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Temporary or traditional rental: What factors influence maximizing profitability - Infobae
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Alquiler temporario o tradicional: qué factores influyen para maximizar la rentabilidad
Cuáles son las mejores opciones para el propietario, en momentos en que los créditos hipotecarios podrían potenciar la compraventa de inmuebles que podrían destinarse a locaciones
www.infobae.com
May 23, 2024
What are the best options for the owner, at a time when mortgage loans could boost the purchase and sale of properties that could be used as locations?
By José Luis Cieri
Apartments for temporary rentals must be equipped and are usually rented per month, 6 months and a maximum of one year.
The rental market in the city of Buenos Aires presents varied conditions for investors, with multiple factors influencing the profitability of both temporary and traditional ones. Recent analyzes indicate that in long-term rentals, an average of 4.84% of the property price is recovered each year, showing a slight recovery. Currently, it takes 20.6 years of rental to recover the investment, 2.1% less compared to the previous year.
The reappearance of mortgage loans could boost the sale and purchase of properties intended for residential locations, increasing profitability opportunities for owners.
According to Zonaprop, Villa Lugano is presented as the neighborhood with the most significant return for the investor, with an average of 7.3%; Balvanera and La Boca follow with 6.1%, respectively. In contrast, the neighborhoods of Palermo and Belgrano offer a lower profitability, with 4% and 4.2%, although they clearly have a greater demand than the previous ones.
For its part, Reporte Inmobiliario reported that the average annual gross profitability of used apartments with 1 to 4 rooms reached 4.50% for formal rentals in pesos last April.
Temporary vs traditional
In CABA, the profitability of temporary and traditional rentals varies considerably depending on several factors. Owners and investors must know these aspects to make informed decisions that maximize their income.
Source: Real Estate Monitor
Daniel Bryn , from Monitor Inmobiliario and partner at Zipcode, told Infobae that “location is a crucial determinant in the performance of traditional rentals. Neighborhoods like Belgrano and Palermo stand out for their infrastructure, security and development prospects, which ensures high demand and better rental income.”
The ability to maintain continuous occupancy is essential. Investing in central and well-connected areas, with high demand, reduces the risk of having an empty unit. Well-maintained and competitively priced properties attract more tenants, especially since the repeal of the Rental Law, which meant that there are now more than 15,000 properties for traditional rental in different neighborhoods.
“For profitability to also be positive, it is essential to opt for responsible and solvent tenants. A rigorous selection process that includes background checks and references guarantees the selection of reliable tenants, protecting the property and ensuring constant income,” Bryn explained.
Choose the property well
“The analysis of real estate profitability in CABA suggests that areas such as Almagro, Constitución, Once and Liniers, less attractive for investors with high purchasing power, offer higher returns due to affordable sales prices and competitive rental rates. These areas present an opportunity to maximize returns through a smart buying and renting strategy,” said Lisandro Cuello , real estate expert.Although the sector maintains that investing in properties located in areas with constant economic growth, where people with high and stable incomes reside, mitigates risks derived from the country's economic volatility.
Cuello expanded: “In these neighborhoods such as Puerto Madero, Belgrano, Recoleta or Palermo, there are better opportunities for temporary rentals. However, today they are not as in demand as they were 18 months ago due to the decrease in tourists coming to the country and students from the interior opting for traditional rentals due to high costs.”
Profitability of temporary rentals
Temporary rentals, offered through platforms such as Airbnb or Booking, have high profitability potential due to higher daily rates compared to traditional rentals.
Source: Real Estate Monitor
Bryn added: “Tourist neighborhoods such as Palermo, San Telmo, Barrio Norte and Recoleta are highly sought after for their proximity to popular attractions and good transport links. These zones allow us to charge higher rates and ensure constant occupation.”
Another big difference is how the property must be, for temporary rentals you have to provide a well-maintained, clean property with additional services (Wi-Fi, air conditioning, among others) attracts more guests and justifies higher rates.
“Professional management with effective communication and regular maintenance is key to maintaining high occupancy and good ratings. Hiring a property manager can be a profitable investment to ensure professional service,” Bryn said.
Comparative
According to data from Monitor Inmobiliario, temporary rentals surpass traditional rentals in terms of profitability. The average daily rate in neighborhoods such as Palermo and Recoleta for a two-room apartment is USD 56.27, with an increase of 12.54% compared to the previous year.
The annual profitability of a temporary rental is 7.26%, compared to 4.73% for a traditional one, generating monthly income of USD 635 compared to $414.
Today there are more than 24,700 apartments for temporary rentals in the 48 Buenos Aires neighborhoods, and 70% are concentrated in just 6, which are detailed below:
Palermo: 8,540.
Recoleta: 3,631.
San Nicolás: 1,617.
Belgrano: 1,298.
Retiro: 1,204.
Monserrat: 1,053.
In the case of traditional rental apartments, there are more than 15,000 available in CABA. According to the Real Estate Market Observatory of the Buenos Aires Real Estate College, the neighborhoods that lead the proposals are Palermo, Belgrano, Recoleta, Caballito, Puerto Madero and Villa Urquiza.
In the case of traditional rentals, the apartments do not need to be equipped, except for connections, appliances and accessories in wet areas such as kitchens and bathrooms.
These neighborhoods represent 58.51% of the total offer, according to the average of offers published on different portals. Palermo was the neighborhood with the greatest growth in supply last month, increasing by 16.8 percent.
Differences
- Duration of the contract: Traditional contracts are free and between parties (generally up to two years), while temporary contracts are for short periods (days to six months, maximum one year).
- Profitability: Temporary workers adjust prices in dollars according to demand; The traditional ones do it in pesos with periodic updates.
- Management and Equipment: Temporary ones require intensive management and equipped properties, unlike traditional ones.
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