Renting out or selling? Which brings more profit for a Budapest apartment?

Many downtown property owners face this question: is it more worthwhile to keep and rent out the property, or rather to realize the capital growth through a sale? The answer is never straightforward, as it depends on many factors — but a concrete numerical example makes the decision much easier to grasp than abstract principles.

The two paths of the decision: yield or immediate capital

In the case of renting, the property generates returns in the long run: it provides monthly rental income, while the value of the property can also continue to grow. However, the price for this is that a significant portion of the invested capital remains tied up for the long term, and the owner must continuously deal with the administration and maintenance involved in renting — or must entrust this to a professional partner. In contrast, in the case of a sale, capital is freed up immediately, which can be reinvested right away — even into another property with better yield potential —, but with this, we renounce future capital growth and continuous rental income as well.

Numerical example: a 55 m² apartment in District V

Let us take a typical 55 m² apartment in District V. In the case of renting, the apartment generates an annual net yield from rent — depending on the market interest rate environment, this yield is typically a few percent of the invested capital per year. In contrast, in the case of a sale, the capital growth of recent years is realized in a lump sum, which immediately gives the owner a free hand in the further use of the capital. Over a ten-year horizon, the two scenarios often produce surprisingly close final results — the difference is typically determined by the timing of the market cycle, the efficiency of renting, and the size of the incurred costs.

What factors tip the scale

The market cycle, the interest rate environment, and the owner's own liquidity needs all influence which path is better — there is no one-size-fits-all answer. If the owner needs the capital in the short term — for example, for another larger purchase —, selling may be the more rational decision. If, on the other hand, the goal is long-term wealth building and passive income, renting is typically more favorable. It is also worth considering that calculating the exact yield from renting is a complex task in itself.

Both paths with Midas

We support our clients with comprehensive property management in the case of renting, and with sales and brokerage services in the case of selling — so you do not have to rely on yourself to make the decision. Request our personalized yield comparison, and we will help you decide which path fits your situation.