
  • Property prices have consistently risen for the past 25 years
  • In many cases property has yielded far greater profit than bonds or long term fixed interest securities
  • Borrowing costs are at their lowest levels in 50 years

 

Why Invest in The Algarve?

  • Excellent return on investment potential
  • Highly desirable location
  • Over 300 sunshine-filled days each year on average
  • Glorious sandy beaches
  • The finest golf experience in Europe

 

Property Investment Simulation

The tables below give an indication of typical property investment scenarios.  Quantities are subject to change and depend upon a number of variables such as property condition and location, personal status and market conditions.

Typical Property Prices & Mortgage Repayments

Property Type

Average Purchase Price

Typical Deposit (30%)

Loan Amount

Monthly repayments

 (interest only)

Monthly Repayments

(Int. & repayment)

£

£

£

£

£

T2 Apartment

100,000

145,000

30,000

43,500

70,000

101,500

292

423

453

657

T2 Townhouse

150,000

217,500

45,000

65,250

105,000

152,250

438

634

680

985

T3 Villa (with Pool)

200,000

290,000

60,000

87,000

140,000

203,000

583

846

906

1,314

T4 Villa (with Pool)

300,000

435,000

90,000

130,500

210,000

304,500

875

1,269

1,359

1,971

Rental Income 

Rental income in The Algarve is seasonal.  Therefore rent charged outside the summer peak period is usually discounted.  The figures below are based on an average 25 week rental period.

Property Type

Rental Income

(per week)

Rental Income

(per annum)

£

£

T2 Apartment

400

580

10,000

14,500

T2 Townhouse

650

943

16,250

23,563

T3 Villa (with Pool)

900

1,305

22,500

32.625

T4 Villa (with Pool)

1,400

2,030

35,000

50,750

Annualised Return on Investment (based on an Interest Only Mortgage)  

Property Type

Rental Income

Monthly Repayments (interest only)

Return on Investment

Net Return on Investment

Gross Return on Investment

£

£

£

%

%

T2 Apartment

10,000

14,500

3,500

5,075

6,500

9,425

6%

10%

T2 Townhouse

16,250

23,563

5,250

7,613

11,000

15,950

7%

11%

T3 Villa (with Pool)

22,500

32,625

7,000

10,150

15,500

22,475

8%

11%

T4 Villa (with Pool)

35,000

50,750

10,500

15,225

24,500

35,525

8%

12%

Annualised Return on Investment (based on a Repayment Mortgage)

Property Type

Rental Income

Monthly Repayments (interest only)

Return on Investment

Net Return on Investment

Gross Return on Investment

£

£

£

%

%

T2 Apartment

10,000

14,500

5,437

7,884

4,563

6,616

5%

10%

T2 Townhouse

16,250

23,563

8,156

11,826

8,094

11,737

5%

11%

T3 Villa (with Pool)

22,500

32,625

10,874

15,768

11,626

16,857

6%

11%

T4 Villa (with Pool)

35,000

50,750

16,311

23,651

18,689

27,099

6%

12%

Capital Growth 

Any return on investment from property should be viewed as long term, ie. minimum 10 years.  Those who have invested in property based in the Algarve over the last 2 decades have been rewarded with capital growth in excess of 100% per decade (see table below).

 

Property Value

£

Year 1 (Purchase Price)

100,000

145,000

Year 10

200,000

290,000

Year 20

400,000

580,000

On average this equates to an annual capital growth rate of 10%.  Although historic data cannot be used as a reliable indicator of future performance, it is widely recognised that this level of growth is sustainable.

Overall Return on Investment 

The capital growth figures above, in conjunction with the rental income demonstrate that an overall return on investment of at least 20% per annum is achievable.  (This is based on a long term investment approach, see illustration below): 

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