Changes in society generate changes in companies. This is why every day, especially in large cities, more and more companies dedicated to the management of apartment buildings are reorienting themselves and their practices to answer new challenges posed by mobility, tourism, and internationalization.
As a company specialized in real estate management strategy, at Lodging Management we have identified the potential this new globalized world holds for companies that manage full apartment buildings as well as investment funds or banks with real estate holdings that are facing the peculiarities of this market for the first time. With more than 15 years of experience in holiday rentals and short-term/month-to-month rentals for international markets, today we’d like to review some of the key factors that affect the profitability of apartment building rental in large cities like Barcelona. This is a business that is intimately tied to the improvement of services that directly impact the bottom line for private businesses, individuals, and banks and investment funds.
Towards more flexible rental models
Traditionally, companies or families that rented buildings did so through normal apartment rental contracts. This posed a number of problems, including the length of those contracts. Today, as contracts are renewed in line with new legislation, the market has become more flexible, but there are models that actually provide even more flexibility.
On the one hand, thanks to the explosion of tourism in cities like Barcelona, there are holiday rentals that, as we have explained previously, can only be exploited in homes that possess a valid tourism license. Lodging Management is an expert in the management of holiday apartment rentals in Barcelona, and we have had plenty of success increasing profitability for owners through services that improve the physical state of their homes, raise occupancy levels and improve their quality of life by relieving them of some of their less desirable tasks.
On the other hand, for those who don’t have a tourism apartment license, there are short-term or month-to-month models rapidly gaining popularity. These models are designed to serve the large population of people who come to a city for only a few months at a time and don’t want to deal with the hassles or the commitments required by traditional rentals.
Opening up to international markets
Big cities like Barcelona are receiving ever-larger numbers of temporary residents that move to the city for just a few months. These people are not interested in being tied to rental contracts that last for years and they are prepared to pay a bit more for the flexibility of renting an apartment for one, two, or six months. People in this population include freelancers, international school students, or expats sent by multinationals; in other words, people with a high level of purchasing power looking for flexible, high quality real estate services.
This population is not interested in buying supplies like linens or towels, doing tiny renovations for comfort, or buying furniture for their apartments. They want everything to be in perfect working order and have access to the latest in technology. They are uninterested in paying huge security deposits that require them to remain in the apartment for a minimum number of months, because their work situation can change at a moment’s notice. In short, they want a zero-hassle apartment in perfect conditions that is easy to get into and out of.
But how to reach this market? Companies like Lodging Management have access to contacts and specialized software that enable them to reach this population all over the world. Over the past years we have had great success renting out full apartment buildings on short-term contracts, creating a community of cosmopolitan and international residents that, in turn, encourage new rentals.
Renovations and economies of scale
Fortunately for many real estate companies, the era of indefinite rental contracts is fading into the past. Many companies are finding themselves in the position of having to renovate all the apartments in a building, and discovering that they are not always prepared to pay the costs. In these cases, these companies can opt for traditional rentals at lower prices, or they can seek out strategic alliances with management companies like Lodging Management that will take on the costs of renovation in exchange for the management of the building revenues from rentals.
In this way, the property owner can charge higher rates than he would otherwise have been able to in a traditional rental, and he will have renovated the whole building and brought it up to adequate maintenance standards. Through specializing in the management of short-term and vacation rentals, Lodging Management has its own network of construction and design professionals that allow it to renovate full buildings and communities to the highest standards and at reasonable prices, thanks to economies of scale.
Simpler administration
Owners of full buildings tend to find themselves faced with the problem of managing each apartment in a building individually. This is part of the normal activities of real estate companies, but not of banks or investment funds. These entities, once they have brought these types of assets on board, have the problem of not having the personnel or the experience to manage real estate products, and also not having a plan to incorporate them. It is in these cases that a strategic partnership with a company like Lodging Management becomes fundamental and allows the property owner to cede management of the building in exchange for a monthly fee. The management company then becomes responsible for the search for tenants, the management of rental agreements, the renovation or maintenance of the apartment, as well as many more services.
As longtime operators in this world of short-term or monthly rentals in Barcelona and its metropolitan area, Lodging Management well knows the benefits of establishing strategic alliances with companies that own full buildings. Because times are changing and so are the profiles of residents in big cities, Lodging has adapted its services to offer the owners of real estate portfolios the ease and the guarantees that come with our management experience and strategic vision. If you have a building that you rent out in Barcelona, contact us for a free consultation and find out how we can help you care for your building and optimize its profits.
