Organize a business on the rental property

Organize a business on the rental property

How do real estate investments work and who makes money on them? It seems that only experienced businessmen can do this. In fact, everyone started out at some point, including those who use Airbnb property management.

Do you know what the first attraction of real estate investing is? You don’t have to know everything about the market to do it.

It is a well-known fact that real estate is one of the most reliable investment options. Buying an apartment, you keep your investment, and over time it will only increase in value, especially if it is a new development, and the infrastructure near the residential complex is only developing. Let’s find out how much it costs to prepare the apartment for handover, and how much can be earned on it.

Renting through the Airbnb booking platform is a lucrative business that requires very little effort or money (assuming you already own the property). There is a wide range of potential customers, which has a positive impact on your profits. To organize such a business, you just need to register in the system as Airbnb host.

There are two ways to rent the most popular types of real estate (apartments and houses): daily and long-term rental. Long-term rentals are less troublesome in terms of constant maintenance of the premises, providing everything necessary and maintaining them in perfect condition. As for daily rent, there are more opportunities for income growth, but labor costs will be high. 

After each eviction of guests it is necessary to change the linen and bath accessories, as well as to replace them with fresh sets. Daily rent is in high demand among tourists, people who come on business trips or seminars, as well as young couples. It is advisable to rent a house for a long term or season. Demand for such facilities is now gaining momentum. Many people choose to live in the countryside and appreciate the comfort and eco-friendly location.

Those who have been working in this segment of the market for a long time have long been calculating the profitability of their business using a proven formula, which consists of several parameters, listed below:

The size of the annual rent. This is the income you plan to receive from renting out the apartment daily at a fixed amount of the tariff. If we consider the business of renting an apartment for a long period, it is easier to calculate this parameter. To do this we multiply the rent amount per month by 12 (months per year). In the case of daily rent – then take the average rate of redemption accommodation at the level of 15 – 20 days. In this case, the daily value is multiplied by 20 and 12 (months of the year) and get the size of the annual rent of the property.

Annual Costs. This includes all current housing maintenance costs: utilities, Internet, appliances repair, intercom and garbage collection fees, and so on. All of these costs add up to a total for the year.

Total investment amount. This includes the price of the apartment and its repair.

What opportunity you get

Renting a garage via Airbnb management also will be a good opportunity to increase income, since the number of cars is growing daily and parking space is usually limited. If the garage is in a good location and meets all the requirements for keeping a car, with good advertising you can quickly find a tenant.

Additional profit can be made by renting out the property:

Renting out the property safely as offices;

The provision of shuttle services to and from the airport or other locations (if you have a car);

Renting out the garage as a rehearsal spot with an hourly fee.

Rohit Raina
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