Long term rental

[ken]

Dont now how clearer I can put this, but there are circumstances where it makes perfect sense to rent out at a loss. For example if you apartment costs you 1000 Euros a month all in. However, the market rental rate is only 800 due to reasons mentioned earlier.

Scenario a) You could be stubborn and think 'I am not renting out at a loss and want 1100 Euros' but no takers. Net result is you are losing 1000 Euros a month but stuck to your priniciples.

Scenario b) You take the 800 Euros a month since thats what the market is prepared to pay and figure its better having some income than the place sat empty. Yes techincally you are losing 200 a month, but someone else is paying the lions share of your mortgage for a longer term asset. Not everyone is in the rental market for short term gain.

To me its an easy choice.....the owner does not determine rental value, the market does. Simple supply and demand economics. There are plenty of property owners in Portugal and the UK in exactly this scenario and happy to take option b.

[tricky]

I don't know Tbt, you ask a simple question Trust you to cause trouble.
Seriously, this thread is what carvoeiro.com is all about... one things always leads to another,
great!

[joanne]

Well, Just like to say I am not thick, and I did understand your comments, what I am trying to say is a lot of people and I have spoke about this a lot with people would rather not rent at a loss, and as I have said before the best piece of advice we were even given was do not buy if you need to rely on the rent, as it is very up and down.

My point is if you are renting out at say 150Euros a week then Electric, Gas, Water, maid etc is being paid for you can end up making a loss, as if the people renting use a lot of the above it will end up costing you as I have friends who have been in this position.

[ken]

Apologies was not trying to imply anything about being thick! Just trying to get across the point that I know quite a few people are renting out longer term at a partial loss. Agree its risky to buy property abroad purely as an investment, but none of the people I know have done so. They just took the decision it was better to have 80% costs covered 52 weeks of the year than the place potentially empty for 30 weeks on the chance they filled it at tourist rates rest of the time.

Understand where you are coming from on the water/electricity useage. We had a similar situation, friends at 'mates rates' had the air con on 'heat' 24/7 even though it was not that cold. Electricity and cleaning cost more than they paid!

[SJ & RE]

Totally agree Ken and totally disagree Joanne.
If you discuss the matter with your accountant, he will say exactly what Ken said. It is a question of economics.
Market rates are what they are, renting long term at a small loss is better than non rental with a far bigger loss. You can always do the rental on an OYEA 52, with a legal 6 month clause and see how the market rental is doing.
I have rented out properties of my own on a buy to let mortgages, easier to dispose of and change, and rented out long term at a small loss where and when neccessary. Recouping costs are easy from a tax point of view, that is if you are legally renting out and of course have a suitable and competent accountant. Overall where you make a loss on rental you can gain it back in other ways if you are savvy that is.

[Canada]

Sounds VERY reasonable to me. Where have you found cheaper?

[robertpinson]

Would you be so kind as to inform me If the apt is still for rental.

[ken]

Hi Robert

Not sure whether we have got crossed threads here, but am afraid the apartment I was advertising for renting out (on another thread) has now been let out.

Regards

Ken

[ron5000]

Would you be so kind as to inform me If the apt is still for rental.

You are certainly on the cutting edge Rob, straight in before any one else gets there. Didn't you notice the date.