Property Rental a viable business?

[Steven]

Hello everyone!

I have enjoyed reading everyones insight on this board, and I hope to get some myself. I have been looking into buying a house for the past several years with the intent to rent out as income. The biggest sticking point for me has been property prices for the type of houses I wanted to buy. Most would ask a crazy price for something that would fetch at most a quarter of that back in the states. But now I have found a place on Krk with an asking price that I would consider more "reasonable". What I would like to know if anyone has come up with a workable business plan to make money off of renting out apartments during the short tourist season? I have read posts on what it takes to run a business under the table, and I have seen that even offering decent customer service would set me a world apart from most croatians. I do have family in croatia that would be able to help me out (alittle). I have citizenship, so I would not have to deal with some of the red tape. But is it even worth the attempt to try to make living doing something like this? Would I have to suppliment my income with another side job? I hope I have not rambled on too much, and I would appreciate some "real world" feedback. I have been visiting family in Croatia every year, and I have had to deal with the local police to register, setup a bank account, etc. so I do not consider myself completely nieve when it comes to working in croatia.

Thanks!

[zorro]

IN A NUTSHELL HAS ANYONE EVER GONE INTO CROATIA POOR AND COME OUT RICH? NEVER NEVER EVER EVER !!!!!!

HA HA HA!

not very helpful I know

[Mirko]

Many people made a lot of money in Croatia, I also made some money, by buying a bit neglected apartment in central Zagreb 5 year ago, done it up, rented it up for the first 2 years, and it seems that I am better off by some $100.000 . I am not selling it, but enjoy staying there with my family.

Buying a house on the Adriatic, like anything else, you have to put some effort in giving a good value, do a good marketing etc and you might have a profitable business. Thousand's and thousand's Croats rent their property for 3 to 4 month's and live from the income for the rest of the year. But some people take it casually, and are not doing so well,

Good luck!

[darcy]

Property rental management is a viable business that is for sure.

If you want to do it I suggest you to manage a set of properties, located in proximity of your residence (1-2km if possible) and managing them I am sure you will earn a decent salary. (In tourist industry well-developed countries, you can take 10% of the turnover for every booking and 10% of the turnover for the rental management, all expenses you pass to the property owner - cleaning, maintenance etc.)

If you think about buying a property for a holiday rental, do you know that returns outside of Croatia (but in the countries with reliable data collection) overall are pretty low, 3-4%, and do not expect you will get any better in Croatia. (Property prices in Croatia are inflated as it is expected EU membership will bring a lots of fresh money into the country. Croatian purchasing power cannot justify current prices.)

I would rather invest 10% of the money to buy a house and set up a property management business instead (what I am planning to do as soon as I retire) and manage other people properties instead of managing only my own little house - it is very time consuming, work intensive, it is not efficient and on the long run it is not economically viable - in Croatia renting is in fact a part-time job for the housewives.

[capio]

Anybody interested in getting into this market, I suggest you follow the business module of www.cottagestocastles.com/
They're very shrewed and good at what they do, unfortunately when I dealt with them, we couldn't come to an agreement on a few contractual issues, but they're very successful.

[Steven]

Thanks everyone who has answered so far.

Darcy - Thanks for the suggestion. I will have to look into that. It sounds like a good way to start atleast. As much as I feel that property prices are over inflated (justifiably or not) I still think its good to get into the action now. I am now starting to put a business plan together to take to the banks to show that I am actually thinking about this, but I want to make sure I go about it in the smarted way possible.

Capio - I will look into the link you listed. That also looks like a good source for ideas. Thanks!

[darcy]

Buying a house is very easy, establishing a business is a very hard job.
For a decent house you will need EUR 150K, for a business EUR 15K is more then plenty.

My estimate is, EUR 150K house will (hopefully) get to you EUR 9K (based on 2 X 2+2 bedroom apartments and 60 days occupancy a year). Your labour is included in these 9K. Loan interest only payment for 150K is more then 9K, so you work for peanuts.

If you are able to take care of 5 x 150K properties (booking and maintenance), you will get 9K as your 5 months salary.

That is my free advise. 10 years ago, my employer was giving away many good free advises and I watched so many excellent and technically very advanced Croatian companies go into ruins.

If you decide to go the way I suggested you, wish you all good luck and I will be happy to hear from you.

[zorro]

...hmmmmmm? Money, money, money!!! Croats know it too!!!

[darcy]

I do not know and I do not care what Croats know and do not know, I just see what they are doing.

If someone with more experience can review rental figures above, I would really appreciate....

[zorro]