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As Turkey continues to progress as one of the most sought after emerging markets for property investing, several questions repeatedly arise from potential buyers considering the location. Below is a compilation of ten of the most frequently asked questions about Turkey as a property investment location.

1. What makes Turkey an interesting investment market?

Currently Turkish real estate is one of the strongest emerging international market growth sectors, showing excellent potential for continued demand and expansion. Capital growth for mid to long term investments, along with good rental yield potential are attracting investors to the country’s property sector.

Coupled with the country’s domestic market, demand for property currently exceeds supply, resulting in fast increasing real estate prices. Growth within the tourism sector and interest to re-locate are also areas creating further demand and a strong growth market.

The country features a youthful demographic with a highly skilled workforce with intentions to enter the real estate market, placing demands on supply and improvements to the mortgage financing sector. This market represents strength in the future re-sale and letting markets.

Turkey’s steadily expanding economy and government integration for bringing the country in line with EU accession requirements allow for strong future growth prospects.

Along with the excellent investment opportunities presented in the Turkish real estate sector, the possibility of gaining admission to the EU in the coming years is further fuelling demand. The pre-EU entry prices offer a competitive position within the European market.

2. Are there any restrictions for foreign buyers?

Most nationalities are freely able to purchase real estate in Turkey, although restrictions apply to some nationalities. Those who fall into a restricted category will require a legal ‘Letter of Invitation to Purchase’ prior to entering the country. If unsure, details can be obtained from an embassy or consulate.

Other restrictions relating to all foreign buyers are real estate purchases within restricted areas, such as military zones, along with restrictions relating to property over 30,000m2 without obtaining a special permit.

3. What are the associated purchasing costs?

Purchasing costs will amount to approximately 5% of the property sale price. Registration and Notary fees are between 0.1% and 1%, while Stamp Duty fees are 0.75%. Title Deed fees have temporarily been reduced from 1.5% to 1% to assist the housing market during the current economic climate.

4. What are the legal fees?

Legal fees are around 2% of the purchase price, with prices varying between different legal firms. Half of the legal fees may be required when signing the purchasing contract and the remainder on completion.

5. What are the taxes I can expect?

If opting to sell the property prior to completing 5 years ownership, capital gains taxes will be charged at 20%. Following 5 years ownership the property is free from capital gains. VAT at 1% is required on real estate with a surface area greater than 150m2. Other taxes include residential real estate tax is 0.1% of the property value, and rental income tax where different payment method options are available to suit the owner’s preferences.

Rental income is charged at between 15.6% and 24.8% payable by a ‘deduction method’ exempting expenses such as utilities, insurance and administrative costs, or the ‘lump sum method’ deducting 25% of the gross income.

6. Will I be able to arrange a mortgage?

The growth of the real estate market has opened up mortgage financing on Turkish property to foreign buyers in recent years. Both fixed and variable rates can be arranged, with financing available for both re-sale and off-plan properties.

7. What is the military clearance requirement?

Military clearance is arranged by the buyer’s solicitor prior to completing the property purchase. The documents are required to ensure the property is not located within a restricted zone including military land, or other land protected for cultural, historical or ecological purposes.

8. What is a typical payment schedule?

While payment schedules may vary between different developments or agent’s requirements, a typical payment schedule will require a holding deposit, reservation payment and reminder on completion. Holding deposits are often approximately €3,000 or £3,000, while reservation payments may vary between approximately 10% and 40% of the purchase price.

It is also possible that a development may have staged payment requirements throughout the construction process. Re-sale properties are likely to have different payment procedures to off-plan investments, with the full price payable on transfer of the title, minus the holding deposit.

9. What is the time zone and currency conversion rate?

The time zone of Turkey is GMT +2. The local currency is the Turkish Lira (TRY). As the currency rate changes, the following conversions should only be used as a general guide:

1 EUR = 2 TRY / 1 GBP = 2.4 TRY / 1 USD = 2.5 TRY

10. Do I need a visa to visit Turkey?

Depending upon nationality and intended duration of the visit to Turkey, a visa may be required. Contacting an embassy or consulate prior to arranging travel plans is advisable for details of full requirements. This will ensure complete and up to date information to avoid unpleasant surprises.

For those investing in real estate, you may find that there are several unknowns that have to be accounted for that are related to money.
This investment relates to both home owners as well as those involved in the real estate business. There are several common fears that are related to money in real estate.
One of the major problems that are part of real estate investing is taking risks.
If you are investing in a property to own a home, you will have to take out a loan. If you are unable to pay taxes or the loan at any time, you will be at risk of loosing the home.
This can cause several levels of fear to occur, which may lead to the wrong loan being purchased for security. Knowing how much risk you are willing to take with your loan will define what type of loan you should get.
Another common fear factor with money is in relation to investing in a property during the wrong time.
If the economy is at a low or if the market price is not good, investing in a certain property may mean a loss. This is a risk factor that many real estate companies will decide to take in order to sell a home.
When deciding if this is a good investment or not requires some risk and can cause fear if you are unsure about the economy and sale of the home.
Money in the real estate business means taking risks. Whether you are a home owner or are in the real estate business, there will be several times where you will have to determine logical decisions without knowing if there will be money to back up the decision.
It is important to acknowledge these fears so that certain boundaries can be set in relation to them.
This means that you know when you are going too far with a purchase or investment or when the fears are holding you back from making the right moves.
By knowing the financial details of a home purchase, you can move past your fears and make the right investments.

Even among people who are not so interested in financial matters, the idea of investing in real estate is very prevalent. An increasing number of people today are taking up real estate investment as a sort of a business and are becoming very professional about it. More and more people are getting rich returns by investing in properties, or even renting them out for a good deal of amount.

Real estate investors are regular features on the television shows discussing the lifestyles of the rich and the famous. This has led to the perception that investing in real estate is indeed quite simple and just about anybody stands to make a profit out of it. However, this concept is hotly debated by most professional investors. They would point out how real estate investments could also be risky, and how you would have to stretch yourself to the maximum limit to get profits out of the investment.

Despite that, it can be said that no other investment pays as richly as real estate investments. The risks are too few and easily controllable. Yet, there are a few pointers a person who is planning to invest in real estate must know about. Let us examine some of the myths making the rounds of the market.

Myth # 1: Investing in Real Estate Means Instant Money

Consider this. Most real estate investors need to spend an average of five years before they can see some good amount of money coming their way. Real estate investments do not pay from day one, as your liquidity would be stuck with the property. To top it, if you have a mortgage, you will need to make the monthly payments too. This disillusions the novice investors and they pull out within a few months into the business. Just like other investments, real estate investment also doesnâ??t pay from the instant you begin.

Myth # 2: Real Estate Investment Could be a Supplementary Business

Well, this is possible, but then your income would be restricted. You will not be able to realize the full potential of your investment too. When one plans to invest in real estate, there are several things to be done â?? hunting for properties, negotiating deals, perform maintenance work, search for buyers, negotiate with them, close deals, or rent properties, etc. All this takes a lot of hours per day.

Myth # 3: Real Estate Investment is a Hobby

If you take it that way, then you must be ready to allow your investment to pay you just as much as your hobby pays you. You will do well with real estate investment only if you become thoroughly professional about it â?? and that includes giving a name to your business, print stationery, give advertisements, build up contacts within the industry, etc.

Banish these typical myths from your mind and go about real estate investment the way a true businessman would. That is when you could turn out to be among one of those on The Lifestyles of the Rich and the Famous.

Investing in real estate has changed in many markets in our country.  If you are like me, you live in a real estate market that has gone soft.  There are still some areas in the country where homes are appreciating nicely, but nothing like it was just a year or two ago.  There were a lot of self-proclaimed real estate gurus that popped up during the boom times telling you how to make HUGE PROFITS in real estate.  Back then, during the up cycle, investing in real estate was so easy.  You could throw money at almost any piece of real estate and be practically guaranteed to make a profit.  It seemed like anyone who had flipped a couple of houses and made a profit was an “expert” investor. 

Times are different now.  Investing in real estate takes a little more effort.  Investors who haven’t weathered down cycles before are struggling because all they know are massively appreciating markets.  All too many of those self-proclaimed gurus lost their shirts when the markets changed.  Those ads that go “I made $256 Million in real estate in 4 weeks with no money down” are a whole lot less believable.  Okay, $256 Million is an exaggeration, but you know what I mean. 

So the question is, “How do we still go about investing in real estate and make profits?”  Can it be done in these soft markets? 

The answer to that question is quite simple.  I can say without question, without hesitation, the answer is:  YES!  ABSOLUTELY! 

I have been investing in real estate for more than 20 years.  I have seen up cycles and I have seen down cycles.  I have made money and been successful in both.  I can tell you several things about down markets that may surprise you. 

First, experienced real estate investors will tell you that more money is made in down markets than in up markets.  It’s true, MORE MONEY is made in DOWN markets than in up markets! 

Second, experienced investors PREFER to do the bulk of their investing in DOWN markets.  There are a number of reasons for this, but the big ones are that there are more motivated sellers in down markets and the competition (other investors) pursuing these motivated sellers is LOWER.  It’s a double bonus. 

Down markets produce more deals and less competition to get those deals.

One of the investing techniques I specialize in is Lease Options.  Lease Options are one of the absolute best techniques for investing in real estate in down markets.  I’ll say it again, because if you are looking for ways to get involved with real estate investing you need to know this, Lease Options are one of the absolute best techniques for investing in real estate in down markets. 

Let’s take a look at why. 

I’ve already said that down markets produce high numbers of motivated sellers.  Right now in Michigan, it’s very common to see a house listed on the market in two ways, both for sale and for rent.  They are listed this way because the sellers KNOW how bad it is and they want someone, anyone, to cover their mortgage payment.  These double listings SCREAM “Motivated Seller!”  Now, not every single one of these is going to be an excellent Lease Option deal.  But you know what?  That’s okay, there are plenty to choose from! 

The critical part in selecting your Lease Option candidates, in an up market or a down market, is creating WIN-WIN-WIN situations.  The seller must be satisfied with the deal, you must be satisfied and the end buyer must be satisfied.  When investing in real estate, this is what makes us successful.  How does this work?  

To create a WIN for someone we must meet their core need.  A motivated seller’s goal is to sell their house.  Eventually they need their mortgage paid off and the deed transferred out of their name.  If they are willing to rent the house as well as sell it, they are telling you that having their mortgage paid each month is more important right now than actually getting the house sold.  If we can find a tenant buyer for them we are satisfying their core need of paying the mortgage each month and eventually selling the home.  This is a WIN for the seller. 

Our end buyer is looking for a home to own. Their current situation prevents them from getting a mortgage immediately but they plan on being able to get a mortgage soon. They want a home now. They don’t want to wait to get their house.  By allowing them to lease and then purchase the house we are meeting their core need. This gives our buyer a WIN. 

Before we talk about what makes a WIN for us as an investor let’s talk a little more about mortgages for our end buyer. There has been a lot of news lately about sub-prime lending woes and how lenders with riskier loans are facing high rates of foreclosure and may be going bankrupt.  As a result it is getting much harder for people with poor credit to obtain a mortgage.  It is also getting harder for ANYONE to obtain a mortgage with 100% financing (i.e. no money out of the buyer’s pocket). This may sound crazy, but this is actually a good thing for us when investing in real estate. 

When investing in real estate by doing Lease Options it is harder for us to find quality tenant buyers when almost anyone who can fog a mirror can get a mortgage. Not only that but because it was so easy to get 100% financing most buyers save nothing and are unable or unwilling to pay much for an option fee.  With the lending companies tightening their belts I expect we will see a growing population of QUALITY tenant buyers who are able to pay HIGHER option fees. 

The flip side of this is that because lenders are tightening their belts your tenant buyers will need to work harder to restore their credit.  It may take as much as 2 to 3 years for some tenant buyers to be able to qualify for mortgages instead of just 1 year as we had seen before. 

The bottom line is when investing in real estate by using Lease Options the difficulties of the mortgage lenders are just another reason why this down market is a GREAT time for us investors. 

Now let’s look at the last part of our WIN-WIN-WIN equation — the WIN for us, the investor. For us to WIN we need to make a profit. The profit comes both from the equity spread between your option price to the seller and the buyer’s option price to you as well as any monthly cash flow in the rental payments.  With Lease Options it pays to be creative. You’ll find a lot more deals and be a lot more successful investing in real estate if you practice creativity in your structuring. 

The most common motivated seller we encounter is the one who has little to no equity in his home.  Too many real estate investors get calls from sellers that only care about “What’s it worth?” and “What do you owe?”  If the numbers are too close together, they say, “Sorry I can’t help you.”  Click. 

What if you pursue it a little further with a creative mind?  A good question to always ask is “What are your monthly payments?”  If the payments are lower than rental rates you may be able to make some monthly cash flow.  

Another good question to ask is, “How soon do you need to sell the house?”  You may want to ask this question a couple of times while you are talking to them.  You could be surprised to find that the number grows longer each time you ask.  There aren’t too many markets I can think of that stay down forever.  Eventually the house should start appreciating again.  If your option period to the seller is long enough you can capture appreciation to make your profit. 

What about this – “Are you willing to bring money to closing to sell your house?” And if their monthly payment is higher than what you can rent the house for, “Are you willing to pay the difference between the rental amount and your monthly payment?”  These two questions may seem brazen, but ask yourself, what have you got to lose?  If the seller is fully leveraged on the house or their payment is higher than the rental rate you have nothing to lose, because if they aren’t willing to make concessions then you can’t help them!  Certainly some of us feel awkward in asking these questions, but trust me, if you ask this question 30 times, no matter how embarrassed you might feel at the beginning, you will start to feel much more comfortable by the end.

These are just a few creative questions you might come up with to try to find terms that will allow you, as the investor, to make a profit, a WIN for you.  When you add all of three of these together, meeting the seller’s need, meeting the buyer’s need and you making a profit, you have created a WIN-WIN-WIN.  This is what you MUST do to be successful when investing in real estate with Lease Options.

Do you see how much BETTER it can be to find deals in down markets?  Motivated Sellers are EVERYWHERE and there are FEWER investors competing with you.  Combining these two factors allows you to choose your deals with greater care. Always “Cherry Pick” your deals in a soft market.  This is why experienced investors, who have been in both up markets and down markets, prefer the down markets.  Soft markets can provide some of the best deals when investing in real estate.

To find out more about this topic, visit my website at www.WendyPatton.com. My website offers free articles, my national speaking schedule and my new books, Rent-to-Sell, (published late February 2009) and Rent-to-Buy (coming out Summer 2009). You may also be interested in my other books, Making Hard Cash in a Soft Real Estate Market and Investing in Real Estate With Lease Options and “Subject To” Deals. These are books for sellers, buyers, investors and the real estate agents that serve them.

Reprints available with permission only.  Contact: Info@wendypatton.com