WHAT IS THE INCOME FROM THE REAL ESTATE ABROAD? SHORT-TERM LEASE.

  1. Buy for rent: 


A flat abroad is not just a chance to get closer to Europe, but a nice investment opportunity. Renting it out, you get a regular passive income of 8-15% per annum. And no special knowledge and need to participate daily in the management of this asset are required.

Certainly, additional rental income is a nice but a non-compulsory option. You may decide to stay in the apartment yourself (or your family/friends), or just leave it empty. It's your personal preference. However, if you still intend to make the purchased apartment "work", use one of the three main ways.

 

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SHORT-TERM RENT
The main tenants are tourists, coming for a period from several days to 2-3 months. This automatically changes the housing requirements: it should locate nearby the key city places - the beach, the recreation areas, the sights, and the historical center. Not every flat can be rented profitably. Therefore, pay attention to the choice of the location before purchasing. To help investors find the perfect apartment for short-term rent,  at WestArp we do big data analysis, look at neighboring ads for each geolocation, assess the tourist flow, etc. Additionally, we are well aware of the criteria of the search engines operate in services like Airbnb, Booking, HomeAway, Wimdu. We make the description of the apartment, advice on the price and work with the guests-tourists so that the object is of a high rating and comes among the top search results. You should realize that: the major part of income comes for the tourist season: generally, the apartment guest occupancy makes 70-80% at the peak, 20% at the lowest point.

Short-term rent is related to great efforts, thus agencies charge a little more — 15-25% of the monthly income for their services. Price depends on the region: for example, in Costa Blanca, with high competition between management companies, it is close to 15%, and in Prague, where there are clear leaders in this market, it is close to 25%.

 

 

 

WHAT IS THE LONG-TERM LEASE PROCESS ABROAD?

The owner signs a contract with the management company and pays the costs of preparing the apartment for short-term rent. The management company takes over utilities (usually), hires a photographer, makes an attractive description of the apartment and posts it in short-term rental services. The Agency assists the guests in check-in and check-out, organizes cleaning, solves current issues, monitors comments, pays city taxes and utilities, transfers profit to the owner.

 

 

 

 

Advantages:

Disadvantages:

1. Income level is higher than that for the long-term lease;
2. You can suspend rent and stay in the flat at any time.

 

1. In some cities (Barcelona, Berlin) it is strictly limited (actually prohibited) by municipal laws. In other towns terms of rent are limited: for example, in the Spanish province of Malaga, you can only rent for a period of 4 days, in Valencia - for not more than 6 months per year;
2. You get income unevenly, depending on the inrush of tourists. For example,  the high season in Spain lasts from April to the end of October, in Prague - from March to the end of September and in December-January;
3. A higher level of furnishing (TV, WiFi, kitchen appliances, dishware, kitchen utensils, bed linen, pillows, blankets, etc.) is required — not below the hotel one.

 

 

Rental income — from 6 to 7% per annum after taxes. Apartments in the city center, with a good "history", photos and a lot of positive reviews can earn up to 10%. Taking into account the growing cost of the apartment itself, the average yield when short — term rented is 11-12% per year.

 

ALL IN ALL

Real estate is the easiest and free-to-all investment tool. You can rent almost any apartment, and in case the right location is chosen, you can rent it out for a quite high price. No need to spend time understanding stock indices and securities, as well as to take the risk related to venture capital investment. Real estate brings a conservative income, but its advantage is that it will always be in demand and has no "shelf life". For example, debt securities will be repaid sooner or later, but the apartment can remain your property and generate income for decades.