Rental housing is on the rise – an opportunity for small-scale investors?
Traditionally, owner-occupied housing in the Czech Republic has been a symbol of prosperity and stability. Living in one’s own flat or house has been regarded as an important milestone that everyone should achieve in life. However, the current economic situation is forcing many people, especially young families, to seek alternatives in rental housing. This shift in attitudes to housing is particularly interesting for property investors.
How do developers view the rental market?
Development companies and real estate funds, as key market players, are recognising the growing demand for rental housing and are increasingly focusing on building flats specifically for rent. These flats are often offered fully furnished, increasing their appeal and enabling a faster return on investment. Furnished flats are easier to let; although the rent may be higher, tenants are strongly motivated by the savings on furnishing costs.
According to available data, around two hundred rental projects were developed in the Czech Republic each year. This year, however, almost eight hundred new rental flats should be completed. This trend is expected to grow further in the future. At present, however, the supply of rental projects is still unable to meet demand, especially in large cities.
Small-scale investors can also benefit from this situation. The method of financing is crucial to making a rental property investment worthwhile. Average rents have risen, so returns can be very attractive. Economically, however, it makes sense mainly where a large part of the purchase is financed from the investor’s own funds.
How to let effectively
To ensure a return on investment, it is crucial to let a property as efficiently as possible. An owner’s aim is to keep the flat occupied by tenants and receive rent regularly. Unfortunately, owners often face high tenant turnover and tenants who are unable to pay. For this reason, many owners turn to professional companies offering flat management, including effective marketing, administration and careful tenant selection.
Tenants are checked against several debtor registers, increasing the likelihood of selecting reliable tenants. We believe careful selection is essential. We choose only reliable tenants with a good payment history and no debts. This prevents issues associated with problematic tenants, who ultimately cause owners nothing but concern.
Fees for professional property management
These services are not particularly costly and deliver higher returns over the long term. According to available statistics, this service is more profitable than managing a property yourself. The commission for rental management is calculated as a percentage of the agreed rent. Over the long term, the owner receives more income because the flat is occupied almost continuously, avoiding gaps in rental income. Above all, it is occupied by a reliable tenant who pays regularly. The company also monitors the condition of the flat for you, ensures lease agreements are renewed on time and finds new tenants. It understands the rights and obligations of both landlords and tenants, enabling it to resolve any issues efficiently. Most importantly, it saves you considerable time and worry – and that is invaluable.