According to the new law on alternative investment method (under number 131 (I) 2014), a new and safe way of investing in the Cyprus property market is proposed.
Earlier, the classic way of investing money in real estate for someone who wanted to have a stable income and had 100,000 euros or more at their disposal was buying one or more apartments, offices and shops and renting them. The average income from leasing in Cyprus is relatively low and varies from 3 to 5%. From this income, you need to deduct the costs of maintenance and repair, payment of taxes, etc.
Now, in accordance with the new law, investment companies are allowed to purchase real estate after the relevant permission of the Cyprus Investment Commission. The investment company presents its proposals to interested investors through a newsletter. An investor can buy a part (shares) in an investment company that owns a particular real estate represented in the newsletter.
The new investment product, in comparison with the old way of investing, has great advantages:
1. An investment organization usually buys large property, in good areas, with solvent tenants (state and / or banking organizations, etc.). In this way, income from the lease is secured and the investor has the guarantee that the property will not be left unrented.
2. The goal of most investment organizations in this sector is to obtain a stable quarterly income (dividend) from leasing, which is more than 6% per annum. Dividends are paid before the end of the investment period. The investment period ends with the sale of real estate, and it is expected that the investor will benefit from the sale due to the increased price of real estate. After the sale of real estate, all money is distributed among investors. The investment organization is bound by the obligation to sell real estate in 5-7 years.
3. The investment organization accepts obligations to maintain and repair the building, calculate and pay taxes, search for tenants, rental proceeds, pay dividends to investors, etc.
4. An investment organization can borrow money from a bank on better terms than a private investor. If you have a loan from a bank, the investment institution usually seeks to increase the income for investors, since the amount of income is usually higher than the loan from the bank.
Thus, the investor has a chance, together with other participants, to invest in real estate that is rented by solvent tenants, without additional red tape and a guarantee of good income, and on better conditions than if he acted independently.