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More and more developers are building projects for temporary rental: the advantages of this investment versus a traditional rental
November 13, 2023
Buildings designed to be rented temporarily from minute zero. More and more developers are building projects designed exclusively for short-term rentals , intended mainly for tourism.
Defining a real estate product from the development itself, allocating it to a particular objective such as temporary rental, is very advantageous. Why? “Because from moment zero the aim is to optimize the costs and maintenance that a property with intensive use of tourists will have. They also think differently from the construction, the design, the format of the unit, the amenities and infrastructure of the building,” explains Daniel Bryn, owner of Invertire.
This translates, for example, into installing storage spaces to store suitcases in the event that tourists need to leave the unit before leaving the country, having a laundry space as an amenity -without the need to have a washing machine in each unit- , install mostly electric ovens and stoves to avoid problems with the use of gas for people who are not so accustomed to its use - tourists are generally not -, have central hot water so as not to have to deal with repairs later of hot water tanks or individual boilers for each apartment, among others. A formula that more developers are betting on with one objective: to seduce investors .
The developer can take on different roles : from handing over the apartment without taking care of anything afterwards because it is the buyer who is in charge of renting it ; Or you can provide a 100% complete service where you manage the rental, provide the owner with equipment options , take care of the cleaning and the owner does not even know who was in his apartment . “For this reason, developers usually charge a monthly fee or money that is calculated based on a percentage of the department's income of approximately 10%,” says Bryn.
Equipment is key to achieving constant occupancy and good reviews from tenants on temporary rental platforms
"Another alternative is 'pool' type exploitation in which the person does not earn for his unit punctually but rather contributes his department to a group of apartments in the building whose total income and expenses are divided based on a previously defined percentage," he clarifies. Bryn.
Regarding income, the specialist assures that the monthly income from the temporary rental of a two-room property reaches approximately US$650 gross , on average, for the apartments that are rented in Buenos Aires, without deducting expenses. But he clarifies that it is important to keep in mind that, on average, in CABA, a temporary worker rents 22 of the 30 days of the month, that is, for 8 days it remains empty, so that the occupancy of the property is 73% of the month. month. “Today a two-room apartment rented temporarily yields 7.41% and traditionally 3.15% ,” warns the specialist.
A key point is that, in general, the apartments in these projects designed to be temporary are rented more expensive than a unit intended for this same type of rental but in a traditional building . At that point, the founder of Invertire.com assures that it depends on the services offered. “If the apartment is new, modern, bright and has amenities that tourists are interested in, it is common for this to impact the daily fee charged per night. If, on the other hand, the apartment is in an old building with small elevators, no amenities, few services, no balcony or a French balcony, this impacts lower income per night,” he explains.
“The model is attractive because of the profitability it offers, which is sustainable in the long term as long as there is a professional team that manages it, generating economies of scale, greater synergy and visibility of the product,” says Leupold. She agrees with Bryn that the profitability is much higher than that of traditional rentals, “it reaches between 6% and 8% annually, practically double the average traditional rent,” she clarifies. However, the investor, beyond the economic income, must analyze the options for exiting the business tomorrow.
The greatest demand in apartments for temporary rental is for studio apartments or two rooms
Another key point to analyze when investing in a well project for temporary rental is to consider whether it is worth waiting for the completion of the building to generate income. This will also depend on whether the investor has all the money or not for the purchase, since the wells offer financing and then he can pay in long-term installments knowing that he will obtain a temporary rental income in the future. "If the investor has the money and wants to generate income immediately, perhaps it would be better to buy a used apartment and remodel it or a brand new apartment for the same amount or a little more money and thus generate income in the short term without waiting for the completion of the project. construction,” advises Bryn.
On the other hand, it recommends that, if the person is going to buy a project aimed at temporary workers, they should demand that they be provided with clear information about how much income they estimate, what vacancy, how the profits from the apartments are distributed. That is, how do I know that my apartment will be rented as many times as possible and will not be given priority to other apartments in the same building - and also what expenses are included in the service or not.
Ariel Venneri, founding partner of Grupo MAHE, states that when one opts for a venture designed, designed and built specifically for temporary rental, there are advantages. “In the near future it must allow us to comply with the regulations and standards that will be imposed, just as in large tourist cities in other parts of the world, trying to discourage temporary rentals in residential buildings,” the developer clarifies. It is also necessary to have safe and flexible investment schemes to enter the business and consider a professional management and exploitation solution that frees the owner or investor from problems and ensures maximum profitability.
The advice of experts is to equip kitchens with electric ovens and stoves to avoid the use of gas
In the context of the temporary rental boom and how tempting this alternative is for investors since it gives them a much higher income than a traditional rental, there are various projects conceived from the ground up for temporary rental . According to the commercial manager of Avilis, one of the most requested areas in the temporary rental modality is Palermo. In fact, it is the neighborhood with the largest number of developments of this style. For example, the developer is building a building in Cabrera and Billinghurst, MAS Cabrera, of which they have already sold 80 percent of the units that were designed for temporary rental and are offered from US$71,000.
The More Cabrera project in Palermo
Venneri agrees that the most attractive neighborhood for this activity is Palermo, especially the area known as Palermo Soho, Palermo Hollywood or Las Cañitas, with some 5,265 properties in operation and a rate that ranges between US$60 to US$80 per night , for quality units. It is followed by Recoleta with about 2,295 properties, Belgrano with about 757 units and San Telmo with an offer of 526 units, with much lower rate values.
The developer MAHE has two projects, the PH Eco Renta San Telmo complex (in Defensa at 1300) with units that are already sold and in operation, while in Palermo (Cabrera at 5100), it proposes an open investment fund for the 24 units (one and two rooms) that are in the process of construction with delivery by 2025. In this case, the average investment is about US$80,000, with the possibility of paying it in pesos with financing of up to 60 installments.
Continue reading...
https://buysellba.com/news-/-media/f/properties-everything-you-need-to-know-when-buying-an-apartment
www.buysellba.com
November 13, 2023
Buildings designed to be rented temporarily from minute zero. More and more developers are building projects designed exclusively for short-term rentals , intended mainly for tourism.
Defining a real estate product from the development itself, allocating it to a particular objective such as temporary rental, is very advantageous. Why? “Because from moment zero the aim is to optimize the costs and maintenance that a property with intensive use of tourists will have. They also think differently from the construction, the design, the format of the unit, the amenities and infrastructure of the building,” explains Daniel Bryn, owner of Invertire.
This translates, for example, into installing storage spaces to store suitcases in the event that tourists need to leave the unit before leaving the country, having a laundry space as an amenity -without the need to have a washing machine in each unit- , install mostly electric ovens and stoves to avoid problems with the use of gas for people who are not so accustomed to its use - tourists are generally not -, have central hot water so as not to have to deal with repairs later of hot water tanks or individual boilers for each apartment, among others. A formula that more developers are betting on with one objective: to seduce investors .
Different business models
The developer can take on different roles : from handing over the apartment without taking care of anything afterwards because it is the buyer who is in charge of renting it ; Or you can provide a 100% complete service where you manage the rental, provide the owner with equipment options , take care of the cleaning and the owner does not even know who was in his apartment . “For this reason, developers usually charge a monthly fee or money that is calculated based on a percentage of the department's income of approximately 10%,” says Bryn.
Equipment is key to achieving constant occupancy and good reviews from tenants on temporary rental platforms
"Another alternative is 'pool' type exploitation in which the person does not earn for his unit punctually but rather contributes his department to a group of apartments in the building whose total income and expenses are divided based on a previously defined percentage," he clarifies. Bryn.
Regarding income, the specialist assures that the monthly income from the temporary rental of a two-room property reaches approximately US$650 gross , on average, for the apartments that are rented in Buenos Aires, without deducting expenses. But he clarifies that it is important to keep in mind that, on average, in CABA, a temporary worker rents 22 of the 30 days of the month, that is, for 8 days it remains empty, so that the occupancy of the property is 73% of the month. month. “Today a two-room apartment rented temporarily yields 7.41% and traditionally 3.15% ,” warns the specialist.
A key point is that, in general, the apartments in these projects designed to be temporary are rented more expensive than a unit intended for this same type of rental but in a traditional building . At that point, the founder of Invertire.com assures that it depends on the services offered. “If the apartment is new, modern, bright and has amenities that tourists are interested in, it is common for this to impact the daily fee charged per night. If, on the other hand, the apartment is in an old building with small elevators, no amenities, few services, no balcony or a French balcony, this impacts lower income per night,” he explains.
What you need to know
For Christian Leupold, commercial manager of Avilis Real State, when constructing a building for temporary rental , the main thing is defined by the location, the connectivity of the area, whether there are universities nearby and whether the commercial, cultural and gastronomic environment of the area is attractive. Regarding the design, he assures that these are projects with homogeneous units and with a limited package of amenities - the most sought after are coworking and SUM - since the aim is for the building to have low operation and maintenance costs.“The model is attractive because of the profitability it offers, which is sustainable in the long term as long as there is a professional team that manages it, generating economies of scale, greater synergy and visibility of the product,” says Leupold. She agrees with Bryn that the profitability is much higher than that of traditional rentals, “it reaches between 6% and 8% annually, practically double the average traditional rent,” she clarifies. However, the investor, beyond the economic income, must analyze the options for exiting the business tomorrow.
The greatest demand in apartments for temporary rental is for studio apartments or two rooms
Another key point to analyze when investing in a well project for temporary rental is to consider whether it is worth waiting for the completion of the building to generate income. This will also depend on whether the investor has all the money or not for the purchase, since the wells offer financing and then he can pay in long-term installments knowing that he will obtain a temporary rental income in the future. "If the investor has the money and wants to generate income immediately, perhaps it would be better to buy a used apartment and remodel it or a brand new apartment for the same amount or a little more money and thus generate income in the short term without waiting for the completion of the project. construction,” advises Bryn.
On the other hand, it recommends that, if the person is going to buy a project aimed at temporary workers, they should demand that they be provided with clear information about how much income they estimate, what vacancy, how the profits from the apartments are distributed. That is, how do I know that my apartment will be rented as many times as possible and will not be given priority to other apartments in the same building - and also what expenses are included in the service or not.
Ariel Venneri, founding partner of Grupo MAHE, states that when one opts for a venture designed, designed and built specifically for temporary rental, there are advantages. “In the near future it must allow us to comply with the regulations and standards that will be imposed, just as in large tourist cities in other parts of the world, trying to discourage temporary rentals in residential buildings,” the developer clarifies. It is also necessary to have safe and flexible investment schemes to enter the business and consider a professional management and exploitation solution that frees the owner or investor from problems and ensures maximum profitability.
The advice of experts is to equip kitchens with electric ovens and stoves to avoid the use of gas
From the foundations
In the context of the temporary rental boom and how tempting this alternative is for investors since it gives them a much higher income than a traditional rental, there are various projects conceived from the ground up for temporary rental . According to the commercial manager of Avilis, one of the most requested areas in the temporary rental modality is Palermo. In fact, it is the neighborhood with the largest number of developments of this style. For example, the developer is building a building in Cabrera and Billinghurst, MAS Cabrera, of which they have already sold 80 percent of the units that were designed for temporary rental and are offered from US$71,000.
The More Cabrera project in Palermo
Venneri agrees that the most attractive neighborhood for this activity is Palermo, especially the area known as Palermo Soho, Palermo Hollywood or Las Cañitas, with some 5,265 properties in operation and a rate that ranges between US$60 to US$80 per night , for quality units. It is followed by Recoleta with about 2,295 properties, Belgrano with about 757 units and San Telmo with an offer of 526 units, with much lower rate values.
The developer MAHE has two projects, the PH Eco Renta San Telmo complex (in Defensa at 1300) with units that are already sold and in operation, while in Palermo (Cabrera at 5100), it proposes an open investment fund for the 24 units (one and two rooms) that are in the process of construction with delivery by 2025. In this case, the average investment is about US$80,000, with the possibility of paying it in pesos with financing of up to 60 installments.
Continue reading...
https://buysellba.com/news-/-media/f/properties-everything-you-need-to-know-when-buying-an-apartment
www.buysellba.com
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