What is the situation if you rent out a property?
Option 1: You build a portfolio of cheap flats, mostly in locations you would never stay in
You buy cheap flats and studios. Often in old places in the suburbs – locations you would never enjoy to stay.
You rent such place for 300-400 euro a month.
If you “find an occasion” and calculated well, most probably the profit in percentage will be even high of around 10%. The problem is that in monetary terms, in cash, it’s really not much. Especially, when you subtract all the costs and taxes.
And if you choose a strategy to buy and rent out many flats like this, you will have more and more costs (you will need to hire people), taxes, stress, and problems distributed in different locations with different tenants.
Option 2: You buy one (too) expensive property
Instead of buying different small flats, alternatively you can say:
“I don’t want to manage 7 studio flats at the same time to get an interesting total rent. I want one “good”, with which generates €30.000.”
Then, you need to spend a bunch of money, maybe over €500K. Central locations are expensive!
Renting a flat to tenants? What are the risks you need to calculate?
Do you know what does it mean having tenants for 12 months?
Apart of the marketing and sale part (that is becoming always more competitive and requires skills from many fields), once you have the tenants in, there are more risks:
- you don’t get your rent (as tenant stop paying);
- they damage your property (and they don’t want to pay for them);
- you receive hundreds of requests from your tenants (and if you don’t please them, they leave your flat-for-rent empty);
- in case of problems, the law doesn’t support you;
- you need to cover different unexpected maintenance costs if you’re buying not a new, but an old property (blocked tubes, leaking roof, dirty walls).
Does this problems sounds rare and won’t happen to you?
Let’s see some statistics data.
In average, over 50% of tenants in Italy don’t pay the rent. Probability of over 50% of not getting your rent is very high.
Please see THIS ARTICLE from Italian newspaper Il Giornale. It allarms that flat owners are not getting their rent!
You think, that if you rent to students, in country like the UK, your investment is safer?
Please give a look on THIS ARTICLE published by The Guardian. It says, that more than 17000 UK students face rent arrears.
Another issue: who will manage your property?
Who will promote your property, find clients, deal with them, fix technical problems, do the laundry and cleaning (if it’s holiday rental)?
If you don’t have a team responsible for property management, owning a property to rent out is more engaging than a 8-16 job.
Problems to tenants (or tourists) happen without respecting the standard working hours.
Taking property management on your shoulders doesn’t have any sense for you: you are better at your job, than taking care of many (but simple and repetitive) property management tasks!
Most common solution for property management in Croatia: a tourist agency
Croatian people manage their villas on their own. Very often it’s their only occupation and they don’t think about scaling their real estate investments or growing their business in other sectors.
At the same time, international investors, who own villas in Croatia, make deals with different tourist agencies.
The tourist agency:
- takes the pictures of the house;
- writes description in few languages;
- register your house on different websites on which tourists book their holidays;
and takes for this a commission of 20-40% of your rent.
It’s a very high commission considering that house cleaning, laundry, pool cleaning, gardening and check-ins are at your expense.
And you, with a single villa, can’t divide such costs into many villas.
Your money flies away.
Look around and see, that the most common investments in flats to rent out look like this:
you spend a lot, you work a lot, you carry high risks and all in all you don’t earn much.
Option 3: Candy Brick villa with pool in Croatia reserved in 2018 for 9 investors
This characteristics of Candy Brick villas you already know:
- a property which generates €30.000 rental income;
- No legal problems (so common in Croatia) of any type: please see Candy Brick Legal Guarantee;
- a beautiful, new, modern fully furnished villa: please see Candy Brick Quality Guarantee;
- unique location, most attractive summer tourist destination;
- full management service by a team of local experts who do all the job: please see Candy Brick Local Master Team Guarantee;
- exit strategy already planned: please see Candy Brick Exit Strategy Guarantee.
Is that all? Not yet 🙂
Candy Brick Rental Guarantee
With the Candy Brick Rental Guarantee, you are not renting the villa to the tourists, but to the Candy Brick’s property management company, which pays you the summer rent.
We pay €30,000 to your bank account, and then sub rent the villa to tourists.
The Candy Brick Rental Guarantee is a rental contract renewable each 3 years, signed in front of the public notary.
For further details you can e-mail us on: firstname.lastname@example.org