The Shavuot holiday has passed. It is a holiday that marks an agricultural milestone - in the Bible it is the harvest festival, because around that time of year farmers used to reap the wheat.
As in nature, so in everyday life and certainly in real estate: to reach a quality harvest, the seeds we sowed - or the property we chose - matter a great deal.
When we know what we want to achieve from the property, we can maximize our deal and the harvest we reap from it. For example, if the goal is to generate high current yield, we should assume that we will look to buy a property in a city that attracts tourists all year round, since it is well known that a property rented on a daily basis (Airbnb) yields more than one rented long term; we will buy a property in the city center or close to the tourist attractions; we will furnish and equip it to a high standard, so that guests have the feel of a hotel room, so that they rate our property highly and feed it with more guests; we will maintain it at a high standard to preserve the property and create a quality experience for guests, which, as noted, will bring more guests. By contrast, if the goal is capital appreciation, we should assume that we will look for a property in areas with development potential and future price increases, or in the more prestigious parts of the city. Depending on the area where the apartment is located, we will also decide whether the apartment needs renovation and upgrading, and what level of furniture and fittings is required to maximize the rent.
Unfortunately, we often meet investors who did not do their homework properly and did not realize how hard it would be to rent out on a daily basis a property in a remote neighborhood (even in a city that attracts tourists), or who decided to “save” on furniture and fittings.
Yossi (a pseudonym) called me right after Passover, completely upset. A few months earlier he had bought an apartment in the center of a European capital for daily rental, in order to earn a current yield. He slept in the apartment he had bought. It was a difficult experience. He had gathered that it was getting lukewarm reviews from guests, but thought that, since these were the first months of operation, these were “teething problems” and organizational difficulties on the part of the management company. But when he arrived he realized he had been wrong, and perhaps even misled. Beyond the fact that the building was under renovation, and the management company he had hired had not told him (not even when he informed them that he was coming to sleep in the apartment himself), he complained about a smell of mold in the bedroom and about a mattress and pillows that were too soft and did not let him sleep on his first night in the apartment. They had not even left a small bottle of water for him. He was very disappointed. The management company had furnished the apartment from IKEA, but, according to him, with the cheapest products and accessories that could be found in the store, even though the company had charged him a very substantial sum for the furniture and fittings.
The very next morning he set off on a tour of the stores and bought a mattress, pillows and new, high-end textiles for the apartment, of much better quality than those the management company had bought for him. He confronted the head of the management company to the point of firing the company and replacing it with another. He had no other choice, because his goal is to maximize the yield from the apartment and, later on, perhaps to buy additional apartments in the area.
Before the holiday Yossi called again. This time he sounded much more optimistic. After about a month and a half of the apartment being run by the new management company, wonderful reviews and recommendations had started to come in.
Do you, too, regularly track the performance of your management company and your apartment?
Stories are based on real situations, with identifying details changed. Not legal advice.
Translated from the Hebrew original. עברית