Buying a house for renting: is it worth it?
What does the concept of leasing mean? Does it differ from renting? And is it worth buying a house to rent out? We answer all these questions in this article.
If you have any doubts about the process of buying a house for rent, the credit intermediaries of Poupança no Minuto can help you for free. Our support is personalized, clear, and without costs, and can make all the difference when deciding.
What does it mean to rent a house?
Renting refers to a type of lease contract regarding real property, such as an apartment or a store, as can be read in a Notícias ao Minuto publication.
"When the contract has as its object an immovable thing, it is called a lease, which is the contract by which one party (the landlord) undertakes to provide the other (tenant or lessee) with the temporary enjoyment of an immovable thing, for pecuniary consideration, normally periodic (rent)," explains the information platform.
What is the difference between leasing and renting?
But many confuse the term "arrendar" with "alugar". While both are legal concepts, they do not refer to the same thing: unlike "arrendar", which is for real estate, "alugar" refers to movable articles.
It is possible to rent temporary items such as a car or various equipment, but not a property. The Notícias ao Minuto clarifies, renting "is a contract by which one party undertakes to provide the other with the temporary enjoyment of a movable thing, in exchange for compensation".
How profitable is buying a house to rent?
Renting a house is usually intended for housing purposes, but it can also be seen as an investment. Does buying a house and renting it out compensate for the costs of acquisition and taxes?
The numbers do not lie and show that yes: According to a Notícias ao Minuto publication, "buying a house and renting it out yielded 7.5% in the third quarter, with profitability rising in the last year."
According to a statement accessed by Notícias ao Minuto, in Portugal, the gross yield of buying a house "to put it on the rental market was 7.4% in the third quarter of 2023, 1.4 percentage points (p.p.) higher than that calculated for the same period in 2022 (5.9%)".
What this means is that profitability in housing was 1.6 percentage points higher compared to the second quarter of 2021, equivalent to 5.7%.
Rental profitability by area.
And in which area of the country is it most profitable to buy a house for investment in leasing? The data indicates Santarém.
"Analyzing by district capitals, it is in Santarém where buying a house for investment is most profitable, with a return of around 7.9%." According to data indicated by Notícias ao Minuto, the city of Évora follows with 7.5%, Leiria with 7%, Coimbra with 6.5%, Braga with 6.3%, Aveiro with 6.2%, Setúbal with 5.8%, and Porto with 5.8%.
Where profitability is not observed as much: in Lisbon with 4.7%, Faro with 5%, Viana do Castelo with 5.1%, Funchal with 5.5% and Viseu with 5.5%.
Buy a house to rent? Simulate now!
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