So now hundreds of greedy South Africans think they have found another easy way to make money.
Increasingly, I come across people with lovely homes who are being persuaded to rent out their property for the duration of the 2010 World Cup for figures that range from R378k to R625k for the 42-day event.
I've received a number of flyers through the post box at home suggesting that I should make my home available for the period and then pocket a truckload of cash. In fact, someone even suggested that I should let the home and then go and stay with one or other of my friends before I jet off to Croatia for a couple of weeks – taking them with me – using the fortune I made from renting out my house.
If only it was that simple and easy.
We know, right now, that there is a shortage of beds for the event next year and that thousands upon thousands of people will be jetting into this country for a jaunt that combines watching some of the world's greatest football and enjoying Africa and its hospitality.
Some companies, some organisations and some individuals are bound to make a small fortune from the event – and that's partly why South Africa fought so hard and invested so much to win the bid to bring the world's greatest football event to Africa.
But let me also caution that making a small fortune from renting out your own home is not necessarily the quick and easy money that it might seem to represent and if you do decide to do so, the risks and planning mean that you will have to put in a lot of hard work and thought.
If we believe the agents and the flyers they send out then people are being suckered into believing that they can charge R2k per person per night for A-grade accommodation.
That's only £170 a night – certainly affordable for some of the British soccer lovers. In US terms, the rates are around $270 per person per night and that's also fair, I suppose.
So the arithmetic works this way: for a home that sleeps eight people, you could charge $270 per person per night. If your home sleeps eight people that amounts to $2,160 a night and for a constant 40-day rental you could earn $86,400 or R625k.
Time to sell the Mini and buy a Rolls – as Roald Dahl once said.
The likelihood, of course, of renting a single property to eight people at $2k a night for 40 days is probably minimal.
So let's halve that figure and say that you make R300k. On paper it sounds great.
But for those homeowners who are seeing the dollars instead of the realities, I suggest they must consider:
- The commission the agent will charge;
- The fees that that might be applicable if you are affiliated to FIFA as an official provider of quality, approved accommodation.
- The insurance premiums that you would have to pay to repair the damage caused by a British hooligan who threw his beer bottle into the 42-inch plasma TV you bought because the referee made a mad decision – particularly British soccer fans, but judging by the TV coverage, any soccer fans for that matter.
- Then there's the likelihood that every Tom, Dick and Harry are also offering A-grade accommodation in your suburb hoping to strike gold. Like the very gold-diggers who founded Johannesburg, Pilgrim's Rest and Barberton. Some did hit gold. Most didn't.
- Then, think about your precious valuables – the things you've spent a lifetime creating and imagine that, just maybe, they were wrecked by a drunken yobo in a bad mood whose team has just lost a crucial game.
To put the demand for accommodation into perspective there are so many things that must be properly thought through. Remember, every actuary in the country has probably already devised a risk profile with a heavily loaded premium that will cover them, not you.
Are there opportunities for homeowners to let out their homes – or even rooms in their houses – to the thousands of soccer fans who will descend on South Africa?
I certainly think there are.
But don't I think that this event is the passport to instant financial freedom that will provide every A-grade homeowner with a sack filled with cash to be spent on all those luxuries you can't afford.
Because there is that overriding adage: There is no easy way to make money – unless of course you're a bank because they've got that recipe exactly right.
In my opinion, the right thing to do is:
- To register your property on any one of the many Internet sites that offers a letting service.
- Then get all the critical detail and find out about the hidden charges in that letting agreement.
- Then talk to your insurance company and find out what is covered and what isn't – and more importantly, what it will cost.
- Then establish who you will be able to stay with while the soccer lovers are living in the comfort of your own home. It might not be as easy as you think.
Once you've done that homework, check out what fixtures are being held at the nearest stadium to you. Those fixtures are crucial because not all games are going to draw the big crowds.
Once you have all that information advertise your property. And remember that the reality might be that you let out your house for three nights, earn a paltry thousand bucks for all that effort and then watch as the agents and insurers take most of it.
And you've promised your best friends that you "make it up to them".
It's a lot of making up you'll have to do.
So forget about the R625k bonanza, forget about being greedy and investigate the process properly.
Remember, everyone in the world wants value for money.
Even soccer hooligans with money.
*Hartdegen writes a regular column for Property24.com. The content of his columns constitutes his personal opinion and doesn't pretend to be facts or advice. Contact him at paddy@neomail.co.za.
Readers' Comments
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Thank you for the article. You are absolutely correct in what you say. I have experienced the following:
1. SA Tourism charges up to R2000 rate your home as an Officialy registered Bed and Breakfast for 2010. They require a number of things like a safe in each room, etc.
2. A property agents associated with a popular sports presenter on Supersport, are the ones bound to make the money. Their contract is all for them and very little for the owner. They take no risks but want 25% of their gross income which they will determine and collect. They give no guarantees. The owner is expected to vacate your property completely but provide laundry service, cleaning, etc. at your expense. It would seem that they expect me to rent a property for 2010 whilst they rent mine. Seems a pointless exercise to me. The term ".......at your expense" appears frequently in their contract.
It is my opinion that seeing I own the property, I should be the one setting the price, terms and conditions for 2010 and not them. In addition, 10% is the usual going rate for agents and not 25%..
I agree with your advice about going it alone. – C Higgins (Pretoria)
What a load of rubbish?
Hope you never got paid to write this article. - Dean Harty
The truth obviously hurt Mr Harty?! – Raymond Waldeck
I have been telling the same to my clients that the World Cup is not the pot of gold at the end of the rainbow.
One can achieve a slightly higher rental than normal but not what some people are expecting.
Ask yourself would you pay R2k per person for accommodation. Some of the world's top destinations are cheaper than this.
Property owners that over price their rentals will only harm the South African tourism industry as we will be known for high rentals and thus 2010 may be the last time we get visitors.
Rather price your accommodation reasonably and aim for long-term sustainable business that will continue beyond 2010. – Abdullah Salie
@Dean Harty
Are you really Gary Bailey? – Anonymous
