Having two or more flats at your disposal can always be beneficial. It should be taken into account that this is not a simple matter and you should not think that all you will be busy with is calculating the profit from the square meters you rent out every month.
Renting out your home looks like a lucrative investment. “It’s passive income,” is a common judgement. If we are talking about native walls, – then you begin to think: what pros and cons can carry tenants? And is it so simple?
By and large, there are two types of property renting – long-term and daily rent. In both cases, there are positive and negative sides. Accordingly, the choice is determined by your personal inclinations and interests. We suggest that you briefly familiarize yourself with them so that you have an idea of what to base your decision on.
Daily rent: pros and cons for the flat owner
This form of property rental is a variant in which the accommodation is rented for a short period of time, usually a few days or weeks. It differs from the traditional long-term tenancy in that guests can rent the property for a certain period of time and pay only for those days.
- High income. From a price point of view, this is more favorable than long-term letting. In an ideal scenario, when you have all the days of the month occupied, your revenue can be two and a half times more. At the same time, the regularity of payment increases – you get money not once, but several times a month.
- Flexible pricing. Everything is in your hands, you are free to set and change the price depending on demand, season and other similar factors. This allows you to maximize your profits and adjust to the market situation.
- Unstable interest. As opposed to the long-term form, the need for daily rentals is erratic and is determined by the season, holidays and many other things. This leads to an erratic money coming in and the need to engage in a continuous search for new tenants.
- High side costs. You have to not only pay for utilities, solve issues with the eviction and settlement of guests, but also to take care that the house is present all the necessary things, cleanliness and order. You can entrust all this to a management company or cleaning service – the cost of their payment will be about a third of your income.
- Possible conflicts with neighbors. Frequently changing tenants and constant noise can be a cause of disapproval from neighbors, especially if the apartment is located in a multi-story building.
4 Chances of damage to property. Theft of crockery and small electrical appliances cannot be ruled out.
Long-term lease: pros and cons for the owner
By this term that you are renting out your living space for a long term, usually a few months and up to a year or two at least.
- Stability. This type of lease guarantees a constant source of finances, as tenants usually sign a long-term contract. Knowing in advance the amount of monthly income, the owner will form his budget based on this.
- Less hassle. As opposed to daily rentals, there is no need to change tenants on a regular basis. Thus, you do not have to worry about putting everything in order for the arrival of new guests. There is no need to equip it with appliances and furniture – this point is discussed with you individually.
- Utilities and other household expenses – at their expense. Payment for utilities and minor expenses in the form of replacing sockets and similar things will be borne by the tenants.
- Loss of income. If compared to short term, long term gives lower financial benefit.
- Limited flexibility. It imposes restrictions on the ability to use the premises for personal or other needs during the term of the contract.
How do you find the tenants?
Budget housing owners who want to become landlords believe that they can manage the task themselves, while renting through an agency is costly and may not be profitable in the end. Most often they reason in this way, until they run into trouble and problems, and do not familiarize themselves with who the realtors really are. Each person is different: someone has the skills and knowledge to successfully conduct such affairs (and most likely, he is a realtor), someone is afraid to look for tenants, interact with a large number of people who want to, to deal with the paperwork, etc. Both methods of renting out housing have their pros and cons. In this case, everyone chooses the right type for him/herself.
This method is one of the safest. Professional realtors will help you find the most suitable offers, formalize everything from the legal side and provide appropriate guarantees. Of course, this will cost money.
Offer the apartment to your circle of acquaintances
It seems to be the most reliable way: you know the people who will be staying with you, so there will be no problem. But the outward attractiveness of such an idea hides many pitfalls: there is a great chance of falling into the trap of a “buddy relationship”.
Before you know it, you’ll be late with payments or broken agreements. In addition to losing money, you will also ruin relations with friends. So, it is better to draw a line between personal and business relationships, as much as it would not seem convenient at first glance. If you decide to do so, make sure that the terms of the lease are in writing and not just a friendly conversation.
What you should pay attention to first
It is mandatory to sign a lease document. One of the most important conditions is the payment for the apartment and utilities. Along with the formal terms and conditions, fix the obligations of the parties on insurance payments, write a ban on re-renting it, indicate the right to regularly check the condition of the apartment personally in the presence of the tenant;
To all other things carefully specify in the agreement and ways of its termination, when concluding such a long term and paying the deposit;
It is also necessary to draw up an acceptance certificate, which describes in detail in what condition the apartment is and after signing the keys;
The keys should be handed over and all documents should be drawn up only with those who are to live in it. Outsiders are not suitable for this procedure;
Examine the availability of documents from the tenant;
Fix the fact of any receipt of money (rent, deposit or payment of utility bills) in writing in the form of receipts. It is advisable to prepare receipts in duplicate: one for the tenant and one for you. When paying by wire transfer, keep all supporting papers and documents about it;
Do not forget about the deposit (as a rule, it is immediately deposited amount for the last month) – it will act as a kind of guarantee, providing him from the sudden possibility of staying on the street, and the landlord – that in case of refusal of the contract he will have time to find the next tenant;
Entering into a short-term arrangement favors both the person renting the house and you. You can easily renegotiate and prevent many of the problems associated with disagreements between the parties;