How can you make money from letting a flat?
Demand for rental housing continues to grow, as is evident in the Czech Republic, which has traditionally had a higher proportion of owner-occupied housing than other European countries. However, with changing mortgage rates and economic factors, many people are choosing to rent rather than buy their own home. This trend is also increasing demand for rental flats and, consequently, rent levels across the Czech Republic. Does this mean that landlords are making more money?
A rental flat is not always the goldmine it may sometimes appear to be. Given inflation, rising utility and material costs, and increasing costs associated with financing a rental flat, some property owners may end up making a loss. The situation where an owner lets a flat while still paying off a mortgage is very common.
Investment in rental flats expanded significantly in the past, especially at a time when mortgages were more accessible. Many people bought flats intending to let them out and sell them in the future. However, as interest rates rose, many owners found themselves in a situation where the rent they could charge was no longer sufficient even to cover the costs of holding the property.
It is therefore important to bear in mind that a rental flat as an investment requires a careful strategy and consideration of all costs and potential risks.
Set a market rent
It is crucial to set the rent correctly so that it reflects market conditions, the specific location, layout and condition of the flat. It is also important to decide whether you prefer a long-term rental or a short-term rental, which can generate higher returns but requires more time and additional responsibilities, including legal obligations. Setting the rent too high risks a longer search for tenants and consequently higher turnover, while setting it too low risks financial losses.
You can use our online rent calculator to determine the optimal rent.
The basic maths must add up
When carefully considering your monthly expenses related to letting a flat, remember to include inflation, unexpected costs and potential loss of income in your calculations. Your rental income should account for all these factors, so that you are prepared to finance unforeseen repairs or periods when your flat remains vacant.
If you are paying off a mortgage on your flat, be very careful with your calculations so that, at the first sign of difficulties, you do not have to cover the monthly repayment from your own funds. Many clients address these concerns by using a professional rental property management service with a full rent guarantee, even when the flat is vacant. Although this service carries a monthly fee, it gives owners certainty and peace of mind.
Professional rental property management proves its value in the long term. Our services not only ensure higher occupancy rates but also achieve higher rents than would be possible when letting independently. Thanks to optimised software developed specifically for property management, we have all the information needed to determine the ideal rent. Letting a flat can be profitable, but it is essential to have a plan and understand rental supply and demand.