By DAISY SAMPON [email protected]
Opportunities within the rental market are helping to boost the property scene in the Algarve as buyers look to make the most of their overseas investment.
A buoyant rental market in the Algarve has meant that property owners are able to make a decent return, often enough to pay back monthly loan repayments.
However, it is the short term rental market that is offering the greatest returns.
Stephen Anderson, managing director of Infinito Real in Portugal, said: “In an area like Portugal, especially the Algarve, rentals are instrumental in most people’s decision making when purchasing a property. However, my advice to those looking to purchase an overseas buy-to-let or considering renting out their existing property, is to stick to short term lets.”
Short term rental usually covers holiday letting of either one or two weeks, with the highest demand clearly being during the high season of July and August although in the Algarve the popularity for winter breaks and golfing holidays means that properties can be rented out for most of the year.
As opposed to traditional long term letting options, which see owners rent out their property to one person over a fixed long term period of a year or more, the short term rentals are able to yield a higher income.
Properties are likely to be rented out during the 10 peak weeks at a much higher rate than a monthly rental contract and these 10 weeks are usually equal to almost a year’s worth of monthly payments from a tenant.
The final bonus of short term rentals is that it enables property owners to be able to use the property more freely.
Instead of having to wait over a year before tenants move on or out, most owners will be able to use their property for most of the winter and longer if they choose.
Each rental can be assessed by the owner and if they would rather have the property to themselves for two weeks in August then there is no reason why they can’t.
Stress free rentals
So, why doesn’t everyone just focus on short term rentals if the benefits are so good? The answer to this is that the work involved in preparing and organising the rental programme puts many people off, but by following a few simple steps the road to rental bliss needn’t be a rocky one.
Stephen Anderson suggests that all owners pick a reputable managing agent to begin the process: “If you are not there to keep an eye on the property, it is important to choose an agent that you have confidence in to manage the running of your property.”
He added: “It is vital to make the right decision where both the condition of your property is maintained, but also to ensure their marketing strategies attract enough rental clients to generate an income that will cover the bills and the mortgage.”
While the management of the property is best left to one company it is better to use more than one when it comes to dealing with rentals as this will help to increase the number of lets your property receives.
“One company for rentals and another for management is a good idea as it offers a greater level of care for the property as each company has its own responsibilities and can focus solely on those,” suggests Stephen.
When it comes down to the finer details of renting short term there are a few aspects that need to be addressed fully and Stephen suggests that owners make sure that a thorough inventory is kept to make sure that any broken or missing items are paid for and also that a deposit should be taken to cover these eventualities.
“Ultimately, the rental of overseas properties, especially in Portugal, can be relatively stress free,” said Stephen, “If you are unhappy with you management company at anytime, then change to another, it is as simple as that.”
He added: “If you do not feel comfortable, or do not have a level of trust from day one, use someone that you do feel comfortable with, this is a major part of owning an overseas property and is something that doesn’t need to be rushed.”