Thursday, 17 October 2013

Buying a property with rental potential:

Buying a property with rental potential:

If you are looking for your own holiday home and would like to rent it out to help pay the costs then there are a few considerations to take into account.  If you want to maximise your rentals then it may be necessary to compromise on some of the requirements you would put first as those factors may not be the criteria renters seek.

You need to consider your target market.  If you are looking to rent to families then several factors will be important.  For instance they will be looking for secure outside space, the pool within sight of (or very close to) the house/apartment, two bathrooms, at least three bedrooms, walking distance to shops, child-friendly restaurants doing early evening meals, and probably walking distance to the beach.  Properties closer to the beach tend to be more costly than those further back, but often families prefer not to have to use a car every time they go out.  Two bedroom properties have the benefit of an extended season as they can attract ‘snow birds’, so are more likely to have winter lets but there is more competition for renters, and bearing in mind the costs of heating and lower rental rates, there is a lot less profit in winter lets.

Another consideration on location is proximity to the airport.  Within an hour of at least one major airport is best, if you can offer a choice of airports even better. 

Keyholders/cleaners area major part of your set-up.  You need to build a good relationship with them, be able to trust them and know they will clean and care for your property properly.  There area number of small businesses doing this all along the coast.  We would suggest that after buying your property you ‘interview’ two or three local ones.  Also put together a check-list of what you will want included in the fee.  Generally the renters pay the cleaning fee direct to the keyholder.  Keyholders often provide airport transfers at an additional cost for those not hiring a car.

We will cover advertising, rental rates, tax and bookings in another blog.  We’ll also cover our Top Tips for making yours a successful rental property based on our personal experiences of many years of successful renting.

Check also before you pay a deposit on the property that there are no restrictions in the community rules on letting out the property.

The property will need to have everything a holiday maker needs.  They will arrive with just clothes and personal items, often trying to limit what they bring to just hand luggage these days to keep down the costs.  You will need to provide everything: bedding, bath and hand towels, a FULLY equipped kitchen, a safe, washing machine, iron and board, hairdryer, all possible cutlery and crockery, pots and pans, satellite TV, wifi, music and music centre, DVD player and DVD’s, games consol and games, traditional board games, and good quality furnishings inside and out plus the mandatory barbecue.  Air conditioning is now considered essential by most renters. 

A lot of Spanish properties come furnished and equipped, but you will need to factor in the costs of replacement furniture items, new quality bedding and towels and even tea towels.  However, not everything needed is always included in a purchase; it may not include cutlery, crockery, iron or other sundry but necessary items (such as kettle and toaster).  Remember you need two complete sets of all bedding for every bed plus and two sets of one bath and one hand towel for every guest, plus a few spares.  Your keyholder cannot be expected to clean the house and lauder, dry, iron and air the bedding and towels all in one day, so second sets are essential for back-to-back bookings.

You will also need lockable separate storage for your own personal items and clothes that you keep there.

Renting out your holiday home is good way to make it more affordable, but you need to allow for expenses involved in equipping the property properly when setting your budget.  Renters don’t expect to ‘make do and mend’!