Rental reality check

[sam]

Buying a holiday home is a life style choice - you cannot guarantee letting, as there are so many variables. If you do buy make sure you buy something that will attract lets by getting the right location and something that will stand out from the crowd. Most of us bought ours because we fell in love with the place, and use it ourselves. Your criteria of a business only let is different, so if you buy, do so with your head, not your heart. Get as much info as possible to make an informed choice, get a good managing agent. Will they do lettings or you? How will you market it? How will you deal with problems when they arise? How will currency exchange affect you? Has the property got a tourist licence? Can you resell easily if necessary? Has the property got the necessary services connected? If you do a long let can you get the tenants out? etc...... the list of questions you need to ask is huge. Personally, if I was going to buy solely as a business investment I'd stick with the UK.

[Please Sir]

There was a thread last week where someone wanted to rent for 3 months for £1000 including heating and bills.

To be fair, I think I began that thread by asking what is available regarding winter lets. I then received replies asking how much I wanted to spend. Now as my dear old Dad used to say, you can't be the buyer and the seller and you don't haggle from the top down.

This has been a very interesting thread but I'm wondering if the people who say they can't make a profit out of holiday lets could do with some better marketing?

[tricky]

As a Marketing Director, I think I've looked at all the options as have the majority
of villa owners on this site. You have to weigh up the cost of advertising against possible revenue and excercise discretion on where you advertise. Are you aiming for the family market?, is your property just suitable for couples?, do you want to discourage large groups, by which I mean, stag and hen parties?, or groups of young people?
It does require some thought.

[fmm]

I've run a marketing agency for many years. Marketing the properties is not the issue. It is down to price, location, price, facilities, - oh - and did I say price?

Part of the problem is that Portugal is relatively expensive for electricity and water and when the maid/managing agents are also taken into account, you need to have a fairly high rental cost to make a profit. The issues (as I said before) with the disadvantageous exchange rate, have also made it harder to make a profit.

There are just too many villas and apartments available to make that much of a difference using better marketing techniques.

[widge]

[quoteThere are just too many villas and apartments available to make that much of a difference using better marketing techniques.

][/quote]
Interesting conclusion fmm.

Given that "marketing" embraces product, price, place, promotion etc. How much more successfull do you think professional agencies such as James Villas or Meon Villlas are at securing occupancy than say personal web sites or "villa owners abroad"?

Given that they (the professionals) mark up the price the owner receives by at least 40% to 50% are they still a more profitable option than DIY?

[Farol]

If you are looking at it solely as a business venture then don't forget the tax implications - especially the capital gains tax when you sell it and want to take the capital gain out of the country.

[Polli62]

I have been told that companies like James Villas & Villa plus pay you a certain amount per season for your property, whether it is fully rented out or not.

[EMM]

Many of the villa companies have been cutting back on their contracts leaving owners in the lurch.

The various owner rental sites provide good bookings if you work at it.
You will also need reliable local management, something you do not want to skimp on.

[widge]

I have been told that companies like James Villas & Villa plus pay you a certain amount per season for your property, whether it is fully rented out or not.

I haven't heard of such an arrangement can you verify that?

[SJ & RE]

Yep, that company does as does some of the select apt blocks and some of the apts in Monte CVO and its counterparts up the road also do this. A few of the golf resorts do it too.
You get a monthly fee regardless if it is rented or not. Some of the companies also do it against your monthly charges too. B.V in Lagos do it that way as does the comdiminium park in Alvor.

[laserblazer]

I believe QdP does the same.

[fmm]

QdP did something along the lines of covering a percentage of electricity, water bills and condo charges but you were not allowed to stay in the apartment during school holidays. Something like that.

[EMM]

Lease back agreements are very common now on new developments with an income of about 5% assured. However owners cannot stay in the peak weeks are limited to just a few weeks a year.

We were contacted by one of the " villa companies "last year wanting to take on our property.
They could " assure " us of an income but payment was on average 6-8 weeks after the guests left.
When I asked them why we want to do this rather than as now get our money 6-8 weeks before they arrived I got a load of bull about how they were guaranteeing bookings etc.

Looking at just how many travel companies have gone bust in the past 12 months I wonder how many owners are still owed and are ever unlikely to see their money.

[e-richard]

an income of about 5% assured..

Out of interest, 5% of what ?
You are right, I'd certainly expect payment BEFORE guest arrives under any circumstances, and I'm sure there are indeed many reputable companies who will do that.