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Already have or are considering buying a property that you want to let out short-term, but don’t know if it’s suitable, where to start and what you’ll need?
Is the consent of the neighbors necessary? What taxes are due? What are our administrative duties? What commitments will you have? How should the apartment be furnished?
By renting out short-term, you can dispose of your property. For example, if you decide you want to house your friends or guests, do home renovations, or for any other reason you need the property, you simply block the calendar for the dates in question, and the property is at your disposal.
With long-term tenants – this is impossible. Renting properties on the sea or in winter resorts also gives you the opportunity to use your property when needed. Often, vacation property owners decide to rent out the property for overnight stays to ensure that it is always clean and maintained, while at the same time bringing in passive income while it is not being used by you.
Depreciation of the property
In the case of short-term rental of property, the depreciation is lower, although at first glance this may seem strange to us. Why?
Frequent cleaning: The change of guests leads to regular cleaning – several times a month. This prevents wear and tear on furniture, appliances and flooring.
Less occupancy: Short-term renters don’t spend all their time in the apartment. They are out, exploring the city and the country, and return to the home mainly for rest and sleep.
Property Care: Most guests take care of the property as if it were their own.
Damage is possible, but there are also solutions:
It is true that there is a risk of damage. They are usually minor: a broken glass, a scratch, a stain.
Insurances: Insurances cover possible more serious damages.
Accommodation platforms: Booking.com and Airbnb offer refund policies for damage caused by guests.
Before you start:
Check the rules: Platform rules change. Familiarize yourself with them before committing to short-term accommodation.
Short-term accommodation can bring you:
Higher income.
Flexibility.
Less depreciation.
Fewer commitments.
Management of overnight property
Perhaps one of the most important factors in the successful rental of a property for overnight stays is its management.
Management requires time and nerves, but there are companies that can take on all the responsibility and chores. Owners who rent out properties in the city they live in can try to manage the property themselves, but in case your property is remote, using professionals is preferable.
Management is paid as a percentage of the property’s turnover. Many professional real estate agents also offer a property management service and can assist you.
Location of overnight property
One of the most important factors when choosing an apartment or house for short-term rental is the location. The best-selling areas are the central parts, close to a cultural, touristic or natural landmark or close to key locations such as the airport and train station.
Big Bulgarian cities are always a good place for short-term rental. Even with the availability of many hotels, there are many people and families who prefer to rent an entire apartment or house for their stay. In the center it is possible to have year-round employment, while outside it is more seasonal.
On the outskirts of the center you would also have occupancy, but usually at a lower price per night. Resort towns by the sea and mountains are also locations with a concentration of tourists, and if you decide to rent a home in such a location, you can enjoy good occupancy in season, but lower occupancy with lower income is expected in the off-season.
Furnishing of accommodation for overnight stays
The next very important factor is the furniture. It is desirable that the apartment be renovated and well furnished. The important thing is to create a welcoming environment. Ensure that the property is functionally equipped and that the conditions meet the general needs.
Do not overdo things, especially if you have a small home. However, guests do not move into the home permanently and hardly need full kitchen equipment. Provide the necessary furniture in the kitchen for a comfortable short stay.
Leave open spaces to keep the room spacious and airy. Bet on minimalism. If you have no previous experience in furnishing and arranging a home, you could get inspiration by searching and looking at examples of interior solutions on the Internet.
This will help you get ideas and an idea of what you want the final design of your property to look like.
Studies show that most tourists expect to have real hotel conditions. Therefore, we recommend that you provide at least things like:
Permanent access to the Internet, Wi-Fi with at least 50 megabit speed.
Cable TV with foreign channels
Equipped kitchen with dishes and kitchen utensils
Equipped bathroom and toilet with shower gel, shampoo and toilet paper
Complete set of white goods
Iron, washing machine, hairdryer
And for safety, a fire extinguisher and a smoke detector.
Neighbors of overnight properties
Problems with neighbors are also possible. There is a possibility that there will be tension with the other residents of the building at first, but in the end the activity is completely legal. Whether you rent long-term or short-term, there will always be neighbors who disagree with the tenants.
There is a standard procedure for categorizing your apartment, after which you are fully entitled to rent it short-term. Many of the apartment owners do not register and work without the necessary documents. This, and how you pay your taxes, is entirely your choice and responsibility.
House cleaning
Before each new guest, your apartment must be cleaned, bed linen and towels changed. That and the laundry are your responsibility. However, this duty can be difficult to fit into everyone’s schedule, so many homeowners hire a professional firm, broker, or person to perform this task.
Of course, if you decide to trust a person to take care of the property, you will have to set aside a portion of your profit. However, there is a solution to the case – often the owners of such homes form the price of the night by calculating the cleaning fee separately.
Features of managing a property for overnight stays
To successfully let a property in the short term, you need to be patient, understanding and flexible in your contact with guests. Communication can be throughout the day, until late at night, their accommodation, too. Some guests come at night.
The good news is that there are methods of self-check-in – lockboxes and pin-code locks, but you should still be available if guests can’t make it. You are required to accommodate them, otherwise you will suffer penalties from the platforms.
It is a good idea to inform your guests in several languages about the features of your apartment.
Everything from bin information, garage access instructions, internet settings and appliance specifics will save you bad reviews and midnight phone calls.
All the time during the stay of the guests, it is desirable to answer all their questions, so that they remain satisfied and, accordingly, write you a good review or so-called “review”.
Cases in which there are problems with appliances in the apartment, such as a non-working TV, Internet, water heater, stove, and others, you must react as quickly as possible, if possible immediately. In short, you must be available 7 days a week at almost any time!
Platforms for letting housing by nights
The most popular platforms with which overnighters will reach your property are two: Airbnb and Booking.
They promote the properties to a wide audience and process all payments for the property owner. They also provide customer support and help resolve any issues that may arise.
Both Airbnb and Booking.com charge a service fee to the property owner and also keep a portion of the rental fee. Airbnb takes about 3% to 15% of the total rental amount depending on how you use the platform, and Booking.com about 15%.
Keep in mind that the platforms invest a significant advertising budget and have many users looking to rent nights from there. Additionally, contact local tourist centers and tour operators for additional advertising and partnership.
It is extremely important to present your property in its best light. To successfully advertise the benefits of housing, you need to think like the tourists, and what you would want if you were in their shoes. After doing this exercise, consider what you have available and how to highlight your property’s qualities to gain the interest of potential visitors.
Photography of the property
The photos that represent the visual appearance of your listing are the first contact your potential guests have with your property. That’s why it’s important to put more effort and creativity into creating your ad. Remember that searching for the perfect place to stay in a sea of listings takes time.
And because of this, users often scroll until they find an offer that really grabs their attention. Therefore, when launching this type of vacation property, it is more than mandatory to take care of their layout.
There are a few simple yet very effective tips to follow to achieve eye-pleasing visual content.
The photos should be taken during the day and horizontally oriented and preferably with a wide-angle lens or lens. Before filming, arrange the apartment and make the beds.
Make the property look welcoming and ready to welcome guests. Show different perspectives to rooms in the home. In the photos, it is good to show what furniture and appliances the guests will have, revealing the attractive accents and details of the interior.
Object Registration
The property must be registered as a tourist site in the municipality. Registration is mandatory and is paid as an administrative service. With the registration of an object thus made: each owner will have to charge a tourist tax (which is paid by the tourist).
The amount of this tax varies from 20 cents to 3 BGN for different municipalities. In addition, you are required to register each guest in ESTI
Costs related to short-term rental of property
One of the main costs you can expect to incur is with short-term rental platforms if you decide to manage your property yourself. If you do it through a broker or firm, your cost will be to the management company itself, which usually includes these costs in their rate.
The costs of electricity, water and heating of the apartments are borne by the owner of the property, as well as the costs of replacing the sheets and towels.
Taxes on overnight rentals
When an individual carries out a commercial activity related to the short-term rental of properties, there are two options for taxation of this activity:
You may choose to be subject to patent tax. The amount of this tax is a fixed amount that does not depend on the amount of profit generated for the respective year.
The second option for taxation of the activity according to the order of taxation of income from activity as a sole trader is 10% of the profit.
When we tax our activity in the second way, the taxable income on which we will charge the tax will be our tax profit or in other words the difference between the generated income and the incurred expenses. It is declared through the Annual Tax Declaration.
If all this seems complicated to you, we advise you to take advantage of the services of property management companies, they specialize in each of the processes, from creating the listing, to welcoming and sending guests, communicating with them, cleaning and laundry to paying the taxes and in most cases you are not asked to do anything except pay the overheads.
This approach is ideal for busy property owners who want to rent out their homes without dealing with day-to-day management. Usually the service of these companies is between 18 and 30% depending on what exactly they do.
Even after covering these costs, short-term rentals are usually more profitable than long-term, but not always.
Long term rental
Not all properties are suitable for short-term overnight rentals. There are special cases in which a property cannot be registered with the municipality. In other cases, the property is not suitable for short-term rental due to the low interest in the location or the short season, and it is more profitable to let it for a long period of time.
In short, it takes more effort to prepare an apartment for short-term rental than for long-term rental. The management and responsibilities are much more if you do it yourself, the depreciation and risks are less and the profit is more. Keep in mind that a well-made short-term rental apartment can always be stopped from the platforms and started to be given long-term. The risks are not great, almost none.