Lessons learned when renting out a Spanish property – Part 1

November 24, 2008 in Renting or Letting Property During the Crash, Surviving The Spanish Property Crash by InspectaHomeSpain | No comments

For the last 4 years www.inspectahomespain.com have been providing property buyers in Spain with a new property inspections, snagging service and as a result of our recent survey of 700 properties, where amazed, after asking as series of questions about rentals, how little buyers knew about how to rent their properties, what facilities, services renters were expecting. This article has been published for people that have already purchased a property who may be looking for common sense advice and in it we highlight some common mistakes made new owners.

The fact is that to successfully rent a property, in what is a very competitive market, you have to treat it as a business and not skimp on the basics. There are lots of properties out there; the key is to differentiate your property from the many others, which may be on the same development, to market the property through a network of friends and family, and not get caught in the discount trap, people looking, comparing prices, and buying purely on price. It can take 2-3 years to build a successful rental business and it is important to encourage the renters to return and recommend your property.

When a family arrives at the property they want to start their holiday straight away, they will want to buy the basics, the children will want to visit the pool, they need to know what the resort offers, where the best beaches are, where to eat and drink, where the shopping centres and markets are, security advice with emergency numbers, so a good welcome pack is vital. A document in the property that clearly explains the workings of the apartment and the resort and this is a document sometimes provided by property management organisations

InspectaHomeSpain have always provided the customer with free guides that explain the completion and rental process but now, in response to customer requests, have extended their service to provide a professional welcome pack via the website www.ourpropertyguide.com and this website includes lots of tips on rentals.

The Our Property Guide Service provides practical advice on how to rent your property plus a professional welcome guide specifically created and tailored for your property including, photographs and a key benefit are that it is provided as a book and electronically, so that it can be mailed to the renter, before they arrive at the property.

Common Mistakes Made When Renting

There are normally some common mistakes when renting out your property and the following information may help some buyers to avoid the same mistakes and there is much more information on the website www.ourpropertyguide.com

Fixtures fittings and furniture

Budget, fix the price that you want to spend on the fixtures and furniture remembering that items which normally are provided in the UK are extras including, lights, shower cubicles and heating.
One common mistake is not equipping the property for the advertised number of renters as a property advertised suitable for 6 people should be equipped to comfortably accommodate that number. This should include seating for 6 in the lounge, dining for 6 people, sufficient cups plate’s cutlery and cooking equipment for 6. The patio furniture, loungers and sun chairs for 6 because owners that cut corners in the early stages on the rental will effect referrals and returning rentals. If possible buy an extra set of matching glasses and crockery as items will be broken and can be difficult to match.
Furnish the property based on your target renter, if targeting golfers consider all single beds, a fully equipped kitchen should have a washing machine, oven and microwave, but a dishwasher may not be essential as they can be expensive to run.
People buy with their eyes so remember this when buying your furniture, don´t over furnish or add too many personal touches and remember the importance of good photographs. Consider plain colours covers for bedding, curtains then try dressing beds and sofas with bright coloured cushions. Buy good prints and paintings and use well placed mirrors create the illusion of space and extra light.
Invest in good quality outdoor furniture which is sufficient for the space and number of renters. Quality metal or cane furniture, with removal covers, may cost more initially but should last longer as plastic chairs and tables degrade in the sun, become brittle and break, often needing to be replaced every year. If furniture needs to be stored inside the property make sure that it is easy to move and store. If the furniture is being left outside we would advise buying plastic UV proof covers to protect items from the sun. Buy plastic plate’s cups and glasses for outdoor use, especially for families.

Understand your costs and do your own research

So that you can fix your rental price and not lose money on rentals, you must understand the cost of owning and renting properties. Costs are broken down into fixed and variable charges; fixed costs include community fees, insurance, local authority charges, and utility standing charges, tax IBI, annual key holding cost. Variable charges which increase on usage and season include utility usage, cleaning, and maintenance. Your insurance cover needs to include cover for public liability and the company may need to be informed that you are renting out the property. The more a property is rented the greater the costs for replacement of linen and furniture. You should budget to have to change some linen annually and re-furbish furniture every 2-3 years.
Utility fees are paid by direct debit from a Spanish bank account and a common mistake is not having sufficient money in these accounts to cover these bills. If you do not pay these bills the provider will disconnect the services and the first time you know is when a renter arrives and there is no power or water, very common in Spain. It gets expensive as there is a re-connection fee charged plus you could lose the rental.
When fixing the rental price first do some research, look through similar properties on holiday sites, check rates and their calendar to see how well the property is renting, look at descriptions compare features and photographs, a good set of photographs is key.
Friends and family are important for finding rentals and referrals but you have to be tough and not to offer them large discounts off your standard rates. Remember, if they are using the property at peak time, the property is not available for full price rentals. If you offer a discount look at the quieter periods or some money off if they find you other rental customers.