| How should you let property/ Landlord’s guide
1. Research of the market conditions
You have decided to let a real estate that you own. The first thing that you should think about is what is its target group – who might be your potential tenant?
The real estate letting market in Sofia is currently divided in two main groups: real estate letting market for Bulgarians, who may afford a budget usually of about EUR 400-500/month. These are students, “young professionals”, young families. The other group is formed by the so-called “luxury” apartments, which are rented mainly by foreigners who reside for a certain period of time in Sofia. These apartments offer a higher standard and are let at higher prices.
Important factors determining the rent of the real estate are of course its location, the buiding type (newly-built or older, with or without a concierge, separate maintained garden, etc.), garage, the qualities of the apartment – finishing works, furniture. It is important that these three groups of characteristic features are consistent. For example an apartmet, which has been luxuriously renovated, with designer furniture and located in a panel building in Druzhba quarter, would not be a good idea because the tenant who would appreciate and respectively – pay for the nice interior, would not live in this environment.
A professional consultant working in the field of real estate letting could help you target your potential tenant. This person would know what the current offering on the marketis, what the demand trends are and would also be able to determine the potential of your real estate. He/she could also provide you with some good advice on the elements that you could improve in the real estate, so that it becomes more attractive and competitive.
2. Determining the offer price.
Once you have completed the above listed steps, you should determine the offer price of your real estate. The main criterion is comparison with similar offers. Such offers you may find in the most popular real estate webpages like imoti.net and imot.bg. You may see various offers there depending on the criteria that you define. It is important to know that you cannot fully rely on the photos that you see on-line. The advice of the real estate consultant could provide you with a more realistic idea.
The price that you announce is a final price for the client. If you have VAT registration, it would be advisable that you specify whether you would accrue VAT and the income tax that the legislation requires you to pay should also be included. This is a responsibility that you have, not the tenant.
Discuss with your consultant the ways in which the information about the real estate would reach the potential tenant. He/she will best advise you whether the advertisement should be published on the Internet, in a specialized newspaper or as a direct offer, etc.
3. Viewing trips
These are the meetings when you show the real estate to your potential tenants. It is advisable that they are acquainted in advance with the main characteristics of the residence (district, size, number of rooms, price). This meeting provides you also with the opportunity to get acquainted with the potential tenant and that both parties get their first impressions about each other. Unlike the viewing trips related with the purchase of a real estate, in this case it is very important to know the other party because you will build up future relations, which will last for a longer period of time. These relations may stay within the legal framework of the rental agreement but could also turn into friendship.
During the visit you should give the interested potential tenants enough time to have a look at everything, ask them if they have questions. In case they ask about something and you want to give a negative answer, do not rush to answer, think it over, discuss it with your consultant after the meeting and give your reply afterwards.
Our advice is that after the meeting you ask for some feedback whether and what the client has liked and disliked.
4. Negotiations
The moment when someone declares that they would like to rent the real estate, is the starting point of the negotiations phase. The main issues that are discussed are: rent, additional requirements of the tenant (if any), term of the agreement and ways for its termination. The usual topic for discussion is the rent but it is not the only important aspect when you are letting a real estate. Unlike the sale cases when you receive a certain sum, when you let you receive a regular cash flow and maintain certain relations with the tenant, which means that it is important that you assess how reliable this tenant would be and whether he/she will be able to pay regularly and on time. Among the other important issues are: number of people who will actively live in the residence, where the tenant works, etc.
5. Rental agreement
The rental agreement is usually drafted by the consultant and his/her legal advisor. If the tenant is a company, it might have a template agreement used in such cases. Most of the rental agreements are signed for a period of one year with an option for extension. There might be a pre-term termination of the agreement by mutual agreement of both parties or through preliminary notification. Usually this is a one-month notification but a longer period might also be agreed upon. Upon signing the agreement the tenant is obliged to pay a deposit. This deposit shall be returned by the lessor once he has convinced himself that no damages have been caused to his/her real estate and that all utility bills have been paid. In case of damages or unpaid bills, the lessor deducts the amount from the deposit.
An attachment, which shall be enclosed to the rental agreement, is a signed delivery and acceptance protocol. At the moment of handing over the keys, it documents the procedure of the actual entry of the tenant into the real estate, as well as a list of the belongings, which are currently in it. If there are any shortfalls, they should also be documented. You could also take some photographs. Upon the termination of the rental agreement a second protocol is drafted and it is compared with the list attached to the first one in order to establish any differences in the presence of belongings. As mentioned above, the signing of the rental agreement is not the end but it marks the beginning of your relations. When things are running smoothly, intensive communication is not necessary. You are obliged to provide the real estate in operational state, which would allow its functional usage, with working installations and appliances and also to maintain the main installations (water supply, heating and electricity networks), as well as to provide repairs when needed. In principle the tenant shall be responsible for minor repairs such as changing bulbs, door locks etc.
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