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Properties: What should I do: Do I sell, rent with a traditional or temporary contract or leave it empty? - La Nacion Propiedades
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Propiedades : qué conviene hacer: ¿vendo, alquilo con contrato tradicional, temporario o la dejo vacía?
Luego de la salida al mercado de los créditos hipotecarios UVA y del DNU de Javier Milei, el mercado inmobiliario se reconfigura y las decisiones a tomar para sacar la mayor ventaja también cambian
www.lanacion.com.ar
May 21, 2024
After the launch of UVA mortgage loans and Javier Milei's DNU, the real estate market is reconfigured and the decisions to be made to get the most advantage also change.
By Soledad Balayan
What should be done: do you sell, rent with a traditional or temporary contract or leave it empty?
During 2021, I received many questions from owners about what was the best decision under the new rental law : should I sell, rent, or leave it empty? At that time, many people who had an apartment were not convinced about selling their property, since they considered that the sales prices were very low compared to the values for which they had acquired that property.
On the other hand, the alternative of a three-year rental with annual adjustment for CPI and other conditions (imposed by the rental law) was not very convincing either. Those who chose that alternative were greatly harmed by the high level of inflation of the last two years and the impossibility of terminating that contract.
Another attractive alternative for some , observing the great return of post-pandemic tourism and the possibility of receiving rent in dollars, was to equip the property and rent it temporarily , either through Airbnb or for a period of three months.
The rules of the game have completely changed starting in 2024. The DNU allows contracts between parties with flexibility never seen before. With the possibility of publishing in pesos or dollars, with periods that can be 6 months, a year or two for example, and alternative price adjustments (different periods or indices).
The supply of temporary rentals decreased after the repeal of Javier Milei's DNU
At the same time, real estate buying and selling activity is more dynamic, even with slight increases in closing prices, making the sales alternative a little more attractive than before.
Competition became very strong in the temporary rental segment, added to the effect of low demand due to an exchange rate adjustment: we were very cheap in dollars and now prices are being adjusted again.
Almost five months after the DNU came into effect , evidencing the interest of owners in renting, we found great competition (a lot of offer) in the traditional rental segment. In April 2024, the number of apartment rental notices in CABA reached a historic peak, exceeding 14,000 available notices.
On the other hand, 12 banks recently joined to offer UVA mortgage loans , opening up another competitive alternative to the rental segment. Some are asking themselves: why continue renting at high prices, adjusted for inflation, if I have savings, a good salary and job stability and I have the possibility of accessing a loan with a fee slightly higher than what I pay in rent? In a short time we will know how many people from the flood of inquiries about these credits were actually able to access them with their salary and were encouraged to take this alternative.
The dilemma of buying, selling or leaving the property empty
Given this new panorama, what is more convenient at this time if I have a property : sell it or publish it for rent? As I always say, it is a very personal decision and there are no magic formulas, because the key to making the decision is always the cost of opportunity that each person faces when faced with that decision.
If you need the money for a superior alternative, or to pay off a debt that keeps you up at night, selling is an excellent option at this time since there is active demand . Additionally, the supply of properties for sale has been falling, so competition is shrinking.
If the idea is to keep the property for a few years to see if the outlook improves even more and sell later, at the same time I can do without the money from the sale and it is convenient for me to receive the rent adjusted for inflation, put it for traditional rental with a contract 2 years adjusted for inflation, is an interesting alternative.
It's probably not the best time to furnish and equip an apartment and turn it over to temporary rental now. If that investment has already been made, it may be wise to stay in the game , as demand for temps will likely eventually rebound. Of course we will have to do the numbers again, estimate the vacancy and the expected income in the coming months to see if it is still a good investment alternative.
Currently, the law allows signing rental contracts agreeing on the index and adjustment time, contract terms and currency in which to make the payment.
Advantages of the DNU
Unlike contracts signed under the Rental Law, selling a property with a contract signed under a current DNU is much simpler , even if the property is rented. Sell a property with a two-year contract adjusted for inflation (this would be the case in which the owner sells the property to a buyer and, in addition to granting ownership, assigns the rental contract to the new owner. While the rental contract is still valid , the new owner cannot live in it) is an interesting alternative for investors, since it is in demand . However, this does not happen so easily with contracts adjusted annually according to the Rental Contract Index (ICL) under the Rental Law, since in most of these cases, the profitability is not attractive. It will depend a lot on how much time is left until the end of the contract.There are other factors that influence the decision, among which are the current costs of maintaining an empty property , such as expenses, taxes and electricity and gas services, which have increased considerably in recent months. In addition, the non-monetary cost plays a very important role, that is, the emotional cost that each alternative implies.
In general terms, we can conclude that, given the current market circumstances, any of the alternatives, whether selling or renting, is much more favorable today under the DNU than with the rental law two years ago.
The author is a graduate of Business Economics from the Torcuato Di Tella University, owner of Maure Inmobiliaria and ROI Coordinator.
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