Daily rental of apartments as a business is a good additional income, but it also has its pitfalls. In order to save not only your money, but also your rental property, you need to have a clear understanding of where to start a business, what risks may exist, and for what group these services are suitable.
Where to start a business
Before you start building a business renting apartments, you need to find out the following points:
- Is there any living space available that can be rented out daily? If you own an apartment, then you need to be prepared for the fact that strangers will live in it and could cause damage to the property.
- You can rent an apartment and rent it out to others. Such a business will be considered a sublease of apartments. There are no additional risks and costs in this option; at first, you can immediately find out whether you will be able to build a business or not.
To start developing a business in daily rental apartments, you should draw up a rough business plan that will help you build a clear idea of where to start. This document defines the following points:
- Find out which apartment will be rented - your own or rented.
- Carry out cosmetic repairs if necessary.
- Furnish the living area with furniture.
- Stock up on sets of replacement bed linen and towels.
- Decide to which category of citizens the premises will be rented (for example, only to married couples or citizens on a business trip).
- To submit an advertisement for daily rent of an apartment, you need to take good photographs and write down a description of the living space.
- The finished advertisement should be submitted to newspapers, the Internet, or you can create your own website or page on social networks.
Features and possible problems
When you decide to build a business renting out apartments by the day, you should understand that certain risks may arise.
In practice, there has not yet been a court hearing of cases where a person who organized an apartment rental business and was not registered as an individual entrepreneur would be brought as a defendant.
What are the advantages of registering a business through an individual entrepreneur:
- In the event of conflict situations, it can be proven that all actions were carried out legally.
- Registration as an individual entrepreneur disciplines the maintenance of documentary records, which means that all papers, from contracts to checks, will be executed properly.
It follows from this that any claims against guests will be documented. This will be a definite plus in court if the conflict comes to trial.
What is the profit?
Renting an apartment for short periods of time, charging as in hotels, per night or day, is often much more profitable than renting it out to permanent residents. Although it is much more troublesome if you deal with the issue yourself. Difficulties can be avoided if you involve realtors, but in this case the income will be less. Today we will talk about how to properly rent out an apartment for daily rent.
Daily rentals also come with a number of other difficulties. Firstly, frequent changes of guests increase the risk of damage to the apartment and the loss of some things. To minimize the likelihood of negative consequences, you need to seal all transactions with an official employment contract. Secondly, income from such rentals strongly depends on the season, the popularity of the city, and the area where the apartment is located. There is a demand for such housing in cities with a population of at least five hundred thousand and in settlements that are attractive from a tourist point of view. In large centers, demand is associated with student activity, business trips, and job searches. In tourist cities and towns - with swimming and other (for example, skiing) seasons, calendar holidays, vacation periods.
On average, as practice shows, in good months it is possible to rent out a good apartment 20 days out of 30. And if long-term rent would bring the owners, say, 15-20 thousand rubles a month, then daily rent would bring 30-40 thousand. The average price for a good, clean room equipped with all the necessary equipment is 1000-2000 rubles per day, depending on the city of location. In order for the result to be good, many organizational issues need to be resolved, in particular, how to advertise the apartment.
Where to begin?
Daily rent is beneficial not only to home owners, but also to apartment renters, because they could pay much more for a hotel room. However, tenants often want comfort no less than in a hotel. Therefore, it is necessary to create such conditions for them.
The most important thing is the cleanliness of the room. You will have to clean after each guest, take out the trash, change bedding and bathroom accessories (clean towels should always be available).
The second component is the equipment of the apartment with appliances and comfortable furniture. It is not necessary to buy new expensive equipment or household items, just search for advertisements on the Internet and buy something second-hand. The minimum set includes:
- cooling chamber;
- washing machine;
- Wi-Fi router (as a last resort, wired Internet);
- air conditioner;
- TV;
- minimum set of dishes;
- kettle;
- iron and ironing board;
- stove and microwave;
- beds, sofas, armchairs (the number depends on the rooms);
- dining table and chairs.
The rental price directly depends on how comfortable the apartment is.. The cost will also be affected by the renovation of the premises, the location of the apartment, the number of rooms and beds. During the holidays, prices can be slightly increased, and during quiet periods - reduced. Discounts are also welcome if you book accommodation for several days.
How to take it officially and safely
There are several ways to officially rent out an apartment. Each of them has its pros and cons.
Three ways to officially rent out an apartment:
- independently, using contractual relationships with tenants and deducting part of the income as taxes;
- through an agency that, for a certain percentage, will act as an intermediary in finding tenants;
- through an agency, by transferring the apartment into trust management, taking into account the distribution of income between the owner and the agency.
In fact, any agreement is already part of the conditions of a safe lease, because in this case all transactions will be documented. However, there are other opportunities to protect yourself from scammers or simply careless residents.
How to comply with all safety issues
For safety reasons, owners must insure their home in case of fire, flooding, gas explosion and other unforeseen situations. Not all companies are willing to issue insurance for rental housing. You must be prepared for the fact that they will offer an increased insurance ratio. Yes, it may not be cheap, but it will allow the owners to feel calm.
Landlords are always worried that tenants will steal something from the apartment or break something. That is why you need to draw up an agreement with each new guest, in which the person’s passport details must be indicated (so that in case of loss there is an opportunity to go to court), and a document of acceptance and transfer, listing all items located on the premises. Although people are even more concerned about the possibility of creating duplicate keys, and that in this way dishonest tenants in the future will be able to take advantage of the opportunity to break into the apartment and steal valuable items. Yes, this is true, there are risks. But there is a way out. For example, instead of a regular lock, you can use an electronic one, in which you can change the code as often as you want. Well, for those who have double doors at home, it’s even easier. Residents should only be given the keys that are used to lock the outer door, and after they leave, both should be locked.
How to pass it yourself
If the owner rents out the apartment on his own, he needs to think carefully about how to attract tenants. There is no point in putting advertisements in the newspaper for daily rentals., because usually the guests are visitors who do not read local newspapers. Thus, the only platform for informing people is the Internet. Today, the largest number of daily rental offers can be found on the Avito website; there is also a similar portal - IRR (“From Hand to Hand”). All of these are free sites, which, however, also have a paid system for “promotion” of ads. Their disadvantage is that they do not specialize in real estate, although they are very popular.
Among the specialized portals, the following can be noted:: “Kvartirka.ru”, “Sutochno.ru”, “Gorkvartira.ru”, “Sdaminfo.ru”, “Yurenta.ru” and many others. There is also a paid system for increasing views. Advertisers will be able to send booking requests by mail. The disadvantage of these sites is that they do not take into account the ratings of apartments and there is no review system. Not long ago, the Arendius website launched, which seems to have taken these shortcomings into account. This is, so to speak, a forum for travelers and landlords, in which you can formulate an apartment rating based on the reviews received. Also, apartment owners will be able to get to know those who book a place with them, since they register on the site through social networks. By the way, there are also pages and groups on social networks where you can post advertisements for daily rentals. Well, for those who have several apartments at their disposal, you can think about posting information on the international sites Airbnb and Booking.
After the issue of attracting residents has been resolved, you should deal with the issue of completing all documents. Each guest will need to draw up a rental agreement, the text of which, of course, differs from the text of a long-term rental agreement. It must indicate the period for renting out the premises, the cost of rent per day and total (if we are talking about renting for several days), the rights and obligations of the parties, liability and the security deposit. A deposit is another way to protect yourself from the unexpected loss of tenants and things in the apartment, although, as a rule, a small amount is charged (equal to the total amount for the days of stay).
In addition to the contract, an act of acceptance and transfer of property located in the apartment is drawn up.
All documents are drawn up in two copies, for the landlord and the tenant. Naturally, they must indicate the exact passport and contact information of the parties to the transaction. Since there will be a lot of tenants, you should stock up on sample contracts, into which you will only need to enter data in the future.
In order for the rental of an apartment to be official and legal, every year before April 30, the landlord must submit an individual’s tax return to the tax office. You will have to pay 13 percent of your income (paid on a tax receipt). If you register an individual enterprise, you can use the simplified taxation system and pay only 6 percent. In addition, this will allow you to purchase a cash register to issue official receipts for expenses to your residents: they may be needed, for example, by those who come on a business trip and will then report expenses.
How to submit through an agency
In many large cities of Russia there are agencies that specifically or additionally deal with issues of renting daily housing. The owners enter into trust management agreements with them, after which the agencies include the apartment in their database (even such a concept as “apartment hotels” has appeared). In this case, the companies take care of everything related to the rental: looking for tenants, cleaning the premises, drawing up rental agreements. Of course, they keep a significant part of the income, and transfer part of the funds to the owner at the end of the month or at other agreed dates. And yet, this option is considered more profitable for owners than long-term rent, however, unlike self-promotion of an apartment, where income can be two or even two and a half times higher, this form will add to income (compared to long-term rent) - 10, maximum 30 percent.
You can earn a little more if you involve an agency only as an intermediary. In this case, the companies will search for tenants, help with paperwork, but the issues of putting things in order and further interaction with the guests will remain the responsibility of the property owner. Agencies may require a percentage of each transaction, however, these costs will not necessarily fall on the landlord’s shoulders; in many cases, tenants who contact the agency will pay a percentage.
In any case, such forms of working with large agencies are more convenient in terms of saving time and safer in terms of the safety of the apartment and the property located in it. If the owner has never rented out housing before, it is best to start such a “business” with the support of an agency, and in the future, if possible, switch to independent activity.
The Russian government has been unable to bring income from apartment rentals out of the “shadow” for many years. This problem is especially relevant for Moscow and St. Petersburg; they are missing millions of rubles in taxes for rental housing, which could be spent on road repairs and hundreds of other needs. Only a small portion of people who rent out their homes pay taxes. And this is due to the fact that the state is almost unable to regulate this business and carry out inspections (since an apartment is private property, and in order to enter it and “catch red-handed” the tenants, very compelling reasons are needed). At the same time, the tenants themselves often contribute to the fact that taxes are not paid. In case of any checks, they answer that the owners of the apartment are their friends or relatives, and they know nothing about the “rental business.”
However, situations are different. And owners who do not want to report their income are sometimes brought to court and punished with fairly large fines. Tax authorities can organize an audit based on just one complaint from neighbors, and if they get their hands on a lease agreement, they will be able to prove in court that the owner is conducting business and does not inform the state about it. Only the original document, and not eyewitness information, can be serious evidence in court. Although he is not a guarantor of the court’s decision in their favor, since the owner can simply state that he rented out the apartment, but he never received money from the tenants.
When it comes to an apartment rented by the day, the authorities will need several originals of the lease agreement to file a claim. In principle, they are easier to obtain than in the case of long-term rentals; for this, service employees only need to introduce themselves as an ordinary tourist, contact the owner, draw up an agreement and spend one night in the premises. Here is the evidence for the court.
Daily rental of apartments is beneficial for clients who are looking for inexpensive housing for a short period, as well as for landlords who want to earn more than with long-term rentals. Renting housing for a day or more per year brings income that is 2 times higher than the amount that can be earned for long-term rental of an apartment.
How to open a business renting apartments by the day
Before starting, choose a concept for your future business and decide whether you will rent out your own apartments or sublet. Further algorithm of actions:
If you can’t show the apartment in person, you can shoot a video review and send it to potential clients
After waiting for the first call, politely but firmly explain to the guest the living conditions in the apartment and state the cost. If he agrees to the proposed conditions, draw up an agreement and take an advance payment with a deposit. Having worked through the rental mechanism once, in the future you will be able to adjust your behavior, the clauses of the contract and the sequence of renting out housing for a short period.
Business plan for an apartment rental company
When planning your own business, you can simply rent an apartment for a year and negotiate with the landlord about the possibility of subletting. After which, without investing a penny, you can rent it out for a short period of time to anyone who wants it, making money on the difference. But to start a real business, think about how to provide a high-quality service: apartments that resemble hotel rooms, as a rule, are rented faster than gray Soviet communal apartments with shabby furniture and leaking taps.
Business concept and market analysis
There are three options for organizing daily rentals. The first, optimistic one, is when you own 2–3 apartments in good repair. In this case, you can organize a business with minimal financial risk: it is enough to draw up a lease agreement correctly and provide for all the nuances.
Two more ways to start a business:
Having chosen the last option for organizing the business, you will have to inform the owners of the premises about how you plan to use the housing. Otherwise, it will not be possible to formally conclude agreements with tenants, and this is a risk.
Analyze demand and competition in the daily rental market. Visit popular sites:
Look through the advertisements available there, evaluate the condition and cost of the apartments, as well as the rental conditions. Take note of the ideas you like - it’s better to write them down. Compare the offers of hotels and hostels with apartments - the results of the analysis will be useful in identifying competitive advantages.
Demand for daily rentals depends on the season - in the summer, the number of people willing to rent housing increases, and tenants raise prices
Find out who in your city is interested in daily rentals. It can be:
Choose the segment you will target - do not try to cover the entire market at once. Everything will depend on which audience you target - from the design of the apartment to the choice of advertising channels.
Company registration
Register a company and do not evade taxes - the daily rental business generates enough income to share with the state, and the risks are too high for illegal work.
You can rent out apartments as an individual entrepreneur or on behalf of a limited liability company. An individual entrepreneur differs from an LLC according to the following criteria:
Despite the fact that financial responsibility is higher for individual entrepreneurs, fines for LLCs are 2–3 times higher
Having decided to register, select OKVED - activity codes. Options closest to the daily rental sector:
Determine the tax regime you will apply:
The timing and amount of taxes paid, as well as the forms for submitting reports, depend on the chosen mode. In addition to taxes, be prepared to pay contributions to pension and insurance funds for yourself and your employees.
If you are hesitant to register an individual entrepreneur or LLC, pay at least an individual income tax - 13% of the proceeds. To do this, contact the tax office, find out when and what declarations need to be submitted, as well as when to make payments.
The following sanctions are imposed for conducting illegal business:
Search and preparation of premises
Focusing on the selected target audience, start searching for premises. Think about what is important for a banker who comes on a business trip? Most likely, rent a quiet one-room apartment closer to the place of internship or business negotiations. And for a young couple for a romantic evening? Cozy well furnished apartment in a small house.
You can find premises for long-term rental on ad sites like Avito
Choose the location of the objects so that you can quickly get to each one for check-in and check-out of guests. If you don't have a car, rent apartments closer to your own home.
The demand for daily apartment rental depends on:
Tenants in 57% of cases prefer to stay in one-room apartments with good repairs, new furniture and working Internet. It is extremely rare to book places in apartments with more than three rooms, as well as in economy class apartments - 1% and 8%, respectively.
The location of the apartment affects the rental price. Proximity to the center still plays a decisive role in the choice of housing for tourists, company employees, and students. You can get a good income from an apartment located near a large shopping or business center, university or train station.
Having chosen seconded employees as your target audience, find out what reporting documents they may need, and be prepared to provide an agreement, as well as a receipt or invoice for rent.
The rental invoice may include additional services, as well as early and late check-in
Having selected premises, enter into long-term lease agreements with the owners. Don’t hide the fact that you will rent apartments by the day, but rather offer a mutually beneficial agreement. Tell them that you don’t just rent an apartment, but take control of it and undertake to make cosmetic repairs, install equipment, provide Internet access and keep order. Explain that your business reputation is important to you, so the apartment will be kept clean. Support what is said with the clauses of the long-term lease agreement. Show the owner the daily contract so that he understands the seriousness of the approach to the matter.
Having rented the objects, start repairing them. Choose materials and equipment in the middle price segment, furniture too. The main thing is that it is new and clean. Minimum set of equipment for a business class apartment:
Order disposable cosmetics in bulk for several months in advance - buying a large batch will cost less
Pay attention to details and be sure to buy for each apartment:
Empty the apartment of personal belongings - your own or those of the permanent owner. When decorating rooms, adhere to the principles of minimalism. Organize a general cleaning - wash the floors and windows, wash the curtains, bedspreads and furniture covers, check the plumbing. Wipe away dust even in hard-to-reach places.
Order a professional photo shoot of the premises - interiors filmed on a smartphone camera are more likely to repel than attract clients.
Preparation of documents for work
Create a package of internal documents that will regulate your activities and living conditions at the facilities. Develop:
If you plan to hire employees, create job descriptions. You can use standard examples as a guide, but rework them for your own activities. Writing one clear instruction may take 2–3 days.
In the “daily” contract, write down:
Before concluding a rental agreement with a guest, explain to him all the points in order
Standard daily rental agreement - .
Attach to the contract an inventory of the property and the rules of living in the apartment. The rules should provide for the following:
In each apartment, place the rules in a visible place, and next to them place a leaflet with the Wi-Fi password, phone numbers of administrators and emergency services.
For particularly demanding and suspicious tenants, be prepared to present a set of documents confirming your right to rent out the premises, namely: a certificate of ownership or a lease agreement with the owner and his written consent to sublease, certified by a notary.
Where to promote a business - choosing advertising channels
Later you will create a business card website with the possibility of online booking, but in the first stages you can do without it. If the site has been created, set up contextual advertising in Yandex and Google.
On some sites, in order to post rental advertisements on behalf of a legal entity, you will have to create a paid account
Work on offline advertising. Print and post flyers, place advertisements in the most popular newspapers in the city, find taxi driver friends and negotiate with them to offer your services to passengers. Order advertising on transport by selecting routes departing from the station. Develop a client questionnaire and include in the list a question about how he learned about you - this will help weed out ineffective promotion channels.
Recruitment
Alone, you can cope with 2-3 apartments, while you will have to hand over the linen and towels to the laundry, and trust the cleaning company to do the cleaning or do it yourself. To expand your business you will need employees:
The number of employees depends on the number of apartments in management. One administrator can simultaneously service 3–6 apartments, and a cleaning lady can serve the same number. The manager will cope with a load of 15–18 objects.
Calculating expenses and planned income
The calculation is given for an individual entrepreneur using the simplified tax system who wishes to sublease two apartments in the city center - one-room and two-room. The target audience is business travelers, solvent people who prefer to live in comfortable conditions similar to hotel ones. There are no employees, but it is planned to conclude agreements with a cleaning company, laundry and dry cleaning.
Table: costs of starting a business
Table: monthly expenses
Calculation of planned income and payback period
The price of accommodation should include: the cost of rent, laundry and cleaning services, advertising costs and the purchase of consumables.
The average price for renting a one-room apartment is 2050 rubles/day. The cost of renting a two-room apartment is 2850 rubles/day. Occupancy in the first month is 60%, that is, 18 days a month, from the second month - 70%, that is, 21 days.
Average income for the first month is 88,200 rubles. Tax deductions - 5292 rub. Profit for the first month - 22093.5 rubles. Average income for the second and subsequent months is 102,900 rubles. Tax deductions - 6174 rub. Profit in subsequent months - 36,793.5 rubles.
The payback period for a business is 5–7 months, with low occupancy of apartments – 1–1.5 years.
Pitfalls of the apartment rental business
Renting apartments daily is a risky business. When starting a business, you take risks from all sides:
The only way to minimize risks is to formalize the business, work out contracts with a lawyer and stipulate in them all possible circumstances, including force majeure.
When checking in, be sure to ask guests for their passports and make copies, and give an inventory of the property and rules of residence for signature. Warn your neighbors in advance and present permits for daily renting of the apartment from the owner. Don't rent out your event space if you don't want your neighbors to complain about the noise. Be prepared to adjust your work schedule to the arrival and departure times of guests - you will often have to get up at five in the morning and go to bed after one in the morning. Keep your phone with you - if there is any problem, clients will call you, and you are obliged to answer.
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Hundreds of people ask themselves this question, not knowing where to start an apartment rental business. Many people think it's easy, but that's not true. As in any business, you need to plow here. This is not a “money” button, but a serious business that requires a high-quality approach.
How to create your own business renting apartments by the day?
We have previously described several ways to make money on real estate. You can get acquainted with them in this. Now let's talk about how a business for renting apartments by the day is built.
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Rental housing as a business is booming all over the world. The only difference will be in the legislation of the countries. Accordingly, there is more profit in some places and less in others. But the fact that you won’t have to live in poverty is 100%.
Attracting bank capital – mortgage
Daily rental housing is the only business that allows you to make a profit from a mortgage in this segment. Monthly rent will bring a loss or go to zero. This is quite easy to calculate on any banking website. Know the prices in your region.
Of course, there are exceptions, for example, an entrepreneur has his own plot of land a few kilometers from the city. He takes out a mortgage and builds a house with 8-10 studio apartments. If the city is large, then monthly rent will bring profit taking into account all expenses.
This method is used by a large number of organizations that have their own business of renting out apartments for daily rent or private realtors.
Here, it would seem, everything is simple. Rent an apartment for a month, rent it out every day. But in reality, there are many pitfalls that will reduce your profits to zero.
For example, if you do not warn the owners that you are going to rent out their property on a daily basis, you can get a lawsuit that will bring losses.
Work as honestly as possible with property owners and then troubles will not affect you.
Many people believe that housing should be located in promising locations near the metro or major transport interchanges, but in fact, it should be located within a 20-30 minute walk from your home. If you are constantly late for a meeting with a client, then most likely he will not contact you again. Take this point into account.
It’s better to look for properties in your area and transport links are not important here. People are ready to give you money, even if the housing is located on the very outskirts of the city.
When buying an apartment, pay attention to whether it can be remodeled to increase the number of tenants. For example, if a room has two windows and they are located far from each other, it is possible to divide it in half and make two entrances.
Thus, you will increase your profit by renting out residential premises to two different people at once. Believe me, there will be clients. These could be business travelers or companies of several people.
This method is ideal for monthly rental housing.
When starting your small business of renting out apartments by the day, don’t chase all your clients at once. Try to find out the purpose of renting housing. This will help avoid many problems. For example, very often young people try to rent apartments for noisy parties.
All profits from such an event will go towards cleaning and minor repairs. You guessed it, it can cause serious damage. If the apartment is subleased, you can easily lose it, plus pay for everything out of your own pocket.
Smoking is not allowed in the apartment; this is a general rule for all landlords. Make paper signs and stick them around your apartment. Warn those arriving about this in advance.
Emergency phone numbers for your city should also be written on a separate piece of paper and pasted on the wall in the hallway or kitchen. This also includes the password for Internet access.
The contracts are standard everywhere and can be easily downloaded online. Be sure to make an inventory of the property in the apartment. After the end of the lease, everything should be in its place. Things must be put away and dishes washed.
Always take a deposit equal to one day's stay. For example, if guests lose their keys, the amount for making duplicates must be withheld from them.
Pledge motivates people to follow your rules.
Buying furniture, linen and cleaning
Do not place expensive things or equipment in the apartment. Everything should be modern and inexpensive. Bed, TV and even plumbing fixtures can be bought used. Believe me, people who need to spend the night absolutely don’t care, the main thing is cleanliness.
The daily apartment rental business involves serious cleaning. You can do it yourself or contact a special cleaning company. Linen must be clean and sealed in cellophane, like on a train. Any laundry service provides these services.
Real estate will never depreciate in value. Yes, there will be price declines, the market will sag a little, but this has always been the case. Housing is a reinforced concrete investment, literally and figuratively. It is always cost-effective and adjusts to the cost of money.
For example, inflation occurred and after recalculation, apartments went up in price by a new percentage. The only disadvantage of residential properties is their cost. Serious investment is required. Plus the margin is not as high as in other businesses or investments.
The exception is commercial real estate, which can pay for itself in two years. But here the decisive role is played by the location or the objects themselves:
- warehouses;
- offices;
- shopping areas;
- car service premises, etc.
Residential property pays off much longer, but provides a stable income and adapts to the general market, taking into account any fluctuations in cash flows.
How do you build an apartment rental business? We are looking for clients
Concluding our short review of an impromptu business plan for renting apartments, I would like to note that all conditions for the client must be transparent and discussed in advance. This will help avoid troubles in the future.
Video - daily rent of apartments from Natasha Zakheim's students:
The category of “business from scratch” can safely include the activity of renting out apartments for daily rent. At the same time, you may not own apartments, but also make money on short-term rentals. All you need to do is find housing whose owners are willing to provide it on a sublease basis. Sublease is a form of agreement in which the right to rent out an apartment is, as it were, assigned.
Such a business may seem clear and easy to organize. But not everything is so smooth and calm. There are many apartments for daily rent, but not all of them bring good money, and some do not justify the investment in them.
It’s good if the property already has a couple or three apartments. Even if they are one-room apartments (the most popular on the market), then the profitability will be higher. If there is no such property, you will have to rent housing for a long time and rent it out on a daily or hourly basis.
The whole difficulty in organizing a business comes down to finding suitable housing. Many owners, upon hearing the word “daily rental,” immediately associate it with drunkenness, prostitution and other negative things. And no amount of persuasion will change their opinion. Although in fact, such apartments rarely need subsequent repairs, unlike apartments in long-term lease.
It is not profitable for subtenants to keep housing in poor condition, because they simply will not have clients. After each check-in, the apartment is thoroughly cleaned. The same cannot be said about long-term rentals: in 90% of cases, tenants (and many of them are young) do not monitor the condition of the apartment. And they party and drink in such apartments no less.
“To conclude a sublease agreement for an apartment you like, you have to lie a little to the owners. I say that I have agreements with some companies to accommodate people who come on a business trip. And in this case, residents will change frequently. If you agree to these conditions, then I will pay you a little more for rent. Homeowners are worried at first, but when they see that everything is in order with their apartment, they calm down. And they no longer care about the opinions of neighbors and HOA chairmen,” says user “Rasklad” on the nasutki.borda.ru forum.
It is best to look for apartments closer to the city center. Finding clients here is much easier. And advertising costs are much lower. It is also worth renting apartments as close to each other as possible - this will reduce transport costs. If one apartment is located 15 km from another, then transportation costs will be much higher.
Legalization of activities
The peculiarity of the daily apartment rental business is that it is difficult to control by the state. Therefore, a considerable part of businessmen work without registering business activities and do not pay taxes. In some cases, this is justified, especially when we are talking about 1–3 rented apartments and the income from the activity is not so large that it makes sense to legalize the business.
With the growth of the organization’s turnover, when the organizer no longer has one or two apartments, but at least 5–6, it is better to register an individual entrepreneur or LLC. Once a business is registered, it will be easier to find new apartments (homeowners trust organizations more than ordinary individuals). Work will become calmer, since no one has canceled fines for illegal business activities. There will always be envious people, including the chairmen of homeowners' associations, who can report this to the police or prosecutor's office. And in this case you will always have documents. Everything will be within the law..
Such a business is most often registered as an ordinary individual entrepreneurship. To register a business at the tax office, you need to present an application, a photocopy of your passport and Taxpayer Identification Number, and a receipt for payment of the state duty. In the application for registration, you must indicate the OKVED codes: 55.23.5 “Activities of other places for temporary residence” and 70.20.1 “Leasing your own residential real estate” (several codes can be specified). Within 5 working days after submitting the documents, you can receive a certificate of registration of individual entrepreneurs. And you are the legal representative of the business.
Separately, it is worth mentioning the choice of taxation system. All three well-known special regimes are suitable for such activities: patent (patent taxation system), UTII (imputation) and simplified tax system (simplified). The most profitable option is a patent. You pay a fixed fee (about 10 thousand rubles) and work quietly for a whole year. You do not need to provide reports, keep accounts, etc. But the patent system is not accepted in all regions, which means you will have to choose between UTII (can be used up to 500 sq. m.) or simplified tax system. These special modes are also beneficial (although they are somewhat more expensive), but you will have to keep accounts and submit reports on schedule.
It is also worth considering the fact that, having registered a business, you will have to pay income tax for apartment owners, which is 13% of the rental price. In order not to offend yourself, this issue should be discussed with the homeowners at the stage of concluding a sublease agreement. This same 13% should rightfully be deducted from the cost of renting an apartment.
Hiring employees
If we are talking about building a business, and not about working “for the sake of working,” then the issue with hired workers should be resolved. If you have 2–3 apartments at your disposal, then you can somehow manage it alone. And if you work with 5 or more apartments, there is no way you can manage it alone.
Imagine the picture: you have found a client, you are going to show him an apartment. While you are negotiating, you receive a call from the second client - you are distracted by the conversation. At this time, the third client moves out of the apartment for which there is already another client, and you urgently need to put things in order in the apartment, etc., etc. And there can be a dozen or two such small, hectic tasks a day. Your head will be spinning, which will affect the quality of work and the number of clients. Therefore, as the number of orders increases, you should consider hiring a maid to clean apartments and a customer service manager. The cleaner can be paid only a percentage of the work done, without registering it with the state (so as not to pay insurance contributions). The manager gets a salary and a small percentage for motivation. Let him work with clients, answer calls, hold meetings, check the condition of apartments after guests, etc.
In this case, you have a lot of time, which can be spent on searching for new apartments, solving accounting and legal issues, advertising services, and supervising the work of staff. There will be time for your personal life, and the work will bring pleasure.
How to advertise a service
Finding clients is one of the first tasks that you should put all your efforts into solving. If there are no clients, there will be no income, and the obligation to pay rent will not go away. The following options will help you create a client base:
- Placing advertisements in newspapers. An old and proven method, although with the advent of the Internet it is becoming less and less relevant. But this does not mean that we should abandon the media completely. Many business travelers, upon arrival in an unfamiliar city, buy newspapers and find apartments there.
- Posting leaflets in places popular with tourists and visitors. These are metro exits, bus and tram stops, bus and railway stations, and central streets of the city.
- Posting information on bulletin boards on the Internet: Avito, Slando, city portals, etc. Do not forget about drawing up a competent description, with an abundance of high-quality photographs.
- Try unique advertising methods, like writing signs on the pavement. All you need is a stencil and a can of spray paint.
- You can agree on cooperation with local taxi drivers, since visitors often hire a taxi at the airport and ask the driver to tell them where they can rent inexpensive housing.
Pitfalls in the daily business
Finding an apartment, legalizing a business and resolving issues with tenants are not all the problems that await an entrepreneur in this area. One of the main problems is the lack of clients. For a business to generate income, each apartment must be at least 70% occupied. That is, out of 30 days, 21 days are rented.
Demand for housing may be low not only due to high competition, but also simply due to the seasonal decline. In the summer in the central part of Russia, the demand for daily rental housing drops sharply. People go on vacation, there are fewer business trips. For this reason, you should not open a business for the summer season. Some experienced entrepreneurs in this business give up part of their rental housing in the off-season in order to reduce fixed costs.
At the same time, for resort cities (Sochi, Gelendzhik, Anapa, etc.) summer is just the season. And in the fall and winter, such a business is idle.
It is worth mentioning separately about mortgages and buying apartments on credit. On the forums you can read ideas with the following content: “you can buy several apartments with a mortgage and rent them out for daily rent. It's better than paying the landlord." The idea looks tempting, but is not feasible for a number of reasons:
- To get a mortgage even for one apartment, you will have to really like the bank. He will require a certificate of income from you, look at your credit history, ask you to find guarantors, etc. Your official income does not reach 30 - 50 thousand rubles. per month and the bank refuses you. If you want to register two apartments, then you will already need an income of 80 thousand rubles. And if you have such an income, then why do you need a mortgage and daily rent.
- From an investment point of view, this option looks extremely unprofitable. The return on investment will be about 8-10 years, which is unthinkable for a normal, working business.
How much can you earn? Brief business plan
Long-term rent of a one-room apartment in Moscow will cost 25 – 30 thousand rubles. per month. This should take into account the costs of cleaning, advertising and depreciation (replacement of broken equipment and furniture) - about 5 thousand rubles. per apartment per month. You can rent out such apartments daily for an average of 2 – 2.5 thousand rubles.
Approximately the picture during the season should look like this:
The profit from renting out six apartments will be about 120,000 rubles. per month.
To determine your return on investment, you should consider the initial investment in the business. Each apartment will need to be brought to the necessary comfort - make repairs, purchase furniture and appliances. For each apartment you should put at least 100,000 rubles. Therefore, six apartments will require an investment of 600,000 rubles.
Hence, the return on investment according to the calculations given above will be from 6 months. But it is also necessary to take into account the fact that in the first months there will be few clients. You will need to work for more than one month before you develop a permanent client base and word of mouth begins to work. Therefore, the payback period for investments can be safely multiplied by two.
