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Owners of apartments who want to rent their flat are often faced by a dilemma, namely what form of rent to choose — a short- or long-term rental? It is worth remembering that with short-term rental a flat has to be distinguished by other characteristics than in the event of long-term tenancy. The difference is also in the return on investment as well as the costs and time that need to be spent on finding tenants. We discuss the matters of investment apartments with Agata Karolina Lasota, the owner of Lasota Business Consulting. TriCity is a typical tourist region, which is visited by millions of tourists annually. There should be no better idea than to buy apartments for rent…

Yes and no. Obviously, real estate is good investment of capital, which gives an above-average return rate. When buying real estate to let, first you should think of the form of tenancy. You need to precisely calculate what is more beneficial: short- or long-term rental.

There are plenty of apartments available for short-term rental in the TriCity…

That’s true. And we can compare it to typical overnight rental. Landlords are usually individuals, and the turnover of tenants is quite high, which involves more frequent maintenance and heavier wear of real estate. The competition on this market is also stiff, while the service of short-term rental is both time-consuming and expensive. The management by an outsourced contractor may consume even 30% of revenue. Moreover, if you add operating charges, which are covered by a landlord, and tax, you are left with 40% revenue. One hundred per cent occupancy is rare. In the event of short-term rental, profitability depends on the season, the competitiveness of the offer, and the outlays of work on acquiring new tenants.

Do you want to say that it is not profitable to let apartments to tourists? After all, we are in the middle of the tourist melting pot…

Absolutely not, I am far from saying that short-term rental is not profitable. But in my experience, there is something more profitable, less stressful, and time-consuming. This is long-term corporate rental, where return is higher than in the event of short-term rentals. The annual return rate is above 6%. And do not forget that the TriCity is not only a dynamic tourist centre, but also a quickly developing business region. New office buildings are built, investors are attracted, and there are more and more international corporations in our region, which are followed by employees, including qualified experts from Poland and all over the world.

What does long-term corporate rental involve in practice?

The key is to find a tenant who will provide the continuity of rent for a longer period, and consequently the continuous revenue, regardless of the season. With ordinary rental, owners of flats are often afraid of the risk involved in the rental of flats to families with children. The law protects tenants in certain situations, even if they are in arears with payments of rent. An ideal solution is the long-term corporate rental.

CORPORATE RENT IS A SURE PROFIT

What does it mean exactly?

A client is a business or a corporation, which rents an apartment for its executive or manager. Due to the nature of this rental relationship, the risk of default on rent, non-contractual occupancy, etc., is minimised. The wear of the flat is much lighter than in traditional rental. In view of the above, this is the most favourable investment of capital and the form of rent, and the demand, due to the dynamic development of businesses and the labour market, is very high. A corporate rental agreement is made for the period of minimum 12-24 months, which is another major advantage.

However, it is more difficult to find a corporate than an individual client.

It is, if you want to do this by yourself. However, there are specialised agencies that search for businesses interested in rental. Therefore, an owner does not need to look for tenants on his own. At Lasota Business Consulting Real Estates we have access to an updated database of Polish and international corporate clients, including most international businesses that operate in the TriCity. At present, we are looking for apartments and houses in the TriCity for the period of 3 years, among other for NATO officers from Poland, Canada, the US, and the Czech Republic, as well as other experts and airlines. Summing up, the rental with Lasota Business Consulting Real Estates minimizes the risk of a transaction, while providing certain and constant revenues, fewer formal requirements, comfort and saving of time.

AUTHOR: MAX RADKE PRESTIGE 85 10/2017

http://prestiztrojmiasto.pl/magazyn/85/biznes/apartament-inwestycjny-niuanse-pulapki-zalety