Long Term Rental Opportunities

When I finished onsite yesterday I went to visit the new Corvera airport site to see how it was progressing and was surprised how close it was plus with the number of people working there

I believe that there is a major opportunity to rent properties to the airport workers and this is especially relivent in the early phases of the development where the lack of facilities is nit a problem for the workers

There is an airport developers website and it may be wirth people who are completing and looking for long term rentals contacting them directly 

A good idea Roy that was muted in the past on this forum.  What really concerns me is the fact that it is clear that Corvera is only suitable for transient construction workers to habitate. 

How long do you anticipate that this may be the situation?

I know that the feedback for you services is very good and that the advice that you offer is sound, but we know that such such suggestions are trying to make the best of a bad lot of broken promises.

The monthly income from long-term rentals will also be well below those expected of a 5* resort and will degrade its status from the start. 

Calidona operates a rental scheme (unsuccessfully) at Roda.  It isn't any surprise that no such scheme is in the offing on Corvera - the whole situation makes me want to vomit!!!!

I'm sorry but in my opinion it's about time that people started to be more vociferous about this entire situation.

Well said Russ, I almost swallowed my own vomit when I read the title of this thread, sorry for being so crude but it's true.  I'm sorry Roy but that ain't exactly what potential buyers want to hear.  JMO  but again I suppose something is marginally better than sweet.  X X .........I mean nothing.

I am sorry that my suggestion seems have have generated such comments and I didn´t mean to create any offence. Having met a number of people that have purchased as an investment, and that will require some rental income, I am trying to be helpful and we have even provided help on the best rental websites, how to furnish and a few other things

Not all the staff that work on these contracts are construction workers as there as also management teams which increase as the development nears completion plus this development may attrcat people working in Murcia or Cartagena

One thing that seems to be forgotten is the reduction in mortgage payments, almost halving over the last 12 months so the monthly costs are far less and therefore the monthly income required to cover cost may be less

You will always get more money renting to holiday makers but the expectations for long term rental in this area I would realistically estimate at €450 - €550 per month plus the renters pays utility bills

Coreva will be offering a rental scheme, keyholding and cleaning servuces on this site but agian I believe a condition is that you have to use thier furniture packs

If you have bought for investment and rental income it is possible to reduce your initial expenditure, perhaps consider 2nd hand furniture as there are some real bargains around where you could furnish a property for less than €5k, take a look at www.smartshopspain.com for some ideas

One short term opportunity is to market the property for people that are about to complete so that they can stay onsite  while they snag and visit the shops and Notary and this was very common on RODA. I am sure such requets will be made on this and other forums

It is common knowledge that the clubhouse golf etc will not be finished till late 2009 erly 2010 so possibly the main peak season will start for golf then and for family breaks Easter 2010

What doesn´t change are the facilitues and attractions around the development the cities of Murcia and Cartagena, the beaches around Mazzaron, the countryside and water parks and of course all of the other local golf courses.  

It is normal for any new development, not just Corvera,  takes around 12 -18 months to mature and this may be conturary to the advice given by your selling agent

Anexcellent suggestion Roy especially for those who are completing and are looking for mid-long term rentals.

You will probably get quite a lot of negatives to this suggestion but most of those will be from people who are trying to pull out of their contracts to complete their purchase or have a negative history with Calidona.

New clients and the more optimistic purchasers would do well to consider the options put forward if it suits their particular plans for their purchase.

The feedback from people concerning Roy and his business is excellent.  I believe that all of the advice he offers is done with the intent to help but in this case I feel that there are many other things to be considered – hence the earlier post.

Whether I 'm completing or not and whether I need the income from rentals is irrelevant.  However I do feel that I need to explain the reason for my earlier comments and link them with subsequent points.

Furnishing an apartment with second-hand furnishings may save money in the short term but it represents a sunk cost.  After an additional 18 months to 2 years wear and tear from letting on the basis suggested I would very much doubt that it would be suitable to use as furniture for holiday apartments in what is bound to be a very competitive market.  Look at how competitive Roda is as an example.  Things like white goods (eg the washing machine will particularly take a hammering).

The suggested rental income of  450 to 550 euros per month is pitifully low but actually around the figure that I was expecting for this resort in its present state.  How one manages this income and how much tax is deducted is a matter for the individual.  But needless-to-say this is not a net income figure.  I assume that there will be management or arrangement fee.  Things like the insurance may well be higher with this type of rental compared to a situation where you use your apartment for personal use only.

Monthly repayments on mortgages are cheaper in the present climate and this is indeed a blessing for many people.  However I do not think that this can be used as a substitute for the fact that this resort is essentially unrentable to the holiday market in its present state.  You should also consider the fact that the reason why lending rates have fallen is because of the deflation within the global economy and the fact that property prices have fallen by 30 to 40% in the last 2 years.

Long–term rentals also mean that you will be unable to use the property yourself which does involve an opportunity cost.  You’ll have to holiday elsewhere in the meantime.

I’m sure that Roy also appreciates that with many new homes, snagging issues often develop through the first few months.  My past experience of tenants in this country has taught me that snagging defects often go unreported and as a result unresolved.   With holiday lets and the employment of a managing agent who regularly cleans / inspects you have a better chance of getting things resolved.

I doubt that there will be very much of a market for people to rent their properties to other purchasers during their completion processes due to the time-scale involved.  Phases 1 and 2 account for a very large percentage of the sales generated on Corvera and they are all being rushed through during this month.

Murcia and Cartagena are not holiday destinations common to people in the UK.  How the heck are people meant to generate their own rentals?  Many owners on Roda have gone to extraordinary lengths to market their apartments and at least they do have the benefit of a beach club for family use.  However I would question the fact that many of these owners state the fact that it is a De Vere resort.  Exactly what part of the resort is managed by De Vere ?  How are owners on Corvera possibly going to market their apartments?

In terms of a 12 to 18 months wait for the resort to mature, this seems wildly optimistic.  Look at Roda – still no hotel / spa or commercial centre.  The decision to build the hotel here has been delayed until the end of this year.  Even if the decision is a positive one there will still be a 2 year time –lag for Roda.  What are the implications for Corvera?  The excuse of the present economic climate is not acceptable as Calidona failed to provide these facilities during the good times and have been sat on a substantial pot of reserves for some time. 

I am not going to make the assumption that it may be more desirable to have professionals / managers renting over construction workers.  Either way it seems likely that you may get multiple occupancies of groups of males who will probably just use the accommodation during the week and not particularly care for the apartment or its environs.

In a nutshell, it’s probably not worth renting out your apartment at all for the paltry income you will receive compared to the expense and hassle involved.  You are probably better off getting some decent tax advice on how you can write-off the losses made on your investment unless you only intend to use it for yourself as a holiday home.

Are you able to live at Corvera for under 183 days and rent out your UK property which may be more profitable for you?I have known people renting to construction workers in UK who were working long hours so only showered,slept and breakfasted hardly using the property. They kept it in excellent condition, think it rather unfair of you to assume that people who are not professionals would not respect other people's property. When buying property for rental you need to think of the worst scenarios and be prepared.

Please read my message carefully - I'm not being unfair to non-professionals. 

I viewed this resort as a holiday let and not long-term rental.  They simply aren't suitable for this type of usage and is therefore not a scenario that was or should have been considered?   In any case back in 2005 it was predicted that the airport would be completed at about this time. 

Hi Russ

Thank you for the comments on our service and altough I agree on some of your comments I would make the following responses

What I try to do is provide advice based  on my practical experiences from renting out my own property is Spain which I have rented out both short and long term and yes my choice is always holidaymakers, where the average rate I maintain is 300 pounds per week, and in 2009 I will have 39 weeks booked, so it does cover its costs and this is something I watch very carefully as it is easy t loose money.

I run a spreasheet that calculates the costs against the income and gives me a minimum rental rate to cover everything which has reduced this year as a result of the reducing mortgage rate 

Important to understand and carefully calculate the real costs and this is difficult to do until you have had a property a while in my case my community fees are lower because the property is in an established golfing area, Villamartin, but not on a golf course so fixed costs are my community fees, insurance, SUMA (local rates), mortgage payments, the keyholding costs

It is the variable elements utilities, tax on income, cleaning an meet and greet and a percentage for general wear because of these items based on the more rentals the higher these cost and it is a fact that at the time of the year when rental rates reduce is the time when the utility costs are highest.

A reasonable rate for property management, which includes keyholding, a fortnightly check on the property should be around €250 per annum and then you would pay extra for meet and greet normall €20 and cleaning between €50- €60 including linen. Some organisations charge much more and include meet and greet but in the early stages you are better paying for each client. It is more common to advertise the property at a rate plus the cleaning charge shown as an additional item.

Moving oto to promoting the rental there are some people who are very suv¡ccessfully renting on RODA, those people are doing so by using the well established rental sites like Holiday Rentals,Holiday Lettings and Daltons because on the traffic they generate and using some proven techniques on availability pricing and of course they have good descriptions and photographs

The rental rate I have listed for long term is the normal for this area regardless of development as it is normal for a long term rental and is always plus bills but I don´t agree with the comments on additional wear as these type of tennants are actually out working all week, they actually use less utilities but yes regular checks on the condition of the property are key and should be included as a condition in the contract. Yes this is not for everyone but a number of people we meet have bought the property as an investment so never plan to use it themselves

There is no different type of insurance required a typical policy from Linea Directa will cover everything under a normal buildings and contents policy. Also for longtern rentals you also take a higher security deposit, for an annual contract at least 3 months rental in advance

I definately don´t agree with your comments on 2nd hand furniture because what you will find is furniture that has been sold by people that have had to sell up, that is very modern, hardly used, and is no different to new furnitiure, the only difference being that it is at least half the price of new furniture. Beds for example where you would buy the bases and headboards and new matresses. Remember that the marging from some pack providers is at least 70% gross just take a look at some of the photographs and example prices on my site for ideas

On the ongoing maintenance front you will always have to refresh a property, typically a 3 year cycle for major items plus if you can afford it buy quality branded white goods

I also disagree regarding the rental opportunity for people completing because yes there are plenty of people completing this month but many more from September plus people that are completing on later phases will want to stay on the resort and we are already receiving enquires from people wanting to rent that we are passing onto to people that we know will have properties ready over the next  few weeks

I am never certain how the hotel adds to the rental opportunity for apartment owners, yes I accept that a spa and commercial centre is important but if you look at the example if Serena Golf, close to RODA, ther´s a 5 star hotel and spa that closed 6 months after it openned because it couldn´t survive and get enough rentals

Renting is all about promoting the area, RODA certainly benefits by being close to the beach but for example if you want a spa Corvera is close to 2 of the best spas in Spain, Fortuna and Archena, you have the water park at Terra Nature in Murcia. The beaches along that side of the coast are beautiful and quieter than the Mar Menor beachesand anybody that visits Cartagena or Murcia will know what a tourist attraction they are.

Putting it simply if you want to rent you have to work at it

I hope with this response I have given some ideas and things to consider and of course I am happy to help with any further information

Well done Russ for the explanations of your previous comments. The statements and questions that you have raised will enable the people who wish to rent make a more informed/educated decision on what to do with the rental market should they wish to rent-out.

Please rest assured none of my comments are meant to "have a go" at anybody personally but both Roy and yourself along with most others, when coallated bring a well balanced view to help other forum members.

Best Rgards

Steve

Hi Steve no offence taken by any comments and totally agree that it’s a debate worth having.

Hello Roy – thankyou for your detailed response, it’s really useful to have points clarified by someone with your knowledge and experience.

Your practical advice is invaluable and I appreciate that you are operating in a business capacity but one which is very useful and much needed.

That said (and I guess you knew there would be a however) it is the case that many people will struggle to finance their apartments on this resort for a number of reasons.

If the net rental income for a long-term let is about 5,000 euros pa for an apartment costing 250,000 then that’s an incredibly poor rate of return (approx 2%).  Put simply, you may as well put the money in a savings account and allow the interest to pay for an annual rental of an apartment and still have some spare change  (and avoid any risks such as negative equity).  I understand that this is the going rate for long-term rental regardless of resort and again underlines the fact that I may have just purchased on any resort / area and gained a greater return. 

Whilst there may be a few people who are successful at rentals on Roda.  I agree it is because they have really made an effort in their marketing.   However there are many who are struggling with it.  You won’t have much trouble finding a cheap apartment outside of the summer school holidays.

The fact is that the main problem facing anyone trying to rent out a holiday apartment on Corvera is obvious in the fact that there is nothing there in terms of facilities.   Yes there may be some nice activities and attractions nearby but holidaymakers also need to be able to return to their holiday apartments and relax and enjoy the holiday destination and what it has to offer.

I appreciate the fact that you will have to work hard to generate rental income.  However in my opinion I would not book my family on a holiday at this resort so why on earth would I feel comfortable taking other people’s money? 

If anyone wants living proof of why I am anti long term cheap rentals then look at the "slipping standards" thread on the Roda forum.  Is this a five star resort?????