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Rental possibilities
 
  • The Rental Market
  • Apartment Rental
  • Rental Yield
The rental market in Tunisia is very strong due to the high domestic demand for rental accommodation. Having the highest home-ownership rate in Africa and certainly one of the highest in the world, Tunisia is a middle-income country which has outperformed most of its African neighbours both in terms of economic growth and political stability.

The number of European holidaymakers who arrive in Tunisia increases each year. These Europeans are looking for a warm, sunny climate to spend their holidays. Being less than 3 hours from major European cities, Tunisia offers something new and exciting for everyone and has been an established tourist destination with Europeans over the past 2 to 3 decades.

Generally, tourists who visit Tunisia tend to come back year on year, and those on their return trips will prefer to rent accommodation giving them more flexibility than a hotel does. As a result, there is considerable demand for rental properties all year round.

Tunisia has a wide overall market appeal whether it is for Tunisian nationals, worldwide nationalities, holiday makers, golfers, luxury independent travellers or business people.

The medical practices in Tunisia are also known for their service quality and efficiency. Many foreign nationals choose Tunisia for treatment of their rheumatism or for plastic surgery. Such visitors tend to spend a longer time in Tunisia to get their treatment or to recover from a surgical act. Such travellers are eager to find accommodations on the rental market instead of the expensive and less convenient alternative that the hotels offer.

Carthage Resort will advertise the rental possibilities through its Scandinavian, European and Tunisian networks and inform the apartment owners of the rental demands on their apartment.  The decision to accept or not the rental offer will always remain the right for the owner.
Carthage Resort will provide legal assistance and fiscal advice on how to best manage the rental of the apartments.

Whilst there are no guarantees for how long every apartment can be full booked for renting, Carthage Resort team is confident that each owner can get an excellent return on his/her investment in the Resort through the rental market.

The beginning of a successful rental property investment strategy is an accurate estimate of rental yield for the prospective property. Here we see how to calculate Net Rental Yield, which takes the property expenses into account, though not the mortgage payments. Then we look at the same property with the mortgage included, and using the actual cash invested. This gives us a cash-on-cash rental yield.

Here is an example of what the Carthage Resort team expect as rental returns for an apartment priced for sale at kr 1 262 000
(At the end of this example is a link to a spreadsheets, containing a sample and a blank calculation table ready to calculate the net rental yield and cash-on-cash rental yield from your inputs on a chosen apartment/mortgage )

Property is rented out 25 weeks in the year (approx. 50% occupancy rate)

10 weeks rental in peak season (summer) at kr 8500
10 weeks rental in medium season (spring and autumn) at kr 6500
5 weeks rental in low season (winter) at kr 5000

Gross total annual rental return = kr 175 000

Annual Insurance             kr 7500
Annual Taxes                   kr 5500
Annual Repairs Budget    kr 2 000
Percent of Rent Mgmt Fee 10 %

Annual Total Cost of       kr 29 000

Income of kr 150 000 minus cost of kr 29 000 = kr 121 000 rental income after expenses

Property Acquisition Cost kr 1 262 000

kr 121 000 divided by property value of kr 1 262 000= Net Rental Yield of 9,6%

Cash-on-cash Rental Yield:

Property Acquisition Cost kr 1 262 00
Less Down Payment - Cash In kr 300 00
Amount of the loan kr 962 000

Payment Monthly Principal/Interest kr 8 000
Annual Insurance Cost kr 7 000
Annual Taxes kr 5 000
Annual Repairs Budget kr 2 000
Percent of Rent Mgmt Fee of 10%

These expenses total to Annual Cash Out of kr 125 000

Income of kr 150 000 minus cost of kr 125 000 = kr 25 000 cash return over cash out

Kr 25 000 divided by cash investment of kr 300 000 = Cash-on-cash Rental Yield of 8,3%
Rental price appreciation in Tunisia is quite high. A 10% yearly increase in the rental market can be expected.

These figures are not guaranteed and have been established from reflection into what is currently available in the rental market in Tunisia and with comparison as to what are regarded as similar properties. It is believed that these estimates are conservative.

Net Rental Yield Calculation
Weekly Peak Season Rental Amount kr 8 500
Number of rental weeks 10
Peak Season Rental Cash In kr 85 000
Weekly Medium Season Rental Amount kr 6 500
Number of rental weeks 10
Medium Season Rental Cash In kr 65 000
Weekly Low Season Rental Amount kr 5 000
Number of rental weeks 5
Low Season Rental Cash In kr 25 000
Annual Cash In Kr 175 000
   
Property Acquisition Cost kr 1 262 000
Less Down Payment - Cash In Kr 300 000
Amount of the loan Kr 962 000
   
Annual Insurance Cost Kr 7 000
Annual Taxes Kr 5 000
Annual Repairs Budget Kr 2 000
Percent of Rent Mgmt Fee 10 %
Annual Cash Out Kr 31 500
   
Net Rental Yield 11,4%
Net rental yield uses the value of the property of kr 1 262 000
This would be a negative return with a mortgage rate greater than the yield.
   
For Cash on Cash Invested Yield:  
Weekly Peak Season Rental Amount kr 8 500
Number of rental weeks 10
Peak Season Rental Cash In kr 85 000
Weekly Medium Season Rental Amount kr 6 500
Number of rental weeks 10
Medium Season Rental Cash In kr 65 000
Weekly Low Season Rental Amount kr 5 000
Number of rental weeks 5
Low Season Rental Cash In kr 25 000
Annual Cash In Kr 175 000
   
Property Acquisition Cost Kr 1 262 000
Less Down Payment - Cash In Kr 300 000
Amount of the loan Kr 962 000
   
Payment Monthly Principal / Interest Kr 8 00
Annual Insurance Cost Kr 7 000
Annual Taxes Kr 5 00
Annual Repairs Budget Kr 2 000
Percent of Rent Mgmt Fee 10 %
Annual Cash Out Kr 127 500
   
Rental Yield 15,8%