What are the maintenance & breakage costs for a rental apartment in Tenerife?

[Dan Cramer]

I am trying to put together budget costs for owning and letting an apartment in Tenerife.

I've done the bit where you sit down with a bucket of popcorn and grow old reading about legal stuff.

A couple of things I haven't budgeted for with any good research are ongoing maintenance & breakage costs also cleaning and linen costs.

Can anyone give me an idea how much cleaning and linen usually cost and also a good amount to budget each month for ongoing maintenance & breakage costs occurred.

Thanks
Dan

[barryk]

Dan

I would buy another big bucket of popcorn and read the illegal lettings threads on this forum before you embark on this journey especially if you are considering short term lets
Barryk

[junglejim]

I think cleaning /linen changes come in around 50-70 Euros depending on occupation and size of apartment - breakages are hard to define , the right guests and you'll have little nor none - what facilities you offer , TV, Washing machine , type of furnishings - intitial outlay on low wattage bulbs pays dividends in long run - installation of aircon is expensive but needs to be metered .
I assume you've allowed for approximate 25% tax and 7% IGIC on your letting income too?

[delderek]

I did this exercise a few years ago. At that time the return on capital was on average about 6 percent, not bad, but not exciting, and property prices were then increasing year on year, so it was a good investment. But now with prices still falling (whatever the agents tell you). Their are probably less troublesome ways of earning the same return.

[Dan Cramer]

Barryk
That's what I meant that I'd read hence the pop corn quote.



Dan

I would buy another big bucket of popcorn and read the illegal lettings threads on this forum before you embark on this journey especially if you are considering short term lets
Barryk

- - - - - - - - - - merged double post - - - - - - - - - -

Junglejim thanks for the info.

Is that 50-70 Euros a month with weekly cleaning \ linen?

I allowed the 24.75% but missed the 7% I didn't see that one unless its the last one in my list below???

Other Items I counted were:
community fees
Rates
Bins
Utilities
Insurance
Mortgage
Maintenance
Cleaning
Rental Commission
Non res tax





I think cleaning /linen changes come in around 50-70 Euros depending on occupation and size of apartment - breakages are hard to define , the right guests and you'll have little nor none - what facilities you offer , TV, Washing machine , type of furnishings - intitial outlay on low wattage bulbs pays dividends in long run - installation of aircon is expensive but needs to be metered .
I assume you've allowed for approximate 25% tax and 7% IGIC on your letting income too?

- - - - - - - - - - merged double post - - - - - - - - - -

delderek

Its not really about return on capital its a 15 yr plan to come out wit a "swallows nest" for retirement and gain a bolt hole for the next 15 yrs.


I did this exercise a few years ago. At that time the return on capital was on average about 6 percent, not bad, but not exciting, and property prices were then increasing year on year, so it was a good investment. But now with prices still falling (whatever the agents tell you). Their are probably less troublesome ways of earning the same return.

[cressrt]

The cleaning will be per let! You will never get this monthly, linen changes will be on top for more than a weeks let.

[tfs1]

generally linen change/cost is weekly and depends on the number of guests - more guests more linen higher cost.

One time clean cost is at the start (or end) of each let.

7% IGIC also on any services provided to you ie on top of the linen/clean/maint costs.

plus any accountants fees in Tenerife and if applicable also the UK

[Dan Cramer]

The cleaning will be per let! You will never get this monthly, linen changes will be on top for more than a weeks let.

Hi thanks for taking the time to reply.

Surely it can't be 50 - 70 euros per let for cleaning this seems very high

[kathml]

Bear in mind most holiday lets are for one or two weeks max
If you are living there and doing your own cleaning and laundry plus maybe another one or two apartments it becomes a different story

- - - - - - - - - - merged double post - - - - - - - - - -

Studios and one bed apartments are not really economical if you are paying someone else

[junglejim]

Answers as above ! 7% IGIC is VAT which is applicable now as you are running a business by renting .
Normally if you are renting via a sole agent , I believe he retains this for payment to Hacienda .
There are others here who have much more knowledge (I don't rent ) and I'm sure will pass on their opinions and experiences !

[tfs1]

Normally if you are renting via a sole agent , I believe he retains this for payment to Hacienda

correct, they should do !


Surely it can't be 50 - 70 euros per let for cleaning this seems very high

correct, this is very high - the original post mentioned this amount for clean AND linen and not just a clean.

This amount is a typical cost for a 1 week rent where you have a couple in a 1 bed. apartment. I pay around €60 for this type of rent.

The cost reduces for longer rentals as you only (normally) pay 1 clean for each rental but have a linen change each week. Sole agents earn less on long rentals but as an owner you incur lower costs.

[Angusjim]

I am trying to put together budget costs for owning and letting an apartment in Tenerife.

I've done the bit where you sit down with a bucket of popcorn and grow old reading about legal stuff.

A couple of things I haven't budgeted for with any good research are ongoing maintenance & breakage costs also cleaning and linen costs.

Can anyone give me an idea how much cleaning and linen usually cost and also a good amount to budget each month for ongoing maintenance & breakage costs occurred.

Thanks
Dan

Dan
Lots & lots of things to consider but you do realize that if you rent out on a touristic complex that it will probably be the sole agent that will TELL you what you are being paid and you also have to consider occupancy rates and perhaps they will not be great on the complexes within your price range. I would think long and hard about holiday letting in Tenerife its a minefield and its not exactly clear what will happen when the next round of the illegal letting fiasco starts. If I were you buy a flat in the UK and use this money to fund your future plans not so glamorous but a lot safer. But good luck with things :)

[Dan Cramer]

correct, they should do !



correct, this is very high - the original post mentioned this amount for clean AND linen and not just a clean.

This amount is a typical cost for a 1 week rent where you have a couple in a 1 bed. apartment. I pay around €60 for this type of rent.

The cost reduces for longer rentals as you only (normally) pay 1 clean for each rental but have a linen change each week. Sole agents earn less on long rentals but as an owner you incur lower costs.

Thanks again for the info it is appreciated.

So if you had a cleaning & Linen business in Tenerife charging €60 a week per apartment with €10 laundry, cleaning products and transport costs. that's €50 profit per apartment say 10 apartments a day working 5 days a week that's €2500 a week x 48 weeks = €120,000

When can i start?

- - - - - - - - - - merged double post - - - - - - - - - -

Does this look correct
See Pic
vvvvvv

5483

[junglejim]

I think you'll find your sole agent's cut is way too low and your Basura charge is low .
Agents cuts can vary significantly depending on complex - there was one who posted on here a while ago but has stopped , Loaded who runs Paloma Beach in Los Cristianos , you can contact him through his web site . He appears to be one of the better sole agents and may be able to give you some information .
He gave a breakdown on costs in the Illegal letting thread about a year ago if you want to look for it , get a bigger bag of popcorn!

http://www.palomabeach.com/

https://plus.google.com/103628218893338214049/posts

- - - - - - - - - - merged double post - - - - - - - - - -

I think you'll find your sole agent's cut is way too low and your Basura charge is low , Bank charges , Gestor for tax returns , remember you will have to supply linen and furnishings to comply with regulations.
Agents cuts can vary significantly depending on complex - there was one who posted on here a while ago but has stopped , Loaded ,who runs Paloma Beach in Los Cristianos , you can contact him through his web site . He appears to be one of the better sole agents and may be able to give you some information .
He gave a breakdown on costs in the Illegal letting thread about a year ago if you want to look for it , get a bigger bag of popcorn!

http://www.palomabeach.com/

[tfs1]

I would say 15% agents commision,

IBI (council tax) should be around €250-280 a year,

NB Income tax is only paid on the profit not the rental charge,

IGIC(VAT) is also payable on commision and cleaning/linen and anything else the sole agent does for you.

Accountants fees Tenerife/UK probably around £450-500 !

[Dan Cramer]

TFS1
Thanks very much this is good info

Junglejim & TFS1
I was told bins rates were 80 and 220 respectively so I will assume those to be correct for now but thanks for the pointers I'll make sure I check

Cheers
Dan

[tfs1]

I was told bins rates were 80 and 220 respectively so I will assume those to be correct for now but thanks for the pointers I'll make sure I chec

Please let us know !

We also have a villa in Spain and pay both IBI and Basura as two separate bills - they take the money in equal payments twice a year (ie making 4 payments in total a year).

When we bought our apartment in Tenerife IBI payment was setup and is paid automatically in July. I also asked about basura payment and told not to worry this is paid on my behalf and of all the complex owners as part of the complex taxes. My basura contribution being a small part of the quarterly community fee.

If this is wrong please let me know !

[Dan Cramer]

I have heard some community charges include basura and some don't

Where I am looking they are seperate and the basura is 40 euros six monthly, I was told the IBI is paid annually as a separate charge of 220 euros

[junglejim]

Our rates including basura are over 300 euro and outwith community charges of just over 2,200 Euro not including water and electricity .
If you are letting "legally" the the sole agent commission will determine your main profit as all the other costs are about same wherever you operate from - check the link I gave you earlier for Paloma and see what they charge rental wise for a well run Touristic Complex - John Parkes may be able to advise you on your expectations , at least you are doing your homework!

[Dan Cramer]

junglejim

Yes rates and basura will be 280 euro where I'm looking and community charge 1200

I had a look at the link and the facebook page it does look well run the 1 bed apartments start at 250 euros.

As for homework I've got spread sheets galore.

I realise its not the best investment in the world but I'm not an investor just trying to realise a dream and if the COST doesn't cripple me then I'll pursue it.

Cheers
Dan.

[golf birdie]

junglejim

Yes rates and basura will be 280 euro where I'm looking and community charge 1200

I had a look at the link and the facebook page it does look well run the 1 bed apartments start at 250 euros.

As for homework I've got spread sheets galore.

I realise its not the best investment in the world but I'm not an investor just trying to realise a dream and if the COST doesn't cripple me then I'll pursue it.

Cheers
Dan.

don't forget the sole agent will only let you stay in your own apartment when it suits them.

[Leam_Lin]

Another spanner in the works, now & again you get a 'derama' JJ. will explain.

[junglejim]

junglejim

Yes rates and basura will be 280 euro where I'm looking and community charge 1200

I had a look at the link and the facebook page it does look well run the 1 bed apartments start at 250 euros.

As for homework I've got spread sheets galore.

I realise its not the best investment in the world but I'm not an investor just trying to realise a dream and if the COST doesn't cripple me then I'll pursue it.

Cheers
Dan.

You don't need a spreadsheet , just some Charles Dickens!

Mr Micawber's famous, and oft-quoted, recipe for happiness:

"Annual income twenty pounds, annual expenditure nineteen [pounds] nineteen [shillings] and six [pence], result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery."

Charles Dickens, David Copperfield

[barryk]

Dan

Sorry to add further doom to your project but your utility estimate looks a little low. We use our apartment approx 7-10 days each month. Our water charges based on a two month cycle work out at about 18 euros every two months. Electricity works out at 56 euros every two months approx 35 euro each visit. Your estimate of 10 euro per week let seems a little low.

For Information the total cost of running (actual) our apartment for the full year based on the above occupancy worked out as follows
TFS
Community Charge € 856.58
Rubbish € 88.84
Electricity € 274.50
Water € 97.75
IBI € 216.00
Non Letting Tax € 213.00
Insurance € 93.00
Phone
TV
TOTAL € 1,839.67

Hopes this helps with your calcs

Barryk

[tfs1]

don't forget the sole agent will only let you stay in your own apartment when it suits them

Not always the case. I book our weeks/months in my apartment and leave the remaining weeks for the sole agent to book. They advise me of each of the bookings they have taken and the booking is only confirmed when I ok with them.

[Dan Cramer]

Golf Birdie

I'm a glass half full person so I'll take tfs1's answer for now, but thanks for pointing this out it can go on questions to ask list.

Leam_Lin, JJ

Whats this Derama?

junglejim

Love the recipe

Barryk

Some good advice there thanks. The apt I'm looking at has some elec & water in with the community charge.

Keep the good advice coming folks. It's appreciated.

[junglejim]

A derrama is when the community need to do some necessary(usually) work, repairs improvements but have insufficient funds available or want to do a major project - they then raise this money by agreement at AGM/EGM and charge each owner , usually in 3/4 installments over the year , it can also be used sometimes to clear community debt quicker .
In case of Green Park on their website they comment on having to do improvements , this may result in a Derrama - check with administrator on previous financial accounts and any future proposals !

http://www.greenparktenerife.com/

[barryk]

Dan,
I keep seeing Green Park mentioned in your posts and although I think the apartments are great and good value for money but there have been some major issues with the previous hotel management there and the ongoing costs and maintenence there.

There are a lot of owners wanting to sell and pehaps you are not being given the full picture and of course some estate agents are being economical with the facts.

You really need to research this complex well. I know things are improving but there is still a long way to go. We had friends who owned in Green Park and I believe until recently they were asking owners to bail out the complex by increasing the community charge from 80 to 200 euros.

Pehaps someone living in Green Park could update Dan on the current position so he can arrive at an informed decision without ending up in the same position as current owners

I kow this is a big ask for 2014 but it would show a good community sprit

Barryk

[TOTO 99]

sundownersvince is probably the best person to ask.....

Hopefully this will alert him...:tiphat:

[Dan Cramer]

No rush

I'm going to just sit back and absorb plenty of info before I make my move.

Thanks all

[sundownersvince]

Heyup! Just been alerted! Yes I have an apartment on Green Park. Has it been a good investment? Well, 0.01% from a current account looks more attractive. If I actually lived there it would probably be acceptable (the never ending derramas) but would I buy on a community again? NO. Had I invested the 32K 12 years ago on a house or two in Nottingham, rented them out and reinvested I would probably have a whole street by now and holidaying on Abama resort. :doh: Well, if they had a Sundowners.....