Profitable Rental Property in the Algarve
Competitive home prices combined with one go the lowest interest rates in Europe make this a great time to purchase property in the Algarve as an investment property. One of the most popular property investments is rental homes whether it be for short-term holiday rentals or long-term rentals. Investing in Algarve rental property can be profitable, here is a checklist of ideal properties features you may want to look at:
- Require minimal maintenance. Look for a newer or recently renovated property. Check the appliances are in good condition and all in working order. Smaller gardens that have been well-maintained are typically easier and less expensive to continue to maintain. Villas with private swimming pools are a great asset and attraction for potential renters, but remember to include the monthly cleaning costs which are on average €100 per month.
- Attracting long-term, well-paying renters. If your goal is to attract renters who will take good care of your property, stay for a long time and most importantly pay on time. While lower-priced properties near Algarve city centres may be easy to rent, they typically attract groups who tend to be loud, messy and short-term renters. On the other hand, rental properties that are in the higher price range may attract renters who are in jobs that require them to move frequently or who will quickly purchase homes of their own. Finding the happy medium in between could be the way to go. Family-orientated properties seem to keep the quality people who will sign a year’s contract and stick to the terms.
- Attracting vacation clients. For holiday rentals you will need to look for properties that offer the best possible options for your guests. Typically near the Algarve attractions and beaches is the first selling point. A property with a private pool is an added bonus, however, apartments or condominiums with shared pools can also work well. Near to shops and local nightlife is also a must. Try to find an Algarve property where you would not need a car to reach all of the amenities you would require if you were the holidaymaker.
- Located in highly-populated, low-crime areas. Try to keep away from remote areas where there are obviously fewer potential renters. Look for homes in neighbourhoods that have low crime rates. A place guests can feel safe walking around at night. Check the educational options in the area, a good Algarve International school nearby is a must for families renting long-term. Neighbourhoods near public transportation, grocery stores and shopping malls also attract renters.
- Rental Licence for renting, also known as ‘AL’ licence which stands for “Alojamento Local”. Always check to be sure the property you intend to lease is approved to be rented by the local camera (town hall). The process is quite easy, property owners in the Algarve are required to register as sole traders and apply for a Rental licence. The AL licence can be obtained from the camera or local town hall for a reasonable fee. Whilst the licence fee is a one-off cost, non-compliance can result in large fines, and with ever-increasing on-the-spot inspections, it is wise to follow the rules set out.
- Do your accounts properly. Your purchase price must be low enough to allow you to set the rent within the range of the local Algarve market rate and that will still earn a profit for you. Be sure to take into consideration every expense of owning, maintaining and renting the property. Only when you are sure you can turn a profit and have a positive cash flow from the start should you start the buying process of your Algarve Rental Property.
If you are interested in buying rental property in the Algarve we can help. Contact Gatehouse International Algarve for more information.