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Your Paris pied-a-terre: smart rentals turn your dream property into a shrewd investment
Thinking of renting out your apartment in Paris short-term to cover expenses or turn a profit? Here are some tips for setting the right price, advertising on the right platform and avoiding financial pitfalls to get the most out of holiday rentals, including The private hospitality sector is touted as a guaranteed moneymaker in Paris. According to online short term rental portal Airbnb, Paris apartment owners who host tourists will earn an average of 2,000 euros per 26 nights of rental. In the most coveted areas of central Paris, short-term rentals are 2.5 times more profitable than a conventional lease.
Keeping the rules in mind: In Paris and other cities with over 200,000 inhabitants, homeowners can rent out their primary residence for up to four months per year, to one or several renters. To rent out for longer than that, or to rent out a second home, the owner must obtain proper authorization and a “change of usage” for the property, transforming it from residential into commercial status. Fortunately for tenants, a recently proposed law that would have forced digital platforms like Airbnb to make sure users had their landlords’ written permission before subletting their homes, did not pass.
Setting the correct rental price:
Certain platforms, such as Airbnb, will automatically suggest a rental price. However, this may sometimes be below market, in order to help users attract clients. Frogly is a tool that aims to determine a property’s optimal rental rate. It adjusts prices according to the location, season, and any high-profile events happening nearby. For instance, renting a room near the Roland Garros courts during the tennis tournament could warrant a premium price. And during the EURO 2016 football competition in June and July, well-located housing in Paris was worth 30 to 50% more than usual.
Choosing a platform to advertise on:
Luxury properties in prime neighborhoods in central Paris may be appealing enough to merit professional management by one of the premier vacation rental management firms catering to international tourists, such as Paris Perfect, Haven in Paris, Elite Destinations or I Love Paris Apartments. These companies command significantly higher rates than Airbnb or do-it-yourself sites, providing renters with a go-to for concierge-style benefits, problem-solving, and meet and greet services. Owners should expect to pay around 25% of the gross revenue for the turn-key services. These high end rental agencies generally specialize in certain areas of Paris or certain types of properties.
For long distance owners, it can be well worth the cost in order to keep occupancy rates at a maximum, pre-screen problematic guests, explain building rules, greet renters to show how appliances work, and troubleshoot problems. Even with the management fees, owners will most often generate a higher return, while keeping the property from suffering too much wear and tear, and maintaining good relations with building neighbors.
For those interested in going it alone, Airbnb is the market leader in short-term rentals in Paris. Its fees are only 3% of the gross rental income; but the service provides little in the way of services. Other websites such as ParuVendu, Leboncoin, HomeAway and Amivac are free to use, but offer no services and ads are quickly drowned in swarms of competing offers. Visibility can be improved on these sites for a fee.
On Airbnb it is not possible to influence rankings or visibility by paying more. An ad’s placement is instead determined by comments, speed of response on the part of the advertiser, and acceptance rates. Airbnb does offer a few advantages over other do-it-yourself platforms, including a free, professional photographer to capture your room or home for rent, as well as a guest rating system and rental insurance for additional security. But with over 55,000 rentals on the Airbnb site in Paris, competition is fierce and occupancy rates can be low. Think about using Airbnb as one of several platforms to advertise your Paris apartment for rent.
Other factors to bear in mind:
When small damages are caused by the tenant, the owner can retain the deposit paid. But to ensure you are compensated for more significant damage such as water or fire damage, you will need to make sure that your homeowners insurance covers “vacation rentals” activity. Airbnb’s standard coverage will reimburse owners for up to 800,000 euros for damage. In any case, claiming compensation for theft by the tenant is a whole lot tougher, considering that most insurance companies require signs of breaking and entering.
A concierge service can be incredibly useful to an owner who rents a property out a lot. A number of new companies such as Luckey or Welkeys provide concierges who will greet guests, collect their laundry, etc, for a set fee. Cancelling a scheduled rental can cost an owner financially in the short and longer-term. On Airbnb for instance, if you cancel within seven days of the tenant’s arrival date, you risk incurring an 88-euro penalty and a decline in your ad’s ranking. On the other hand, if the tenant cancels last minute, the owner keeps the deposit, equating to between 25% and 100% of the rental amount, depending on the strictness of the terms of the rental (set by the owner). Filling a last-minute vacancy can be impossible.
Professional short term rental firms offer the best option in this regard, since they will most likely keep 50% or up to full payment of the rental if it’s cancelled last minute, and can fill last-minute openings or switch renters to another property in case of an emergency, all without harming future rental bookings.
Renting a basement cellar, top floor service room, or parking space can be another way to increase your cash flow. A cellar measuring 10 square meters in Paris can fetch between 80 and 150 euros per month and renting out a parking space has the potential of making you an extra 120 to 200 euros per month.
Paris Property Group specializes in assisting clients to find exceptional properties that fit their investment objectives. Contact@ParisPropertyGroup.com
Related article: Paris service rooms are worth a fortune
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