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Rentals Reality

Many who are planning on buying a holiday home in Bulgaria are also considering renting the property to generate some income to cover costs. The rental market in the country is still in early stages and so buyers should look at long term potential for decent returns. How are property owners doing in the current economic climate?

 

The most successful rents are gained from those properties which have something unique or unusual about them. Perhaps a particular service which is offered or an unusual building - and top of this list would be location.

Currently it can be quite difficult to make a living offering holiday accommodation and if you are seriously interested in rentals, then you’ll need to thoroughly research the market.

 

Tour Operators

Up until now over 80% of those visiting Bularia for a holiday have done so using a package holiday at a hotel. The involvement of the large tour operators has made it very difficult for the individual to rent a property at a price which is competitive. Large companies have the ability to charter cheap flights and negotiate extremely low prices with hotels and apartments.

On top of this there has been significant hype from some agents and developers offering 'guaranteed rental returns'. Any cursory study of the tourism market in Bulgaria should alert anyone to be suspicious of the claimed 10% guaranteed rental yield.

 

Rental Returns

Quest Bulgaria conducted a straw poll amongst readers and found that a realistic return is 5 to 6%.

Over-estimation of potential returns and purchasers buying with large mortgages (and, indeed, it has to be said, greed on the part of some property owners) has led to conflicting pricing in rents demanded.

 

Prices

The discrepancy in prices asked has led many rentals to be standing empty.

Richard Slater from Pride Property Management in Varna told us "It's no good coming up with any old price and hoping. Those owners who are more savvy on pricing are getting more bookings. Tourists are looking for quality properties to rent and all our high quality 3 bedroom villas with a pool are booked solid and are the most popular. Apartments in resorts have done worse as they find it difficult to compete with tour agents".

Richard went on to add "Many buyers wonder about buying on a new development further back from the sea or in the middle of nowhere because it's cheap. Why not. But what about renting it? Front line properties right on the beach, apartments right next to the ski gondola, or quality detached rural authentic homees are the ones obtaining good rental prices with higher occupancy - and they'll also be the ones obtaining best resale price over the next few years".

Typical weekly prices for holiday rents being achieve are :


City, Ski or Coastal One Bedroom Apartment - 315 euros
Coastal Three Bedroom Villa - 690 euros
Rural Three Bedroom Villa - 320 euros

The trick as always is location and quality. Add to this mix a dose of realism on achievable rental prices. You'll probably end up buying a Bulgarian property at less than 30% of an equivalent in the UK, so take a medium term view and you'll achieve rental returns of 6%, capital growth of 15 to 20%, plus... enjoy a beautiful holiday home for yourself.

Follow our top tips for rentals...