Making Money From Your Empty Property Is Easy, But It's All About Risk Versus Reward
For anyone who owns property here on the Costa del Sol, you will no doubt have considered at some point, albeit maybe a fleeting one, to rent your property out.
While it pays for its own mortgage and costs, you can relax at home safe in the knowledge you have the asset working its little socks off for you.
Is it as easy as that?
The good news is that yes it is!
There is a market for everything!
It doesn't matter where the property is, how big it is, the views it has, whether its an apartment, a villa, a country side finca or a tent on the beach...for someone, somewhere it's perfect!
Unfurnished, fully furnished, partly furnished, even properties that are need of renovation have been rented out.
There is a market for everything!
There is only one deciding factor that counts when you are renting your property, and yes, you may have guessed it by now...it's MONEY!
So How Do I Make The Most Money?
The best way to decide which is better for you is to look at the pro's and con's for both, and mix into the equation a healthy dose of common sense.
Short Term Summary and Returns
This may sound a bit harsh, but I am not a big fan of short term rentals.
From a consumer point of view they are brilliant.
You get all the perks of an actual proper property but for the price of a poky hotel room, and with a huge choice to pick from, you can get some really good deals.
From the perspective of a guy who has a responsibility to customers, and to make sure they get the best returns possible (me), in the vast majority of cases, the returns are no better than if you rent out the property long term.
The biggest issue is the marketing and servicing the property.
The property needs to be professionally photographed and hosted on all the relevant websites. Bookings need to be managed, deposits taken, the clients need to be met at the property.
Keys need to be handed over, the guests shown around and be able to contact someone 24 hours per day, seven days a week (in case of emergency).
Upon departure, the property needs to be checked, deposits returned or kept, then all the laundry needs to be laundered, the property needs a full clean in preparation of the next arrival and the list goes on.
If you can do this yourself, great, but like the majority of property owners here, you may well live somewhere else, which leaves you with no alternative but to employ someone else to do all this for you.
A property management company can do this for you.
We here at Terrasur Homes can provide you the service and although we feel we are probably the best priced company to help you, there are many to choose from and many different price packages.
I personally know one property owner, who having rented his property out for 17 weeks in the first 12 months (which is extraordinarily good) netted less than €800!! The property management company took the rest. He was billed €150 to change a light bulb!!!!!!!
They had to send a 'technician' from the head office about 20 miles away, who needed paying, fuel, the cost of the light bulb and the fact that the tenant needed it changed now as opposed to tomorrow...all led to a €150 bill. A check-ins come with a bill. Check-outs come with a bill. A yearly fee to 'host and advertise', cleaning comes with a bill and so on and so on.
You get the idea.
An experienced short term rental company might get you to a 4% return on your investment. Better than leaving it in the bank and does not include any capital gains
A property run by the owner and managed by the owner can reach up to 10%. It's a business and if treated like one can produce a decent return.
So how does this compare to long term?
Long Term Summary and Returns
Other than the fact that you will not be able to use the property...not even for a weekend, then long term rent is certainly an option you may consider.
The market for long term rental properties is, and always has been buoyant. With many people looking for somewhere to live while they search for a property to buy, or for personal reason don't want to buy anything, or new to the coast with a new job, the market is very healthy.
In some areas of the coast, finding long term rentals is like looking for the Holy Grail where the demand far outweighs the supply.
In this kind of market you cannot charge whatever you like, but providing your property is normal as far as quality and amenities, then customers will be plentiful.
It is not unusual for us to find tenants who have all the required paperwork and are willing to pay the entire year up front in order to rent.
Sure, this is negotiable and depending on who they are and their 'history' then it can even be done month by month.
A normal long term contract can generate a 4% return. The same as short term rental but a lot less hassle.
Yes, there are some downsides, but if you have a property that is going to be empty for a year, then long term rental is possible a far better and much easier return than short term.
If you need some extra information or you would like to know more about how Terrasur Homes can help you with either long term or short term rentals then please hit the button below and we will happily talk you through what we feel would work for you.
