Find your Rental Property Investment
Whether you are a seasoned landlord or new to the property rentals game, no-one can deny that a rental property investment is an excellent way to make money. First, there’s the rental income garnered on a monthly or daily basis and then there’s the capital appreciation of the property itself. There is one caveat though: buy the right property and buy wisely! This is where employing the services of a professional estate agent to assist you through the whole process will be invaluable.
1. Always, always speak to a professional agent
Before you immerse yourself in the process of acquiring a new rental property, consult with an experienced estate agent operating in the area you are interested in. The benefits are:
- Brand new properties may be available as for sale that have not been marketed yet and your agent will be able to show you these.
- The area’s dynamics may be changing and you may be unaware of it but your agent will know it.
- Legislation that you are unaware of may have been introduced regarding rentals and your agent will be able to inform you of any updates or changes.
- An agent can provide you with a historic timeline of ownership of the properties that you are interested in.
- An agent will be better at negotiations when buying a property as they are trained to do this and do it for a living.
- An agent will save you time and money by providing you with a list of suitable candidate properties that will work as rentals. The reason for this is that they have access to property information that you do not.
- An agent will organise inspection visits to potential properties at times that suit your calendar.
- An agent will take care of all the paperwork, the transfer of utility bills and more.
- An agent will be able to find you suitable tenants very quickly through their referral network, making the process of acquisition and renting seamless.
2. Decide on the market segment you want to cater for
Do you want long term tenants or do you want to do short-term rentals? Long-term rentals provide more assurance of a stable monthly income, but you will make less if you work it out on a daily basis. Short lets or holiday rental properties charge higher daily rates, but you are never guaranteed of full occupation for an entire calendar month. Speak to your agent about the best option that will work for you.
3. Be aware of your obligations as a landlord
Holiday or short-term rentals also come with other responsibilities such as regular cleaning after each let, constant maintenance, complying with health and safety regulations, registering it with the tourism authority and more. If you are extremely lucky, you may just find that rare property that will be suitable for either market segment, depending solely on what your intentions are. A property in this category may even bridge times when tourism figures are lower such as winter time when you can look at longer lets until the tourist season kicks off again.
4. Find out about the legal and tax implications
Long lets (6 months plus) also need to be registered with the Malta Housing Authority, you will need to sign a rental contract with any tenant and be aware of their protected rights. You will have to pay tax of 15% on any income derived from rentals, long or short-term. Make sure you have an accountant that is experienced in real estate matters to look after your affairs for the most favourable results.
5. Set a budget
The same budget will buy you a smaller property in a popular area or a bigger property further away from the hotspots. The age and state of the property will also influence the purchase price. Always set a budget and stick to it.
6. Choose a location
Properties located in sought-after, popular areas will be better suited for short-term rentals and stand a chance of making you more money depending on the bookings that you will have, whereas a bigger property on the outskirts will be better suited for families and long-term rentals. For the latter, look at properties that are located close to schools, hospitals and day-care; look for ones that have garaging or off-street parking; consider ones that have easy access to major roads or are close to public transport routes.
7. Do a lot of research and ask a lot of questions
Before you shortlist some candidate properties that interest you, have an in-depth chat with your estate agent about general market conditions, surrounding and similar properties, the actual location or area and what other rentals are achieving close by. Having many other rentals close by can be a double-edged sword: it can mean the area is in high demand and popular for rentals or that you will be facing stiff competition due to oversupply. This is where our next point can be of major importance.
8. Price your rental property right
Planning your going-to-market pricing is crucial: get it wrong and you can end up with a rental property that stands empty for months. Rather than sitting it out and refusing to lower the rent to a more realistic figure, adjust what you are asking for soonest and get a tenant in as quick as possible. Rather get less money than no money at all as you can always revise things later. Have an in-depth conversation with your agent about what a realistic monthly or daily rental will be for the property you have in mind.
9. Never get personally attached to a rental property
Owning a rental property is like owning and managing a business… and in business matters there’s no room for sentiment. Getting emotionally involved with any property will cloud your judgement and lead to bad decision-making. If you went it alone without consulting with an estate agent and made a mistake by buying the wrong property or if the area is undergoing change and is no longer popular for rentals, sell the property as soon as possible and buy elsewhere. It is better to cut your losses and move on. Agents are impartial and not emotionally involved with properties, so they stand a better chance at painting a realistic picture for you before you buy, or can provide a professional, unbiased informed opinion to you as an owner on an underperforming property and provide solutions as what to do to remedy the situation.
Efficacious rental portfolios have paved the way to financial independence and success for many real estate investors over the years and especially so in Malta. The local rentals market is extremely active and delivers a good yield, usually in the region of around 4% p.a. and sometimes even more. If you are in the market to become a landlord for the first time, do not overthink it, just do it…but this early on, always have and estate agent as part of your team. If you already have considerable experience as a landlord yourself, we still advise that you call on a professional for up-to-date market advice and insights that will be of immeasurable benefit in your next transaction: Frank Salt Real Estate’s more than 50 years of experience in buying, selling and renting is a mere call away.