Comment by roymurdock | Hacker News Reader

Comment by roymurdock | Hacker News Reader

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To add a bit of math into the equation:

Piketty estimates that the average return to real estate worldwide is a little less than 5%.

In other words, the average property worth $6M would generate 6,000,000 x 0.05 / 12 = $25,000 in rent per month.

If we use the same assumption to calculate the value of your property, assuming an 80% utilization rate - $2000E/day x 365day/yr x 0.8 utilization / 0.05 = $12M.

So given these assumptions your sister was offered half of the value of the property. Of course this simple valuation hasn't been adjusted for taxes, depreciation, cost of maintenance, etc. but I doubt that would bring the value of the property down by 50%, and I'm willing to bet that you generate much higher than a 5% return on your properties if the rental mkt is as good as the OP has described.

The offer was at least 10 years ago, we weren't renting most of them back then. I gave it as an example because I don't know what the actual evaluation of each apartment is.

Santorini boomed the past 5 years I'd say to the point that this year the Government had to cut down Ships from mainland to Santorini because the Island couldn't afford having that many tourists on it.

Using your calculations yes it would go for more than 6m euros although you have to calculate the fact that Greece is currently in a very unstable economic state, with heavy property taxes etc, and of course being close to the Middle east tourism can be affected heavily by wars etc. Although again I have no idea what the actual price of any of the apartments would be nowadays.

There's a massive difference between active management (e.g. short let luxury rentals) of a property vs passive management, though.

If they were renting out properties long term, the yield would be lower. I have a friend who did something similar in London, and he was renting out apartments for £200-300 a night which would rent out for £3,000-3,500 on a long let lease.

Also, I would assume the average property worth $6m would rent out for a lot less than $25k a mo. Most properties worth $6m can't even be rented out consistently, for years on end unless you're in a prime city such as London or NYC.

Santorini is a great place for wealthy people to spend a week, or even a month, but I don't expect many to have their permanent base there.

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