The recession has forced many overseas property owners to rent out their holiday homes rather than keep it for themselves.
With low costs flights from most major European cities, Stephen Anderson, Managing Director of Infinito Real in Portugal believes the short term rental market is a fantastic opportunity to generate income to help with the running costs of an overseas investment, as long as it's done properly.
Stephen, comments:
“In an area like Portugal, especially the Algarve, rentals are instrumental in most people's decision making when purchasing a property. However, my advice to those looking to purchase an overseas buy-to-let or considering renting out their existing property, is to stick to short terms lets and follow these steps:-
1. Pick a reputable managing agent – If you are not always there to keep an eye on your property, it is important to choose an agent that you have confidence in to manage the running of your property. There are always numerous rental companies offering varying degrees of services and although many will be fantastic at making sure a property is kept well maintained and that rent is paid, the opposite is also true.
It's vital to make the right decision where both the condition of your property is maintained, but also to ensure their marketing strategies attract enough rental clients to generate income that will cover the bills and mortgage.
Choose a company that will be transparent with rental income and the split between management costs and you the owner. Ask them for a monthly income and expenditure report to ensure you are up to date with your property.
2. Use more than one company for your rentals - or even one for the renting and one to just look after the property. Although this can be a little more work for you as an owner, it does offer a greater level of care for the property as each company has its own responsibilities and can focus solely on those.
Unfortunately there is no official way to check for a reputable managing agent or associated maintenance companies, so I would recommend speaking with a number of different companies to get a feel for the services offered and compare the costs of each. Recommendation is vital here, and if you trust your estate agent, then that should be the place to start, as the companies recommended will generally have a proven track record and be trustworthy.
3. Always take a security deposit - Some of the main fears people have when renting out their property is that they may have a tenant who will cause damage to the property. It's worth bearing in mind that most people holidaying in rental apartments will be paying a high weekly rate.
In the Algarve for example, peak season will most likely be around £700 plus per week, and properties are quite often rented by clients who may also own their own property abroad and will take the same care and attention in a rented property as they would in their own property.
However, although this is something that rarely happens, especially if the property is safeguarded by a reputable management company, it is still advised to take a security deposit first so minor damages can be deducted easily.
4. Maintain a thorough inventory - Make sure the management company you choose maintains a thorough inventory of the property’s contents, number of knives, plates, televisions, DVDs etc. These should be checked off before the tenant leaves and, again, anything missing or broken is taken from the deposit.
5. Expect to rent out most of the summer period - and depending on the property and its location anything up to 10 weeks more throughout the year. As a rule of thumb if you expect 10 weeks per year, anything extra is a bonus as that should cover the majority of the running costs each year leaving plenty of spare time to use yourself.”
Stephen continues:
“There is the opportunity to rent a property for longer periods of time, long term rental, however, this is generally not common in tourist hotspots such as the Algarve, as the rental is a lot lower than that of a short term income, and there is a lot more work involved regarding the contracts and the general wear and tear on the property is substantially higher. This also eliminates the opportunity to continue using the property yourself.
Ultimately the rental of overseas properties, especially in Portugal, can be relatively stress free. If you are unhappy with your management company at any time, then change to another it is as simple as that, if you do not feel comfortable, or you don’t have a level of trust from day one, use someone that you do feel comfortable with, this is a major part of owning an overseas property, and is something that doesn't need to be rushed.”
