With the rising rent prices, more families are looking to buy a home here in Dubai over the last year.
See guest post, by Home It Better, on whether Dubai is a good place to invest in properties, and calculators that will come into handy for you to decide if it makes financial sense.
Many investors buy a home to save on rent, and others invest to grow their investments or diversify their portfolios. The decision to begin property investing is a personal one. Whatever the reason it may be, you will need to run the numbers and do your research.
After reviewing many discussions in forums on property investing in Dubai, here are the 2 commonly asked questions:
- Should I rent or buy?
- What is the ROI (return on investment) on properties right now?
Let’s look at both and show you 3 free tools you can use to run your own numbers.
1. Should I Rent or Buy in Dubai?
As a start, buying a property in Dubai is not always the best investment.
It can come with a lot of expenses.
There are service charges, property insurance, property valuation fee, maintenance, life insurance, just to name a few. It’s typically an extra 7-8% of the property value.
What about renting?
It depends.
Renting in “Downtown Dubai” is probably cheaper than buying as this area is more expensive to own. And when you rent, you don’t need to keep up with unexpected expenses that come with owning a home, keeping your monthly cost stable and fixed.
However, there are many who believe that they are ‘throwing money away on rent”, and want to get on the path to homeownership.
And, with so many off-plan properties options in Dubai, these properties are sold at lower prices and have affordable payment plans that allow investors to pay the property in installments.
This can be a cheaper option than renting, and give you the opportunity to build wealth and equity over time.
The truth is, a lot of it depends on location, the type of property you are buying, your financial situation and timeframe.
Free Tool #1: Rent vs Buy Calculator will help you understand how both renting and buying can impact you financially.
We particularly like this calculator from Property Finder as it factors in the length of stay, the upfront fees of buying a property in Dubai, and how much you will save if you rent versus buy.
Under ‘Length of Stay”, you can also calculate when renting becomes more expensive than buying based on your budget.
Note: This calculator does not include service charges, property insurance, property valuation fee, maintenance, life insurance, etc. It’s typically 7-8% of the property value. (See post here on all extra costs in details).
2. What is the ROI (return on investment) on properties right now
After reviewing many comments that debated between long-term and short-term rental ROI in Dubai, here is one major takeaway…
A property with a greater ROI (and cash flow) is usually the better investment.
If you eyeing on an investment property and want to know which one (long-term lease and “AirBnB-ing” it) gives you a better ROI, here are two calculators you can use to see which one makes more sense financially.
Free Tool #2: Rental Yield Calculator Dubai for Long-Term Lease
Free Tool #3: Rental Yield Calculator for Airbnb / Short-Term Lease
Our Rental Yield Calculator includes all the upfront and extra costs that come with buying a property and the potential return on investment (ROI) of a given property.
These tools will help get your mind working on property analysis, understand your price limits, and be clear on all the expenses that may come up.
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Final Thought
Keep in mind. Numbers are just numbers.
The property market in Dubai can be dynamic, so it’s essential to understand the market and carefully weigh the pros and cons before investing.
Just like anywhere else, buying properties in Dubai can be a good investment, but if you don’t believe there is a real financial gain in the long run, it’s ok to wait than have your money be tied up.
At Home It Better, we have created a series of guides to take you through each step of buying your property from start to finish, so that you can navigate and invest better.
Disclaimer : Home It Better is not your financial advisor or real estate agent. The articles here are for informational purposes only, and should not be used as a substitute for advice from a licensed professional.