Weekly Rates TOO low?

If you are planning to buy a rental home, or you're thinking about what to do with one you have just acquired, this is the place for any questions about starting out in the rentals business.
Musetta
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Weekly Rates TOO low?

Post by Musetta »

I'm buying a small home in Italy..and very happy with my choice :-) I had planned to rent it by owner when I am not using it...but...I found out that the local management company (it is a "development" of restored homes) is/will be renting them at VERY low prices (under market, IMHO after looking at various listing sites).

They will be renting out a one bedroom for 200 euros a week - but the owner will have to pay 20% out of that for commission as well as 30-60euros cleaning charge and 40-50 euros laundry service on top of usual upkeep...obviously, it is not worth it to me to have guests in my home for a few dollars a week profit (max 80 euros? less if I pay for TV or heat) - I don't think the problem is the 20% (that seems standard), but the actual rates (only 150 euros/week for a studio)

As I said, I would like to do it by owner mostly anyway, but I think it will be an issue if I charge more than all the other homes in the area :-(

Right now, there is only one home I know of finished and rented at that price...the only other things I have to go on are...
-the local "hotel" (a 1* I believe) that charges 55euros/night for a double.
-the local B&B that charges 120/night for a double (and 60 euros extra for each additional person - including children, but, wityh breakfast, I'd assume :-) )
-and a country farmhouse with apartments that is maybe 7km away (my place is in the village) that charges 80/night for a one bedroom, 120/night for a two bedroom (I have a one bedroom, with a loft befroom for children). but they do have a pool (wich my guest can use at a daily rate if they wish)

Thank you in advance for the advice! I guess I just need to decide if I want to choose a price that makes since to ME and market it, or if I want to wait it out and see what happens to the prices and start renting when the weekly rate goes up a bit and it would be worth it to me....no point renting it for free (which seems what it would be after my expenses)
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Mouse
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Post by Mouse »

Hello there!

I can't really advise you about what price to charge, but it would have to be something that you felt compensated you for your energy bills, wear and tear etc and also something that the local market could stand.
In my experience I wouldn't bother renting out to strangers unless you made a decent profit. The hassle and wear and tear isn't worth it. Could you maybe rent it out only to family, friends and acquaintences? This might also get you around any legal issues of renting

The charges for cleaning and laundry of a 1 bed apartment seems extremely expensive to me. Here I pay 12 euros an hour for cleaning (and our 4 bed house takes 2 people apprx 2.5 hrs) and a service laundrette would charge apprx 12-15 euros for a double bed duvet cover/sheet/pillowcases that includes collection and delivery. Other charge apprx 8 euros per guest but that also includes towels.

I know there are some people on the board that already rent out in Italy - so I'm sure they can probably give you more useful advice.

good luck in your decision

Mouse
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ianthy
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Post by ianthy »

Hi

I am not sure where in Italy your property is located but Italy has never been known for cheap accomodation. So you may need to ask the Mgt co how they have come with €200 per week rate. The cleaning costs seem pretty high - I pay €10.00 per hour, so 4 hours for a 3 bed farmhouse.

You could always just set your price and market the property and see what happens. If there is only one other property completed - you have nothing to loose.

Best of luck.
Guest3
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Post by Guest3 »

but the owner will have to pay 20% out of that for commission as well as 30-60euros cleaning charge and 40-50 euros laundry service on top of usual upkeep
The cleaning and laundry charges seem extremely steep to me considering it's a 1 bedroom property. I don't know what the normal rate is for cleaning charges in Italy, but here in Spain I pay 10 euros an hour for cleaning (the cleaning of our 4 bed villa is shared between the cleaner and myself approx 2.5 to 3 hours each on a full changeover) and about 20 euros for laundry charges (linen only).
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Ciapolin
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Post by Ciapolin »

You would struggle to get a long term rental for that in Piemonte!

Where abouts are you? I do think people expect to get what they pay for - just think about what you would expect for that price!

To give you and idea, I have 2 1-bed apartments which I let out for €500 per week.
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Musetta
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Post by Musetta »

Thanks for all the advice!

I agree that the cleaning fee is VERY high (I pay less for my cleaning lady here to clean my entire house) It doesn't really upset me though since I don't have to use them...I can do my own search to find someone I trust to clean...and nice to know I have a back-up if I need it. I also have no intention of using the sheet/towel rental - I will have a washer/dryer, so there is no reason a cleaner can't throw in a load of landry at those rates!

The management company says this is a "low introductory rate" and that they will be raising rental prices...the deal is that they have an ulterior motive since they are connected with the development company that is in the beginning of selling a lot of homes and wants to make it as cheap and easy as possible for people to come over and house-hunt. (the property services/magagement company is connected to them as well) I am also assuming that they are using the completed homes to house their interns who are over working in the office and leading viewing trips to potential buyers.

It is in Campania - so a fairly inexpensive part of Italy in general, but I have found a few more accommodations in the area and those prices are really way off...two more country homes renting rooms, both at 55 Euros/night for a double room and extra for children.

Persoanally, I have seen the "hotel" for 55/night and I would not sleep there - it really is about youth hostel standard at best...after seeing that, I don't even know what I would think of a rental for under 30 Euros/night! (the much more expensive B&B is lovely though...at 120/night for two) Certainly not a newly renovated and furnished home! Good point there.

Thanks for letting me vent here :-) I guess I have come to a bit of a conclusion - I won't rent it out for 200/week :-)

...so my only choices are to #1, wait it out and see what the management company ends up charging when they are closer to completion, or #2, set a fair price, market it and rent it out....and I would assume that if I get my price, the management company and the other buyers will copy me and raise their prices as well ;-)

I am a little worried though - I feel that unless I have something to offer that the other homes don't, people will feel ripped off if they pay more to rent mine on their own than if they'd have booked somehting through the management company's website for 200/week...am I being silly?

Thanks again for listening!
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