Itâs easy to buy an off plan property, but can you rent it and be successful?Landlordzone.co.uk
offers advice and tips to landlords across the UK. An article that caught my eye is entitled â20 steps to successful residential landlording
â? and details guidelines to follow.
As overseas property is slightly different to the more regulated UK market, I have made a guide of 11 points to consider
if you want to become an overseas property landlord.1.Â Do you have a Strategy and goals?Questions to ask:
Who is your target audience? By aiming for the higher end of the market it can mean fewer rental problems however these clients are more demanding in terms of furnishings etc.
What publications, websites and newspapers do they read?
Are you in the bottom, middle or upper part of the lettings market?
Are you going to rent your property out for the long term, short term or both?*
* Longer-term rentals generate less overall income, but a stable rental income allows better planning of your finances; short-term rentals generate potential large incomes during peak season, but you have to fight for rentals in the slower seasons and rents are lower. The upside is you can still maintain some personal use of your property.2.Â What are your Expectations?
Be realistic about what to expect; your first year will be a test to see what works and years 2 and 3 can build on that knowledge to create a rental machine.
Donât expect overseas agents to do all the work of marketing your property for you, lets face it, if they have 300 properties to rent out, what makes yours special? Spend some time doing your own marketing featured in my next property post.3.Â Develop some procedures
If you use an agent try to develop a good relationship and understanding.
Set the ground rules, what procedures would you like to see in place:
Who meets the clients when they arrive?
If it is late then where are the keys left?Â Some agents have a âsafeâ box provision.
What documentation is left in the property i.e. useful phone numbers, local things to do etc, guides to the various appliances? Highlight interesting things like your favourite restaurant or a reliable car rental company. Maybe even leave a guest book so people can see past comments.
Look after clients when they arrive, set your property apart, leave a welcome pack, wine olives. Word of mouth is the best form of advertising; make clients remember you and they will recommend to their friends and family.
Write your adverts honestly so clients will not be disappointed when they found out you lied or embellished you properties attributes.4.Â Research is key - know your local market!Property Research
If you are buying an overseas property to rent it out (buy-to-let) then think about which property will best suit your clients needs, does the area have a great rental market for 2 bed villas??
Try not to fall in love with a property and get emotionally attached, it is then hard to see the property as a business and you end up buying for you rather than your potential clients.Questions to ask before you purchase
If you were on holiday would you rent the property?
- Chances are if you like it, your potential clients will also.
What is there to do in the area, local amenities and facilities?
- Swimming Pool on site, close to beach, golf, restaurants a marina etc..
Is the area easy to get to?
- 3-hour drive from the airport is not a great start; are the roads good?
Is there a tourist industry, i.e. geared up for mass crowds in the summer?
- Mass market want to have want touristy things to do, does the area offer that?
Do you have access to a domestic market as well as tourists?
- A property in Spain could attract Spanish to rent as well as the British, so does your property have the potential for that, can you market to them? Are there transport links, a university and commercial areas that sustain the community?
What are the future plans of the area, this will help you gauge whether the property is likely to gain in value significantly?
- New transport links, commercial areas, big businesses moving into the area etc
Donât listen to all the estate agents, developerâs hype. Many of them will tell you what you want to hear! Online forums
are a great way to speak to real people with real experiences; there is a wealth of information out there.Employing an Agent Vs Renting it yourself
Many owners prefer the convenience of employing a local rental agent, unless you live near the area where the property is located. Word out mouth is a good indication of reputation and their local market knowledge with respect to typical rental prices. I have found that agents, whose business activities include everything from web design to real estate sales, tend not to look after you in the same way as a dedicated rental agent. Look for a rental specific agent, one that preferably does not sell property, this is a major conflict as more money can be earned from a sale.
Make sure you speak to locals and expats in the area, talking in local bars is a good place to start. Reading a few local papers (if they are in English or you have the native tongue) to see what's letting locally will help.What are the costs associated with renting your property
Agents fees usually around 20-30% of rental or monthly fixed
Cleaning maybe included on top
Laundry maybe included on top
Marketing usually part of the agents fee
Maintenance charged ad-hoc â beware of bogus maintenance claims
If you choose the rent your apartment yourself, most people tend to have build up a local network of contacts from having visited the property previously. In many vacation communities there tend to be a few owners who live onsite, which is often better for, meet & greets. Charges can be monthly or per rental and items like laundry tend to be done in your own washing machine whilst the apartment is being cleaned. You have to plan in advance for money collection, do you trust the person to bank the monies if paid in cash or have you an online medium for collecting your funds (see point 7).Rights and Obligations
Do you know about rental contracts in the country you are buying? What are your rights when it comes to evict tenants should you need to? What are your obligations as a landlord?Furnishing
The style in which you furnish your property
can make a huge difference to the rental, renters today are more sophisticated and look for home from home comforts. A mish mash of all your old furniture is not an attractive look and may even put off renters. Make sure that key items such as beds and sofas can withstand heavy use and come with washable covers. Also think about personal items, do you have a lockable room that you can put things away when the property is being rented.Â Turnaround
Think about things like second linen sets, replacement items for cutlery and plates etc.5.Â Paperwork
An agent should have the appropriate paperwork for letting the property; make sure it is all clear at the beginning and that every party knows where they stand.
Set your ground rules in writing:
Deposit for breakage or damage to the property
Terms and Conditions
Time of contract, if the agent is not fulfilling their obligation you will want to terminate the contract and find another company
Vetting of clients. 20 golf players on holiday can sometimes be a nightmare to deal with.
Longer term rentals â no pets, no smoking..6.Â Assess your rental price
Be realistic not greedy, think longer-term and repeat business, it is much easier and then you donât even need to do any marketing.
Look at other properties on your development and local area; is your property rental priced well?
If you do opt for longer-term rentals review the rent every year, donât shock people half way through the year. Structure a deal where a client can pay it all up front, but get a significantly reduced rent for the contract term.7.Â Make it easy for payment
If a client is interested and wants to pay, how are they going to send money to you?Paypal
â set up an account for clients to send money toMoneybookers
â Transfer of funds with very low charges. Simple to useVillarenters
â Set up an account and let their payment module handle the money transaction.8.Â Property Maintenance
Keep property up to date, try and have contacts on hand if anything should go wrong, remember the property is in a different country.
Landlords have a serious obligation to provide safe premises, installations and appliances for their tenants. They must also ensure safe use of equipment by providing clear operating instructions.
Safety is potentially one of the greatest risks a landlord faces, but it need not be a problem if it's managed properly.
Maintain the property, no one is going to recommend your property to their friends if the place looks shabby.9.Â Insurance Cover
Do you have the correct and appropriate insurance cover?
Contents and buildings insurance are a must have (especially if you have a mortgage).10.Â Â Be available and responsive
Be available to deal with issues if you management company call, make sure they have good contacts.
If problems arise, act quickly and always carry out what you have said you will do (procedures). Take action immediately so that tenants know you are serious about looking after them.11.Â Legal Issues Abroad
Going to court abroad is likely to be a very costly and time consuming experience, it is difficult enough in your home country, but trying to go through all the red tape in a foreign country is bound to be a stress in your life.
Make sure you have done your homework and know your rights, try to negotiate where at all possible.
Research is key to being successul in the overseas buy-to-let game.
Thanks to Landlordzone, whoÂ offer an informativeÂ directory for landlords
and some great property related articles.