Post by account_disabled on Mar 14, 2024 0:56:58 GMT -6
Although Spain is a country in which the acquisition of housing, owning our home, is a deeply rooted fact - especially in relation to other European countries where renting is more popular - the question of whether it is better Buying or renting a home, to a greater or lesser extent, has crossed all of our minds. Obviously, personal and work circumstances, and the personal tastes of each individual take precedence when making a choice, and economic circumstances are secondary, things are worth what each person is willing to pay for them, as it is popularly said, and factors such as location, features, condition of the house, etc., can considerably influence the sale or rental price of a home. Net rental profitability and PER However, there are two basic rules in the real estate market that can help us guide ourselves on the suitability, or not, of the rental or sale price of a house, and, therefore, on whether it would be better to buy or rent said home.
Net rental income The net rental profitability is the result of dividing the annual cost of renting a home by its sale price. For example, let's imagine a house that is rented for 1,200 euros per year and whose sale or purchase value is 320 thousand euros. The annual rent of the home would be 14,400 euros (1200 x 12), if we divide this by its purchase price, that is, 320 thousand euros, and multiply the result by 100, we would obtain 4.5%, and so on We would say that this home has BYB Directory an annual profitability of 4.5%. PER (Price Earning Ratio) This ratio indicates the number of times that the annual rental income is contained in the sale price of the home, which would be equivalent to the number of years it would take to pay for said home with the rental price that the home has.
The way to calculate is the inverse of the way we calculate the net rental profitability, that is, we would divide the sale price by the annual rent following the previous example, we would divide the sale price, 320 thousand euros, by the cost annual rent, 14,400, which would give us the figure of 22.22, that is, it would take us 22.22 years to pay for that home through rent. Net rental profitability and PER in Spain According to the latest report on these ratios from the Bank of Spain , corresponding to the last quarter of 2021 In Spain we have, on average, a net rental profitability of 3.7% and a PER of 27 times (27 years/324 months). These data can give us a reference on the value of the home: returning to the house in our example, we saw that the home generated a 4.5% annual return, equivalent to a PER of 22.2, so it would be a larger home.
Net rental income The net rental profitability is the result of dividing the annual cost of renting a home by its sale price. For example, let's imagine a house that is rented for 1,200 euros per year and whose sale or purchase value is 320 thousand euros. The annual rent of the home would be 14,400 euros (1200 x 12), if we divide this by its purchase price, that is, 320 thousand euros, and multiply the result by 100, we would obtain 4.5%, and so on We would say that this home has BYB Directory an annual profitability of 4.5%. PER (Price Earning Ratio) This ratio indicates the number of times that the annual rental income is contained in the sale price of the home, which would be equivalent to the number of years it would take to pay for said home with the rental price that the home has.
The way to calculate is the inverse of the way we calculate the net rental profitability, that is, we would divide the sale price by the annual rent following the previous example, we would divide the sale price, 320 thousand euros, by the cost annual rent, 14,400, which would give us the figure of 22.22, that is, it would take us 22.22 years to pay for that home through rent. Net rental profitability and PER in Spain According to the latest report on these ratios from the Bank of Spain , corresponding to the last quarter of 2021 In Spain we have, on average, a net rental profitability of 3.7% and a PER of 27 times (27 years/324 months). These data can give us a reference on the value of the home: returning to the house in our example, we saw that the home generated a 4.5% annual return, equivalent to a PER of 22.2, so it would be a larger home.