Top 5 Mistakes Foreign Investors Make as New Home Buyer in Turkey

Common Mistakes Foreign Investors Make in Turkey

Turkey has become a popular destination for foreign investors looking to purchase real estate. However, many make common mistakes that can affect their investment outcomes. In this blog, we will highlight some key tips to avoid these pitfalls.

1. Understanding the Market for Foreigners

Every year, approximately 1,500,000 properties are sold in Turkey. Out of these, around 40,000 properties are purchased by foreign investors. This means that about 3% of Turkey’s property market is available to international buyers. Importantly, most developers do not exclusively target foreign investors, so it’s crucial to research the market thoroughly before making a decision.

2. Hesitating to Purchase

Some investors visit Turkey, evaluate properties, and then return home to think about it. However, this can be a costly mistake. Property prices in Turkey can increase significantly due to inflation, which is currently around 15% per year. For example, last year, property prices surged by an average of 30%. Therefore, it is advisable to conduct your research before coming to Turkey and to make a purchase during your visit.

3. Trusting International Real Estate Agencies

While there are many international real estate agencies with attractive offices and partnerships, it is not always wise to rely on them for your property purchase. These large agencies often focus on specific areas and projects, which may not represent the best deals available. In Turkey, the standard commission rate is 2% from the buyer and 2% from the seller when working with local companies. International agencies, however, can charge as much as 20% due to exclusive agreements. To maximize your investment, work with a reputable local company that understands the market dynamics.

4. Paying Cash Instead of Choosing Installments

For the Citizenship by Investment program in Turkey, you need to pay the full amount in cash. However, as an investment strategy, it may be better to opt for installment payments. Turkish Lira depreciates at a rate of about 20-30% each year. If you pay cash upfront, even with a 15% cash discount, you might miss out on better deals down the line. By choosing to pay 50% as a down payment and waiting at least a year, you can protect your investment from currency depreciation and potentially secure a more favorable purchase price later.

5. Investing in Ready Properties Instead of Under-Construction Projects

Many investors focus on purchasing ready-to-rent properties, which typically offer a net rental income of around 4% for residential apartments and 6% for commercial properties. While this can be appealing, consider the long-term benefits of investing in under-construction projects. While you might miss out on approximately 12% rental income during the construction phase (usually 2-3 years), the capital appreciation once the project is completed can be substantial—often doubling your investment. Choose reputable developers and avoid smaller companies without a solid background.

Conclusion

If you’re considering investing in Turkish real estate, avoid these common pitfalls. Conduct thorough research, understand the market dynamics, and work with local experts. We at Select Turkey are here to help you navigate the process from start to finish. All you need to do is provide your flight number, and our licensed agents will assist you throughout your journey. Our legal department will also be available to guide you every step of the way.

Thank you for reading, and we look forward to welcoming you to Turkey!

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