Should property owners be withholding the availability of their investment property for long-term rentals with an eye towards the 2010 Soccer World Cup?
Is this likely to increase income from the property in 2010 overall?
Is the potential income to be made from a let during the World Cup going to be worth keeping a rental property vacant until June 2010?
These are questions that thousands of homeowners are asking themselves, as the fervour to 2010 picks up and homeowners consider the potential amounts they could make by letting their homes out for the tournament period, says Jules Arnott, Seeff Properties Cape Town CBD rentals specialist.
"I am increasingly being asked by owners to withhold their investment property to ensure availability during the World Cup," says Arnott.
Arnott explains that Match, the FIFA-endorsed ticketing and accommodation booking agents for VIP'S, sponsors and media to the World Cup, does not cater for the marketing of non-graded residential accommodation for the average fan.
"It's a once-in-a-lifetime opportunity and excluding peak holiday seasons when we accommodate our regular clients visiting from overseas, and paying on favourable currency rates, most homeowners will not see rental amounts like this being achieved, even in peak holiday seasons. Just last month, Seeff Properties listed a home in Camps Bay that will be let our for R90k per day."
"I suggest that if you live in the property yourself, and you do not necessarily have to be in Cape Town for the tournament, and considering that schools will be on holiday, why not enjoy that overdue foreign holiday from the rental income?"
"If you own an investment property, however, it is not that simple," he adds.
He says there are many other considerations to be taken into account.
If your investment property is already fully furnished and suitably equipped then it certainly makes good sense to market the property for the winter months at peak summer rates. "However, and this is highly relevant, if this means turning down a longer term rental offer, the likelihood is you may be out of pocket in the long run."
"This could see your property standing vacant and unrented in the run-up to the tournament, and again afterwards during the notoriously quiet winter months. This will more than wipe out any expected windfalls from the tournament."
Arnott says his recommendation in this case would be to remain open-minded to both long and short-term rental opportunities.
"If your investment property is currently unfurnished, then it will almost certainly be prudent to keep it this way. Consider the following:
Typical CBD apartments currently rent per month for:
1 bed: R6k – R6,500 unfurnished/R8k – R9k furnished2 bed: R8k – R10k unfurnished/R12k – R15k furnished
The expected nett income per day due to an owner for the World Cup peak period is:
1 bed: R1k – R1 500 = based on 50% occupancy for tournament = R15k – R22,500
2 bed R2k – R2,500 = based on 50% occupancy for tournament = R30k - R37,500
"To fully furnish and equip a one-bed apartment costs in the region of R100k. You need to ask yourself how long it will take to recoup this outlay, based on the above income figures?"
"Furthermore, taking into account the current lack of unfurnished apartments and the oversupply of furnished apartments, I fully expect to see a glut of furnished properties standing empty later next year. For my own personal investment, an unfurnished property will stay that way, albeit at a slightly lower but steady and predictable overall monthly rate."
For more information contact Jules Arnott on 083 383 3526.
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Could not agree more, but who is listening?
Mindless greed takes over easily. I am an investor and letting agent who is specialised to investors needs. I already rejected to continue to manage a couple of properties where the owners made some very short term decisions to target the WC with totally unsuitable properties. I fully expect them to come back to me after the event with their tails between their legs. – Marc
