Daria News

Daria Villas: High yields in a prime location

Jan 20, 2024 | Investment & Concept, Investor Tips

Why the right location is so crucial 

Getting rich with real estate? Not so easy! But there is an insider tip: the city of Cape Coral in southwest Florida is the perfect location for attractive rental yields. Find out why in this blog post.

If you want to get rich, invest in real estate. The statement is correct, but you can also do a lot wrong in this area.

Basically, if you want to protect your money from inflation and unprofitable investments, you should invest in houses and apartments.

The great advantage of real estate is that you can build up assets with money borrowed from the bank. However, important conditions must be met for this to work.

Location, location, location

The most important factor in real estate is the location. Experts and industry insiders divide locations into the following categories: A, B and C locations. There is no uniform definition, but the following classification has become established in the real estate world:

A-location: These are metropolitan areas of international importance. The demand for real estate is always unbroken. High purchase and rental prices are normal. There are many streams of demand (international, national, regional) that want to invest in residential space.

B-location: These are major cities with high national and regional significance. Purchase and rental prices are also high. Demand is driven by national and regional buyers.

C-location: These are cities that are of regional importance but play no role nationally. Here, too, there can be a high demand for real estate. However, the flow of interested parties only comes from one source: people from the region.

Over the years, the situation at B and C locations can change - sometimes quickly and drastically. A company with many jobs leaves the region, the infrastructure deteriorates or the economic life in the city center loses substance.

This means that properties in B or C locations lose value and can only be sold at a favorable price, if at all.

This is not uncommon in rural areas. Example: A family builds a house in the countryside. 30 years later, the property is finally paid off. But then the children have moved out and the parents who stayed behind find the home and all its obligations too big. However, their hometown in a C-location has developed badly over the past three decades. It will be difficult to sell the house at a profitable price.

Places of residence naturally have an emotional value, which is why purchase decisions are not made solely on the basis of monetary criteria.

 

Germany as a real estate location

However, if you want to build up your wealth with the help of real estate, you should only invest in A-location properties. In these locations, you can let your money work for you with a clear conscience. In the case of major cities such as Munich, Frankfurt, Hamburg, London and Paris, there is a much lower risk that these cosmopolitan cities will quickly lose their importance.

However, properties in A-locations also have a major disadvantage: they are incredibly expensive and the rental yield is low.

Let's take Munich as an example:

Property owners are currently calculating with an average rental yield of 2.98 percent.
The average rent per square meter is 19.97 euros.
The average purchase price per square meter is 8,049 euros.

As a newcomer to the Munich real estate market, it is difficult to do a profitable business. As a potential investor, you should therefore not limit yourself to your own country, but also dare to look beyond the continent.

 

A look at Florida as a real estate location

The US state of Florida quickly comes to mind. There are attractive opportunities here at the moment that have even more to offer.

In Florida, attractive rental yields are combined with year-round sunshine, a high quality of life and a community of like-minded people.

Specifically, the perfect location is Cape Coral in southwest Florida.

All the important prerequisites for an absolutely attractive investment come together here:

  •  A country with a high gross domestic product
  •  A-location with many demand streams
  •  Positive urban development
  •  High rental yields

 

USA: Highest gross domestic product worldwide

The gross domestic product (GDP) of the USA is around 25 trillion US dollars. This means it is still the world's most economically powerful nation. By comparison, the EU generated a GDP of 15.8 trillion dollars in 2022, according to data from Statista GmbH. The value of all goods and services in Germany amounted to 3.8 trillion US dollars.

Basically, Americans have more money in their pockets. On average, they work slightly longer and pay less tax. The figures fluctuate depending on which factors you take into account. In Germany, the downward and upward outliers are more in balance. The average income of Germans is around €27,000 net.

The US state of Florida has enjoyed a huge influx of Americans from all over the country for more than 50 years. Investors from Canada, Germany and Scandinavia also seek their fortune here permanently. In addition, up to 100 million tourists from all over the world visit the Sunshine State every year. In 1980, the population was still at 9.7 million inhabitants; in 2017, it was already 20.9 million.

These figures are also reflected in the southwest in Cape Coral.

 

Location Cape Coral

The town was founded in 1957 and the first houses were built a year later. By 1970, 11,500 people were already living in Cape Coral. In 2000, the city had already grown to 102,000 inhabitants. As of 2021, over 200,000 men and women live in the city, which is also known as the Venice of Florida due to its many water canals.

 

OpportunityN through limited expansion

The city continues to grow, but expansion is limited. Cape Coral is located on a peninsula and there are still few areas in the north that can be developed for housing. This is exactly where we at DARIA want to build an entire district and realize our vision.

When everything has been developed in twenty years' time, real estate prices will rise again if the growth trend remains the same. This is demonstrated by sought-after destinations such as the island of Mallorca in Europe.

Realistically achievable rental yields in Cape Coral are currently between 8 and 10 percent.

One example:

Villa Sir Henry is available in two versions. One on the water and one without a water border.

The villa costs 1.05 million dollars including land, development and furnishings

The rental of the villa is divided into two categories during the year:

High season and low season.

In the high season, you can expect to pay an average of 2,900 $ per week for a waterfront villa.

In the low season from April to September, the average rental is 2,400 $.

The rental income less expenses such as property tax, insurance, pool cleaning, etc. is 109,620 $ in the case of 100% occupancy. This corresponds to a net rental yield of 10.85%.

If the occupancy rate for rentals were 80%, this would result in a net rental yield of 8.4%. Incidentally, the average occupancy rate in Cape Coral in 2022 was 82%.

"We give our investors a rental guarantee for the first two years. This means that our customers can count on a fixed monthly contribution. In the case of the Sir Henry Villa, for example, this is €200 per month. The total of €2,400 per year results in a rental yield of 8.8 percent per unit with a purchase price of $ 30,000"says Philipp Hills, Head of Sales at DARIA US.

Anyone purchasing shares in the DARIA villas can therefore expect a guaranteed rental yield immediately after completion of the house. Provided you release your own time periods for renting out the villa.

 

Cape_Coral_City_of_Canals_and_the_Venice_of_America

Conclusion

Imagine investing in a property in Cape Coral with DARIA. You fulfill all the requirements for a solid wealth accumulation. It starts with the prime location in a booming market and ends with the German construction quality that DARIA guarantees for every villa. At DARIA, we keep the entire process firmly under control. In this way, we avoid unforeseeable costs and offer investors a central point of contact for all matters.

So if you want to make your money work for you and be part of a vibrant community in a stunning location, get in touch.

Because with the DARIA US Group, dreams are easy to realize.

Author Rouven Zietz
Rouven Zietz
Journalist and copywriter.

He is a communications expert (Master of Arts) with 16 years of experience in copywriting and marketing. Starting out as a local reporter, he still works as a freelance journalist for numerous magazines and newspapers. As a copywriter, his passion is to get to the heart of communication emotionally and clearly.

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