Buying property purely for investment, and in the meantime, letting it out to derive income as well as capital growth, is a very popular trend in the UK at the moment.
Buying overseas property to let is now growing in popularity too. Owning a holiday home that provides rental income so it virtually pays for itself?
However, it can be hard to realise any rental income that is enough to offset management fees and other costs, plus there's the hassle of having strangers in your home!
You'll need to consider carefully what you want this type of investment to do for you.
Long term capital growth with regular income
Most economists agree that property will grow in value over time, especially in up and coming growth areas such as developing holiday resorts. So, it makes sense to put your money into property, as long as the area you choose remains popular.
Long term lets will be the ideal for this type of project, guaranteeing monthly income over a long period.
In holiday destinations like Crete, the rental income season is from May to October, and despite the fact that there are an increasing number of foreigners looking to rent before they buy, you may have problems getting tenants for the winter.
Even more difficult is to expect being able to use your holiday home when you want during the summer, and rent it out just for the winter, when you are wrapped up warm in the UK.
Short term capital growth
You might want to buy a property, get some rental in, then sell at a profit.
In some places, property prices are growing very fast, but there has been and there is anticipated, a slowdown in this rate of increase.
There are other obstacles to this kind of project too.
Costs associated with buying property in Greece are much higher than in the UK for example. You can expect to pay up to an additional 15% on top of the asking price when buying in Greece, which will be hard to recover in the short term.
In addition to this, the Greek Government has recently introduced capital gains provisions to deter this type of speculation. A sliding tax rate applies to properties sold at a profit, reducing in amount the longer you own the property.
Expect to pay a high percentage of the profits you anticipate in tax if you sell within 1 or 2 years of buying it.
Any hope or desire to derive some short term rentals, to holiday-makers, for example, will first require an EOT licence issued by the Greek National Tourist Organisation.
Any lets of less than 3 months require this licence which is involved, complicated and expensive to acquire.
Crete Real Estate agents, a Lettings Agency or Property Management company can advise you about acquiring an EOT licence.
A holiday home with rental income covering management/mortgage costs
If you want to buy a holiday home, but won't be able to visit throughout the year, then you might hope to rent it out when you are absent, and recoup costs – or even make a profit.
You are most likely to be back in Blighty over the winter and hope to rent it out over this period (3 to 6 months), after having taken full benefit over the hot summer months.
In our experience, it is very hard to find someone who just wants to rent during the winter. The biggest market is for summer lets, next comes lets for the whole year – but purely winter lets are very rare.
How much Rent?
Long-term rentals have their advantages as you are assured a rental income for the whole period of the lease. The rental income you can expect is much lower than a short-term holiday let, though. Generally the amount you charge a week for holidaymakers you would charge per month for long-term tenants.
Legal requirements for a long-term tenancy means a rental contract should be drawn up with the tenant, deposited with the tax authorities and declared on your Greek tax return.
You will also need to think about using the services of a good
Crete Property Management Agent or Crete Letting Agent to handle the holiday bookings, "meeting and greeting" arrivals, taking deposits, taking full payments, cleaning, maintenance and any other the day-to-day issues.
Choose a Crete Letting Agent or Crete Property Management Agent who has a thorough local knowledge and has a good track record of short-term letting.
The percentage payable to the Letting Agent or Property Management Company ranges from 15% to 40% depending on the services they offer.
Bear in mind that short-term letting requires far more work than long term rentals so you pay more for this service. Generally, the more you pay the more prime advertising you should expect. This should include active marketing of your property in UK newspapers, magazines, brochures and the Internet.
Check out their websites to ensure they offer the web visitor an easy to navigate and informative site. Your potential tenants will want a simple process to book their holiday let. Put yourself in the shoes of the potential holidaymaker wanting to rent your property. What are they looking for?
You do not have to use and pay for a property management company, of course. A much more cost-effective approach is to market your property yourself.
Start your Search
There's a great deal of choice when considering buying property for your Buy-to-Let project.
A good starting point is to check out our featured pages on the real estate agencies and Crete estate agents who operate in the different prefectures of Crete.
You’ll find Lassithi properties covering beautiful locations such as Sitia, Aghios Nikolaos, Kritsa, Sissi, Ierapetra, Elounda and Makrigialos in our Lassithi Estate Agent Guide.
You can also browse through our Heraklion Real Estate Guide which features fabulous areas in and around Iraklio such as Malia, Stalis, Hani Kokkini, Agia Pelagia, Amoudara, Hersonissos, Piskopiano and Matala.
Explore the estate agency options offered in and around Rethymno in our Rethymnon Real Estate Guide, which highlights wonderful coastal resorts and villages such as Panormo, Kournas, Georgioupolis, Stavromenos and Bali.
If your heart belongs in Hania you can take a tempting look through our Chania Estate Agents Guide which features fantastic locations such as Platanias, Almirida, Plaka, Kalyves, Kissamos Kastelli and Paleochora.
You’ll need a good English speaking Crete lawyer too to help you through the process. Check out our Lawyers in Crete list that covers the prefectures of Chania, Rethymno, Iraklio and Lasithi.
And you may need to seek advice on how to raise the finance needed.
See more on Long Term Letting.
See more about short term Holiday Rentals.
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