Investment: Guide to renting your property

Introduction

A large proportion of people who are in the process of buying a property overseas have the intention of renting it out for at least some of the year in order to offset any mortgage costs and maintenance they might have to pay. One of the most common problems encountered is that people over-estimate the revenue they will get, and under-estimate the amount of work they may have to do in order to rent their overseas property successfully.

This guide, from the experts at Holidaylettings.co.uk, is the perfect way to get on the road to making money from renting your property out to holidaymakers.

Choosing the right property

Be clear about your objectives – how important is rental income compared to choosing a location and property that you personally desire?

Try before you buy – be sure to holiday in your chosen location, preferably at different times of year.

How many airlines fly to your proposed location? Are you reliant upon one carrier?
How would you get to your home if they stopped that route?

Check the length of holiday season in your resort. This isn’t just about climate – think about transport links and whether amenities/attractions are always available.

Consider the typical demographic of holidaymakers to your chosen area. Be sure that your property appeals to these groups in terms of size, facilities and location.

Buy property with a ‘wow factor’. Location, stunning views, luxury facilities or external features such as pool or roof terrace are unique selling points (USPs) that will make your property stand out from the crowd.

Find comparable properties on the Internet and with local agents to assess what prices they are charging and how much of the year seems to be booked.

Make use of property portals to search through thousands of properties for sale overseas before leaving the UK.

Furnishing a rental property

A higher standard of furnishing will enable you to set a higher rental price and could potentially give you a higher occupancy rate throughout the year.

If you are considering adding new features to the property, assess the outlay costs against the added rental income any additions will yield.

Select neutral furnishings and colours with minimal clutter to maximise mass appeal. Buy mid-high quality furniture that will last longer and require less maintenance.

Think practically and consider what items you would expect to find as a holidaymaker: hairdryer, iron and ironing board, washing machine, clothes dryer or line, fresh linen and towels.

Consider essentials: first aid kit (which should contain no medicines), local emergency contact details and a fixed position safe for valuables.

If you spend time in your property, get a lockable cupboard or chest to hide your own personal clutter when holidaymakers are staying.

For properties in colder climates, consider USPs like a log fire, central heating, patio heater or Jacuzzi.

For properties in warmer climates, think about air-conditioning, ceiling fans, hammocks, swimming pools, BBQ and garden/poolside furniture.

If appealing to families, think about entertaining children with TV, videos, DVDs, board games, books. Provide a high chair, stairgate and cot.

If the location is good for cycling, provide a couple of inexpensive bicycles to encourage guests to explore the local area.

Keep a collection of inflatables if your property has a pool or is near a beach.

Being a responsible owner

Firstly ensure you are allowed, legally, to let your property on a short term basis, ask someone other than the person or company you are buying the house from.

If buying on a complex, check with the community president that there are no restrictions on short term lets. Check the complex/community rules for other obligations you may need to make guests aware of.

You will need liability insurance to cover you for any damage caused by guests, as well as standard buildings and contents insurance.

Mention to your holidaymakers that they are responsible for arranging their own travel insurance to cover them should they injure themselves during their trip.

Use a booking contract to confirm details of the reservation, tenancy and terms and conditions with holidaymakers.

Check that your property adheres to all of the security measures required by your insurance policy such as specific door locks, alarms or window locks.

Check your policy for a minimum vacant period clause. This can often necessitate paying a caretaker to visit your property every 30 to 45 days during the closed season to check for burst pipes or running taps.

For peace of mind make some contacts in the area and find someone who can check on your property regularly when your property is unoccupied.

You will need to pay tax on income from your property. The UK has double taxation agreements with most countries to prevent you from paying twice. You will still need to declare all income earned, the amount of tax you have already paid and then simply pay any difference.

Check for variances in non-resident and resident status if you spend the majority of your time outside the UK, as this could save you money.

Setting your pricing

Identify your target market given your location and accommodation type – couples, young families, adult groups or large families.

Assess the alternative accommodation in your area and the prices that competitors are charging. Look at other holiday lettings, B&Bs and package holidays and use these to guide your pricing.

Look for similar properties advertised with local agents and online. Make a note of charges per week, any extra charges, seasonal variations and how they approach low season – special deals, reduced pricing, short breaks, etc.

Know your seasons and price your accommodation accordingly. Peak or high seasons will vary according to location, but school holidays are invariably in demand and your pricing can reflect this.

If you have last minute cancellations or late availability, promote these at a special offer price and advertise this clearly so that people realise your property is normally worth more.

Consider variable costs such as utilities, cleaning and laundry. If you factor these into your prices, holidaymakers will be able to budget more easily.

Know how much money you need to make in order to break even. This will enable you to be flexible if you need to offer reductions and to provide a welcoming bottle of local wine or basket of fresh produce for guests.

Letting your property

Decide how or who you want to manage your bookings.

If you have little free time to respond to enquiries and don’t mind who stays in your property, consider using a letting agent to manage everything on your behalf.

Ask other owners to recommend an agent, see how they advertise their rental properties and if they have a dedicated lettings employee to look after them.

If you decide to use an agent, ‘mystery shop’ them once in a while to check that your vacant weeks really are vacant.

If you want to save money on paying agent commissions, be in control of who stays in your property and when you get to spend time there too, then you would be best managing your own lettings.

When handling your own lettings remember that holidaymakers are your customers.

Respond to enquiries quickly and pleasantly.

Holidaymakers are likely to have sent the same enquiry to more than one owner, so the first to respond may be the most likely to secure a booking.

Find an individual or company nearby to handle cleaning, laundry and key holding for you.

Consider all the steps involved from initial enquiry through to returning the security deposit, assessing the time and costs involved. Then plan a sensible procedure for handling enquiries, bookings, changeover days, return of keys, etc.

Managing your bookings

Most importantly you will need a booking contract stating the full terms and conditions of use of your property for potential tenants.

Sample booking contracts can be acquired and then personalised in consultation with a solicitor to suit your requirements.

A standard contract should cover:

• Arrival and departure dates and times.
• Names of occupants.
• Contact numbers for occupants during their stay.
• Payment terms 10 – 25% of the rental sum is usually requested as a non-refundable booking deposit at the time of booking. The remainder is normally payable within 6 – 10 weeks of the holiday.
• Cancellation terms vary but it is normal to offer a period upon which the majority of the deposit would be returned, a second within which a portion would be returned and in instances of very little notice being given, a period when no refund is returned.
• If you are able to re-let the week, you may wish to return most of the deposit retaining a little for extra management costs incurred.
• Security deposits of £100 – £500 should be taken before handing over the keys.
• This should cover you for most instances of loss or damage to your property.
• Behavioral obligations should include matters such as policy towards smoking and pets, maximum occupancy and any security measures to which tenants should adhere. Your insurance policy will help with this.
• Responsibility for insurance should be clearly stated. You should have buildings, contents and liability insurance for your holiday home. The holidaymakers’ personal possessions should be covered by their travel insurance, not yours.
• Community regulations that apply on your complex, such as parking, use of pool and other activities should also be mentioned.

Ensure you have received cleared funds for the agreed deposit as confirmation of booking and final balance prior to giving out keys. If given a cheque as a deposit, be sure to cash it in immediately.

Provide holidaymakers with contact details for you or your local representative during their trip and make sure that you have their contact details for the same period, or those of a relative in case of emergency.

If you provide your cleaning company with an inventory to check, ensure they are happy to do this at every changeover. It is more practical to cover main items of value rather than a detailed list.

Ensure that your cleaning or management company will advise you immediately of any problems. Check with them before you return deposits.

Invest in a Polaroid camera so that your cleaning or management company can record any damage or need for excessive cleaning – invaluable for justifying any necessary deductions.

Marketing your property

Decide how much money you want to make from your letting, and then decide on an advertising budget.

If you are looking to earn between £5,000 and £20,000 per year you will probably only need to spend between £100 and £500 marketing your property.

Word of mouth is the cheapest form of advertising so be sure to tell your friends, family and colleagues about your property.

Produce a simple brochure or flyer with some photos that you can put up at work, in the newsagents, in the gym or hand to interested people.

Use the Internet to market your property. Internet listing sites are now the main method by which owners advertise their property to holidaymakers.

Consider advertising in magazines – especially if your property appeals to a niche market such as golfers, skiers, families with young children or pet owners.

If you want to create your own brand or the impression of an established business, consider investing in your own website, otherwise an advert on a listing site will probably suffice. Ask holidaylettings.co.uk for more details on getting a personal website.

Encourage repeat business. Keep in touch with guests after their stay and let them know about any improvements you make or late deals offered.

Advertising secrets

Good photography is the single most important tool for effective advertising.

Your photos should entice holidaymakers to read the whole advert.

Professional photographers charge £40 – £70 per hour but it may be worth it.

If you take the photos yourself, take your time and prepare every shot:

• Remove clutter and clean the property.
• Lay the table and make the bed.
• Don’t put people in photos, allow holidaymakers to imagine themselves there.
• Take photos with the sun behind you to prevent loss of contrast.
• Daylight is most complementary in the first or last few hours of the day.
• Take external photos in good weather.

Make your USPs stand out in your photos and highlight these with captions.

State important points in easy to read lists but also provide a good summary paragraph that sums up a great holiday at your home.

Remember you are selling the features and benefits of your property to holidaymakers, so don’t be afraid to boast about the best ones!

DON’T USE CAPITALS – it looks like you are shouting and is much harder to read.

You need to come across as pleasant and approachable through your advert.

Update your advertising regularly. Adapt it to different seasons and different client bases throughout the year.

Be clear about costs. If your prices look low but don’t mention extras like heating or cleaning, you will lose potential bookings when the true cost is revealed.

Internet advertising

Use your best photographs online. Photos are often the first thing online advertising sites show, drawing holidaymakers in immediately. Make use of all the photo slots available.

Get creative and write descriptions of your property and local area brimming with USPs, emphasising what’s really great about your holiday home.

Be sure to tell people the easiest ways of getting to your property and useful contacts, such as car hire and taxi companies in the area.

Tell people about local attractions and facilities – they may not know the area and need the destination selling to them just as much as the property.

Be sure to use and regularly update your online availability calendar as many holidaymakers like to search by date. Listing sites often order results by availability and may display most recently updated adverts/calendars first.

Set up a dedicated email account for booking enquiries and check your spam filters to make sure your enquiry emails don’t get dumped in your trash folder.

Check your emails as often as you can, but at least once a day. Most online rental websites offer free SMS text messages to your mobile, alerting you every time an email enquiry is sent, in case you are not near your computer.

A basic advert on an Internet listing site costs about £150 per year and lets you showcase your property online. These sites typically attract tens of thousands of holidaymaker visitors every day, making them the best source of enquiries.

Tricks of the trade

Respond quickly and politely to enquiries with any suitable information they may need.

Provide a welcome pack for guests on arrival at your property. A bottle of wine and some basic food items are always welcome after a journey.

If you have any late vacancies to fill, try emailing previous guests to offer them a special late deal.

Provide a Guest Book for visitor comments providing useful feedback and valuable testimonial comments to entice new guests.

Keep up to date with local events and activities and get listed with event organisers, as this is often free.

Work with other owners. They may be your competitors, but if you get an enquiry you can’t honour, someone nearby may have availability. They may return the favour another time.

Keep an eye on the market and make sure your pricing and facilities remain up-to-date and competitive.

Finally, don’t forget to keep some weeks free for you and your friends/family to enjoy!

It can sometimes be tempting to take all the bookings on offer, but make sure you don’t end up in a hotel!

© Holiday Lettings Ltd 2007