Setting the value of rent in Romanian cities is in fact, much more precise than some people realize. Usually, internationally, rent is linked to the cost of borrowing money. For residential property at this time, the typical mortgage borrowing cost is 5% to 6%. Therefore, so is rent, 6% of the value of the property, per year. This has been stable for quite some years. When interest was 12% in 2008, so too was the rental yield.
If you know the selling price but not the rent…
Simply take 6% of the selling price, assuming the apartment is ‘very good quality’, such as might be suitable for Airbnb, or use 5% or less % if sub standard. This 6% is the annual value in euros you can expect.
Example, a flat with 135k euro value, then 6% is 8,100 euro, and 1 rent is 675 euro.
If you set the rent much higher than this figure,
- It will probably remain empty for extended periods.
- It will probably only appeal to a slim section of the available clients, narrowing your choices.
- Create a strong motivation with the tenant to move away at the earliest opportunity.
If you know the rent, but not the selling value…
Then just reverse the above calculation. Example:
You have a stable track record of 450 euro per month, and the property is a high standard, which means 2 rents are 900 euro, which is 1%, so the apartment should be approx. 90k euro selling value, inclusive of everything that the rental included.
- To determine if you are paying too much rent, check the area price for any similar property, calculate 6%, and this will tell you the correct annual figure
- To determine the selling price for a property with a rental history, multiply the rent by 12, and this figure represents 6% of the sellable value.
- To determine the rentable value of a nice quality property, calculate 6% of the sellable price, or 0.5% per months
Note, office rentals tend to sit around 8% at this time, and shop/ commercial space rental values around 10%.