To Rent. Introduction
For rent. A sign we all see in virtually every location. The rental market on the Costa Del Sol has always caused delight and controversy in equal measures. But for a purchaser it can offer a genuine revenue stream and capital appreciation.
In a moment we’ll look at the two types of common rental options in a working and holiday area. But first, we just want to say THANK YOU for your continued support. Please comment your thoughts on our blog and contact us for information.
Short Term/Holiday Rentals
This can be the most lucrative of options however it is not generated without expense. The first thing to consider is that if you are looking to buy a property for holiday rentals – never forget the golden rule of whether or not you would choose to holiday in it yourself …. if not …. it’s not right for holiday rentals.
The essential things to remember when looking at buying a property for holiday rental are always. a) LOCATION. Close to the beach and amenities – that’s what people come on holiday for! SIZE – doesn’t have to be huge. But if it’s three double bedrooms – can you fit six people in the living room or the terrace? QUALITY – most people have nice homes – so really what they want on holiday is something to a higher standard than they have at home. Of course these tips are designed to maximize the income from your holiday rental – we don’t have to consider those that enjoy a week under a canvas roof.
And remember to factor in that you a) have to have your holiday rental registered and legalized by the local town hall. You will be given a ‘touristic license and a identity number’ plus permission from the community if there is one. You are also responsible for all costs – community fees, insurances (contents, public liability etc), local taxes and of course income tax. Unless you are going to manage the property yourself you will also need a managing agent. They deal with check ins and check outs as well as ongoing maintenance, repairs and laundry. Normally the cost of this is around 25% of your income. You will also need to pay booking agents like Air B&B their commission too.
Long Term Rentals
This is the easiest option to make money from property. Still, the golden rule would always be ‘would I live in it?’. For sure there is a market for virtually any property for long term rent, but you also want a decent monthly income, reliable tenants and capital appreciation.
Currently long term rental values are around 4-5% of the value of the property, so better than the money in the bank at the minute. Plus most of the time the property will be rising in value. Currently Marbella property prices rose by just under 10% last year (2020) during a pandemic ….
As with any investment, there can be pitfalls. The biggest issue currently being non-paying tenants, so be careful. But asking potential tenants for huge sums money up front to cover the risk that you have taken isn’t really cricket. Damage to property is also an issue as tenants may not care as much as you’d hope or indeed you do yourself. Again this is part of the risk – most risks are insurable against and always remember these situations are by far and away in the minority! And remember wear and tear is not damage – properties need love and attention!
There is a golden rule with long term rental and being landlords ourselves – it is this. ‘If a property commands respect it will earn it.’ If you neglect it and don’t do essential repairs and keep on top of modernization you really can’t expect a tenant to care much either.
But all in all, both options represent a genuine and lucrative opportunity for income and capital appreciation. You can even combine the two options with summer rentals coupled with a longer term winter rental – both are viable.
In addition, remember us here at Verdin Property. We are always happy to discuss your ideas and ideals when it comes to property investment. These are some of the options that we would certainly consider ourselves to invest in…..
Property Of The Week
This week, our favorite property has to be a chic beachfront villa near Cabopino. Located close to the port, this high quality villa has direct access to the dunes and beach. Talk about us opening the door to luxury? Well you can open the door to the Mediterranean! Check it out!
Latest YouTube video
Do to a very hectic, unfortunately we have been unable to upload a new video this week. But do not despair, just watch our last one instead! We promise to have a new video ready for you to watch very soon.
Well, until next time guys! Remember to leave us a comment if you enjoyed this blog. Plus, we would be so happy if you support us on social media!