Profit for Renting Out your Purchased

Now that you have purchased your new flat in Madrid, it’s time to start making money on your purchase.    

After experience and analysis, we recommend focusing on short term vacation rentals. The primary advantage to renting your flat to short term vacationers, instead of full-time tenants is the potential for higher rental profits generated.  You, as the owner, also have the flexibility to occupy the flat from time to time, and there is a lower risk of unpaid rentals because guests pay upfront when booking on websites like airbnb.

Also, vacation rentals often experience less wear and tear than long-term rentals.  There are shorter stays, less moving of heavy furniture at the end of rental terms,and less potential for damage.  Rental returns are higher at 10% but so are operating costs, with management fees typically accounting for 15–30% of your rental income.  The better the management, the better the customer experience which drives customer satisfaction and most importantly impeccable guest reviews.

Gross Return for Short term Rentals

The Gross return is 10% for short term rentals is the total that you make renting your flat not counting extra costs for management fees.

Net Return for Short Term Rentals

The net return before taxes is 7% of the property value paying Management fees (30% + VAT on average – 36,3 % in total).  This includes cleaning, management, marketing, optimization (In Moving2Madrid’s case also:  check-in, 24/7/365 answers to messages, yield management of prices like hotels, and coordination of legal and fiscal)

After taxes, the net return is 4% of the property value.

For more information on the profit potentials for short term rentals as well as help with your property’s rental management, contact us at: email@moving2madrid.com.

To speak with a professional, book a free consultation at www.moving2madrid.com

Posted on 1 July, 2016 by Pierre-Alban Waters in Return on investment - Invest - Buy, New? Start Here