I have been in Prague for seven years now, and own two properties here. I originally purchased an apartment in Dejvice, and I followed this with the purchase of a second property in Vinohrady in 2007.
The learning curve of making these apartments actually pay for themselves was both steep and interesting, and the experiences learnt have eventually paid off, as my apartments are currently rented, with happy tenants.
Experience 1- To use an outside agent or management company?
Real Estate Agencies and Property Management companies can be useful, and worth their weight in gold, if you choose the right one.
However, this is a big if.
I purchased my first apartment and placed it in the hands of a property management company, as at the time I was still living in Ireland.
After six months with no takers I reduced the recommended rent and placed it with a second agency. Another six months passed and still no tenant was found. So I decided to move over to Prague and live in the property whilst renting out the apartment room by room.
I placed an advert on this very website and instantly found 2 tenants, one of whom stayed there for three years.
So it became obvious to me that many real estate agencies and property management companies will work and put the effort into either; helping locally based landlords rent out their properties first, or anyone who constantly puts pressure on them. My experience was that the wrong agency will not give you a level of professionalism commensurate with the fees that they charge. They will often also not provide a completely ‘´hands off´´ service as many of them promise to do.
If you should choose a property management or lettings agency, experience has shown me that they provide maximum value only if you maintain some interaction with them, especially when you have vacancies. When choosing a company, ensure to ask for a reference from an existing customer or two, to prove they do indeed act as they promise.
Experience 2 – Renting the property personally.
If you are able to rent the property yourself, I have found that the following steps have provided much better results.
I have rented an entire apartment to one person, or family at times but generally it seems that renting individual rooms it the best way forward (for me at least). There are both advantages and disadvantages to this policy.
Disadvantages include the fact that you need to collect rent from two, three or four individuals rather than one person.
Additionally, personal factors come into play here. I am currently renting seven rooms to seven individual people, and it can sometimes be challenging to keep everyone happy. You might believe most people will just get along but once they move in you discover that they don´t, because of age difference or cultural background, or any number of different reasons.
Therefore when you have a vacancy in one of your rooms, it is important to know the kind of people your current tenants will get along with. It´s a big waste of time if you spend the energy to secure another tenant, only to have your existing tenants move out because they can´t stand the new guy!
However, I have found there is one huge advantage in renting your property in this manner.
Renting to individuals means that if you are renting out four rooms in an apartment and someone cannot pay the rent, or is late with rent, then the other three people can carry the burden. This is especially relevant if, like me, you have mortgage payments to keep up.
The other key to successful rentals is to try and make sure that you don´t end up with vacancies over the summer months. During the summer months, from the end of June to mid-September, it can be very difficult to get replacement tenants. As a rule I normally only offer twelve month contracts, but I have had to be flexible on this as a result of summer vacancies.
Experience 3 Keeping your tenants happy. Keeping the rent coming!
I have seen landlords forget the landlord-tenant relationship is a two-way one. As a landlord, I expect my tenants to pay rent on time, and to let me know if there are issues with the property. However, it is unfair to expect this if the landlord doesn´t respond to their reasonable requests in a normal period of time.
For example, tenants may need certain paperwork signed by the landlord, and it can develop bad feeling if the landlord doesn´t do this, or needs countless reminders. Also, if there are difficulties with the water, the heating or any of the other basic things making an apartment habitable, then the landlord must react immediately. Not only is it the landlord´s legal duty to do this in certain situations, it is also simply good manners. I have had friends who have dragged their feet on matters like these, and then been surprised when the tenant stopped paying the rent, or moved from the property giving little or no notice.
However, this rule applies to reasonable requests only. I have had a previous tenant call me at the weekend to ask me to come to the flat, as a light-bulb needs changing. It pays to include in your lease contract an agreement that the tenant will make necessary repairs at their cost up to a certain level, 1000CZK is normally a good marker.
However, keeping your tenant happy is not a failsafe golden ticket to success. There are still matters of fate and personal circumstance to take into account, as well as the idiosyncrasies of individuals.
I recently had a situation where I moved a tenant from a different country and culture into an apartment with two Europeans, and this caused all sorts of problems. I asked one of the Europeans to lend him an electronic key to activate the elevator as they were leaving for a few weeks, therefore not needing the key.
They would not let him have the key despite the fact that it would not be needed by them for weeks. Some people just cannot get along. Racism? Or just the other tenant having a bad day? Although far from ideal, factors like this can eventually hit the landlord in the pocket.
Another time a Finnish tenant got so drunk that he just disappeared. I found him in hospital several weeks later. Needless to say he nearly killed himself and rent was again unpaid for a while.
I have had religious fundamentalists, emotionally unstable people and even a character with pretty extreme political views as clients, so there is no shortage of variety. However, they all appear to be decent and reasonable people when you give them the keys to move in!
Other instances with pets or musical instruments leave you nervous about whom you allow to move in. However, the woman who owned the dog turned out to be much more annoying than the well behaved animal, and the German guy with the guitar just wanted to sing lonely religious ballads. This did not bother me too much but it needs to remembered that there are also others living there, and it may also not be too easy to rent to other people if the present tenants are a touch bizarre?
In regard to paying rent, tenants will assure you of their reliability, but of course there is always something that crops up – losing a job or becoming ill – but I have also had people falling in love (not good for business), getting pregnant, ending up in hospital, relatives dying, and an assortment of other unlikely scenarios, which have resulted in the non-payment of rent. Tenants forget that all these valid reasons and more cannot be taken to the bank when a mortgage payment is due.
When I first came to the Czech Republic, there were far fewer services available for landlords, especially compared with my experiences of renting properties in Ireland. However this is changing. Management companies and real estate agencies, such as Century 21, Remax, MEXX, Home Sweet Home and Sim Property Group, have evolved to offer a varied range of specialist services for foreign landlords. Additionally, insurance services such as rental income payment protection have also been recently launched here, through Guarenty Group, a service which can really help in case of defaulting or disappearing tenants.
Additionally, although the laws here are very much orientated to the rights of the tenant, the emergence of ‘´tourist tenants´´ (tenants who move in and pay the first month´s rent with the intention of staying without paying another CZK) have led many to look for more robust ways of protecting income, through more detailed lease contracts, insurance policies and other legal, but effective ways of protecting their income.
Renting a property here is not without its dangers, but if enough attention is paid, it can result in happy tenants, rented properties and best of all, constant income.
Guarenty Group provides the only boutique insurance solution for all owners of residential properties in the Czech Republic, against rental losses caused by defaulting tenants, or by tenants who leave the property in breach of their lease contracts. All types of residential properties are covered throughout the Czech republic, and there are special rates available for owners of multiple rented properties. This insurance product provides claim payouts in real time, on a monthly basis, to replace the rental amount until the current tenant pays the amount owed, or until a new tenant is found.
Guarenty Group is licensed by the Czech National Bank.
Further information can be found on www.guarenty-group.com