To Outsource or Not to Outsource Rental Property Management - That Is the Question
Today's pace of life, emerging markets, technological innovations, and world events. These factors present us with an increasing number of questions and challenges.
As well as opportunities!
When considering expansion into the real estate investment area, you may ask yourself questions about remote rental management.
You are likely already aware of the formalities involved in renting. With a homogeneous portfolio, this may not be too much of a challenge. However, the situation becomes demanding and potentially burdensome when several properties, including properties abroad, are already involved.
It certainly requires more time and additional financial resources. Managing your investments, while important, should not consume your entire life! How can you maintain the work-life balance?
Imagine this Scenario:
You live permanently in Poland.
Let's assume you are close to the airport. You bought an apartment in Spain.
What a great plan you have!
Every three months, you will take a break from your daily routine and fly to Spain for a week to relax, warm up and recharge your batteries.
The rest of the time, the property will work for itself and you.
You will rent it out.
This is where the obstacles begin.
With self-management, you would have to get on a plane every few days to take care of everything personally.
You could use a special electronic lock, which works on a generated code, to issue and receive keys. But what if every time you prepare the apartment for the next rental, there's a leaky tap or a neighbour's house floods? You can't take care of that with an app!
Why cause yourself a headache and unnecessary stress?
Not to mention the costs disproportionate to the rental income.
There is a solution for this!
This convenient option was created with you and other rental property owners in mind. Specialised and experienced agencies will handle rental management on your behalf, saving time and money.
These companies provide the owner with comprehensive services and year-round property supervision. This includes obtaining tenants and dealing directly with them (all according to your instructions).
There is full transparency on what you pay for and the agency's responsibilities. All terms of such cooperation are written in the contract, and you choose the service package that fits your needs best.
What Expenses Are Your Responsibility?
Fixed Fees Associated with a Property in Spain:
Community Fees - for an average apartment, you can expect a monthly fee of €50 - €100. This fee is charged for maintenance of common areas, elevator service, and taking care of the pool and tennis courts (if applicable).
They depend on the standard and size of the property. The higher the standard and larger the area, the higher the fee.
Bank Account - when deciding to buy and rent a property, you must set up an account in a Spanish bank or in Spain.
Tax on Rental Income in Spain - it ranges from 19% to 47% (usually, you pay a tax of 19%, but if you are a taxpayer with high rental income, you will have to face a higher tax rate).
The amount of income tax is the same as the taxes charged on regular income earned from employment in Spain. You can read about them in my earlier article, "Direction – Spain", which I invite you to read.
Annual Property Tax - as in Poland, we also pay a property tax in Spain.
Its official name is Impuestos sobre Bienes Inmuebles, but you may encounter the common name - Predial.
The provincial government sets the amount of the tax. Rates range from 0.00405% to 0.01166% of the property's cadastral value.
Example: For an apartment worth €140,000, the property tax will be €385 per year for a non-resident.
What Other Things Are Worth Paying Attention to?
Apartment Equipment:
Remember that the apartment should be equipped with all the necessary accessories. Take care of:
Kitchen equipment - glasses, cutlery, plates, etc.
The tableware should be sufficient for the number of people provided in the rental offer and two additional pieces.
At least two sets of towels and bed linen - ensure the rooms have the same colour theme as the photos shown in the offer.
Vacuum cleaner.
Basic cleaning supplies.
Also, think about full insurance.
Often landlords do not check this when signing a policy, and then when damage occurs, their insurance policy does not cover rental apartments. To avoid paying for this out of your own pocket, check what is and is not included beforehand.
How Do I Operate in Terms of Managing My Properties?
Personally, I prefer small 2- or 3-person companies that are locally based.
I often choose to work with people from Poland. That way, I can support Poles who want to make a life change and build their business from scratch in a new country.
Small companies have an individual approach. They know the property well, and the client feels cared for.
You can also work with larger rental property management companies but be prepared to pay (several times) higher costs. Keep in mind that different employees may handle your property on a rotational basis.
Remember that this is my experience and opinion developed over years of practice.
Below, I've included an example of the costs I've experienced for a contracted rental property management:
Reservation handling - 5% + platform costs.
Cleaning - €65 (cleaning products are included in the price of cleaning. If you agree to let the tenant stay with pets, the cost of cleaning will be higher).
Ozone treatment - €0.
Delivery and collection of keys - €20.
Key storage - €0.
Website (on a free server) - €0.
Alarm (additional option, upon request) - one time about - €100.
This price depends on the type of alarm installed - you can expect an additional cost for a SIM card with recharged credit.
General annual cleaning (combo) after the departure of the last customer - €120.
In case of door slamming, any malfunction - €0.
The apartment owner covers the cost if the malfunction requires a professional to be called.
Annual replacement of batteries in remote controls - €0.
Ordering equipment from the store and ensuring the entire delivery process to the site - €0.
Minor repairs done on your own - €0 - €30.
Oiling the locks on the doors - €0.
Disinfection of the apartment against cockroaches - €0.
Washing towels/linens on site, in the rented apartment - €0.
Dry cleaning, upon request - according to local prices.
Full correspondence with tenants - €0.
As you can see, I have established very detailed terms of cooperation with a local company.
When deciding on your rental management services, inquire about hidden costs and activities not stipulated in the contract but may occur in practice. The agency or local company you choose should have experience in this area and suggest the best solution.
Feel free to contact me!
You can find me at:
https://www.facebook.com/DrEdytaTadeusiak
https://www.instagram.com/dr.edyta.tadeusiak/
