Rental investment has become one of the most widespread practices in recent years in most countries around the world, including Morocco, particularly in Marrakech. This business model is characterized by moderate profitability and, above all, by its stability and ease of implementation.
Indeed, investing in rental property in Marrakech is an attractive option for those seeking to generate long-term passive income. The city is a highly coveted tourist destination, with millions of visitors every year.
However, the question of the profitability of real estate investment in Marrakech is complex and requires an in-depth analysis of the different factors that influence the city’s real estate market. Hence the question: Is this semi-passive way of generating income still profitable in Marrakech?
In this article, the team at Villas Master will provide you with the necessary guidelines to make your property purchase for rental a profitable activity. We commit to providing you with the maximum amount of available information before you embark on a rental investment.
Everything you need to know about real estate investment in Marrakech
Before embarking on real estate investment in Marrakech, it is important to understand the advantages and risks of this investment strategy.
1- Advantages
Marrakech, a growing city
Morocco is a developing country experiencing strong economic growth, and Marrakech is one of the most dynamic cities in the country, with a booming tourism industry.
High rental yield
The rental market in Marrakech is constantly growing due to the rise in tourism and the establishment of many businesses in the city, offering attractive rental yields for investors.
Affordable cost of living
For Europeans, the cost of living in Marrakech is generally lower than in most European cities, making real estate investments more affordable.
Political stability
Morocco is considered one of the most stable countries in the region. The government is committed to modernizing infrastructure and improving the business climate. This is why the Moroccan government offers tax benefits for real estate investments, including tax reductions and exemptions.
Regular and stable income
One of the most attractive advantages for real estate investors when renting an apartment is receiving a constant and stable monthly income that is maintained during the period in which the person occupies the house.
Safe activity
With the help of real estate agencies like VILLAS MASTER in Marrakech, your investment is much safer than in the past when you would find irresponsible tenants who did not pay rent and you did not have enough tools to proceed with them.
Now, our agency helps you by providing more security through our insurance and policies that guarantee your rent month after month regardless of the behavior of the user living there.
2- Factors to consider before making an investment decision
As promised at the beginning of this article, we will provide you with all the necessary information to help you make the right decision regarding your investment in rental real estate. Here are some of the factors to consider:
High initial costs
Purchasing a property can be costly and require a significant initial deposit. Additionally, there may be additional costs such as notary fees, moving costs, renovations and repairs, as well as marketing costs to attract new tenants, all of which need to be taken into account.
Even higher costs if you’re not on site
It is important to note that the costs associated with managing a rental property can be even higher if you are not on site to manage the property yourself. In this case, you will need to hire a property manager or real estate agency to manage your property on your behalf, which can result in additional costs.
Risks associated with renting
Managing a rental property can be difficult and time-consuming, and there are risks associated with tenants such as unpaid rent, property damage, and legal disputes.
Dependence on the real estate market
The value of real estate can fluctuate based on market conditions, which can affect the profitability of the investment.
Difficult to rent
Sometimes external factors arise and make the process more complex than expected. Here are some of the aspects that tend to occur: location, value, accessibility, structural issues, and even neighbors. All of these circumstances can cause the property to remain unrented for months or even years.
Tips for Renting a Profitable Real Estate Property
Follow these tips if you want to invest in a real estate property to rent out, to obtain a recurring source of income, and to make it as profitable as possible.
1- Real Estate Market Trends
One of the first steps to assess the profitability of a real estate investment in Marrakech is to understand the city’s real estate market trends. It’s important to know the average rental prices in different areas of the city, as well as the factors that influence the demand and supply of rental properties.
For example, the proximity to tourist attractions and amenities can impact the price of real estate in a given area. Similarly, the demand for rental properties can be affected by tourist seasons, cultural and sporting events.
2- Location is Key to Profitability
One of the most important key factors when investing in a rental property is the location of the property. It not only affects the rental price but also the chances of renting it easily.
In fact, when someone is looking to rent a property, they expect to find a quiet and safe neighborhood with access to schools, supermarkets, and other daily amenities. Offering a property in a dangerous or noisy area or far from civilization will not only affect the price but also make renting much more difficult and less profitable.
3- A second-hand property has more advantages
What they don’t take into account is that if the goal is to rent out the property, the advantage of it being new doesn’t exist. The most important thing is that the investment value is generally higher than that of a second-hand property, and when it’s rented out, it should be offered at the same value as a second-hand property. This means that the return on investment is much longer, and the profitability is affected.
4- It’s more advantageous to live in a rental property
Nowadays, people seek the comfort of a residential unit by renting a house or an apartment. The difference in rent is not very significant, and this type of housing offers more advantages such as pools, gyms, security, and constant maintenance. This is very interesting, especially for families with children.
This doesn’t mean that a house outside a unit isn’t profitable. But when you compare them, you’ll find that the advantages of one and the other make the choice easier.
5- Size matters a lot
In general, the most demanded houses are those whose space is of medium size, neither too big nor too small. Often, families have four members, so a very small house will have a smaller target market and be more difficult to occupy. And a very large house will have the disadvantage of having a higher value.
Therefore, choosing a medium-sized house will give you a great advantage in real estate rental activity and will generally be more durable and stable.
6- Conduct a competitive analysis
Yes, this is not a joke, this term is used in businesses to launch competing products and fight in the commercial war. Renting out a property is no exception.
In fact, if you want to be competitive, you need to know the rental values of neighboring properties in the area where you are located. This will give you an approximate idea of the value you need to set to ensure that your property is easily rented out.
It is very common to come across houses that remain vacant for months. Many people think that there is a problem. When we check in detail, we realize that the rental value is high for the type of house and the neighborhood where it is located.
7- Innovate, it can be more profitable
This activity generally brings recurring and stable income. Therefore, they tend not to appreciate in value. But there is a strategy that is currently gaining momentum to ensure better profitability and to periodically increase your income.
Try to innovate, evolve, and reform your property. If you are in an area where the average rent is 5500 DH or 500 €, you can reform it by building a playground, a barbecue area, or even a swimming pool. This will be a plus for many people and will attract the attention of those who want to live there.
With this strategy, you can increase the rent by 30%, but it will not be expensive for someone who appreciates structural changes.
Conclusion
Conclusion
Investing in a rental property can be a good investment option if done wisely. However, several factors must be taken into account before buying a rental property. It is important to carefully evaluate the cost of the property and the potential rental income before making a decision. Therefore, it is advisable to contact a local real estate agency.
By working with Villas Master, you benefit from professional assistance throughout the rental process. We can help you evaluate current rental prices, set up strong rental contracts, and manage administrative tasks related to renting out your property in Marrakech.
Contact us to learn more about our quality real estate services.
