Look for all year round returns when buyng a property so you can maximise its potential
Potential investors who believe that buying at or near a resort is your best bet for a sustainable rental income probably feel overwhelmed by the choice available.
To achieve higher rental incomes it's better to aim for regions that offer the longest seasons. These tend to be ski resorts because they offer the possibility of a year round income. The peak rental period falls over Christmas in a season lasting from mid-December until the middle or end of April. The fact that these regions also offer a summer season – albeit at lower rates – means that houses in ski resorts tend to enjoy up to twice the returns of similar Black Sea properties.
When selecting a rental property in a ski resort, you need to consider its proximity to the ski-runs: the closer the better. And when choosing between different resorts consider factors such as surrounding areas and other selling points. Bankso, for example, has a beautiful museum town – attractive all year round – and therefore not dependent exclusively on the skiing season.
Pamporovo becomes very quiet out of season but its closeness to Plovdiv (a beautiful city that enjoys a real historical ambience in its old town) means that there are other areas to explore. A little known fact about Pamporovo – to foreigners at least – is that it is also home to an observatory. You can visit the site on a tour and see its giant telescope as well as view the fabulous panorama from the observation platform at the top. The observatory is about 15 km from the resort, on the Mechi Chal peak.
Borovets, just an hour's drive from Sofia, provides the opportunity for tourists to explore the capital. Sofia is home to many museums, interesting architecture, shopping districts and new, modern arcades like the newly built Sofia Mall – a true Western-style shopping centre with cafés and branded clothes, among other attractions.
On the Black Sea coast, if buying in resorts like Golden Sands or Sunny Beach, bear in mind the out of season dormancy – with most facilities closed after the middle of October. Therefore, if you are intending to buy a property there for rental purposes, you must allow for several months of vacancy. Golden Sands has two particular advantages over Sunny Beach: its closeness to the nearest city – Varna, being only a 15 minute drive away and its proximity to the Albena beach resort, providing another alternative for tourists desiring side trips. Black Sea visitors obviously prefer sea views as well as properties near beaches, local restaurants and cafés. Golden Sands has many restaurants in season – and when the season is over, a short drive away is Kranevo, a town that has all year round restaurants because it's more of a residential location than a tourist centre.
Here is a summary of last year's typical rental yields in the most popular Black Sea and ski resorts.
Various costs are associated with renting out a property. For this reason your actual net return will be less than the figures usually published. Tourist-based rentals are more likely to be short term, and you will be liable for various utility bills and the following costs:
Property maintenance fees
Property management fees
Rental management fees
Any additional advertising of your property
Utility billsCable/Satellite TV bills
Internet bills (if you are providing Internet access)
Agency fees (for example tour agencies) if applicable Income tax on accrued rental income
Annual property and refuse taxes (similar to the UK council tax)
Property maintenance is between five to 10 euros per square metre per year. So an average one-bedroom apartment of between 60-70 square metres will cost between 300 and 600 euros per year. These costs do tend to rise in ski resorts where the average rate is now eight euros per square metre.
You can expect to pay between 15 and 20 percent for a rental management service, when renting out your property for short-term tenancies. Property management – handling small repairs, holding the keys, checking the property once a month etc – costs from 360 to 500 euros a year. Obviously, this depends on the company you use and the services required. When buying in larger apartment complexes, many come with a property/rental management package – typically at a fixed percentage or a fixed annual amount.
Rental management would normally include advertising your property on websites, handling the payment of rental from clients and transfers to the owners' bank accounts – either in Bulgaria or in the UK.
Many estate agents also provide some degree of rental management. They focus more on long-term rentals, however, and many have proved to be particularly incompetent. Unfortunately, many estate agents who handle rentals lack the professionalism and drive of Western counterparts. They are best avoided and you should find a company that specialises in property/rental management.
Companies that cover the Black Sea area are those such as UK-owned Pride Management and Safe Future Management (based in Varna) – who specialise in property and rental management, providing different types of packages depending on their clients' needs. Property Management BG manage apartments in Sofia and Varna; in major ski resorts including Pamporovo and Bansko; in popular beach resorts like Sunny Beach or Sveti Vlas – and have a standard letting charge of 15 percent on gross rental income.
The dividend from a rental property depends on many factors. By far the most important is successful advertising. If you are buying an apartment in a large development that has its own management it's likely that your apartment's advertising will be included in the management charges. In such cases it's the company's responsibility to work alongside agencies and tour operators to advertise the property and ensure that bookings are managed.
If, however, you wish to “go it alone” then you must think about other ways of advertising your property to reach tourists. The Internet is the obvious choice and you need to consider which websites promote property rentals. For example, www.varnarentals.com offers a selection of private rental properties, and caters to individual property owners advertising their properties directly on the website. Other websites offering private advertising of properties, including Bulgaria, are www.villa-vacation.com and www.villarenters.com.
When advertising rental properties, be sure to express clearly your property's location, whether you can organise airport pickup from either Sofia or Varna International Airports, the area's facilities and whether the property has cable TV or satellite.
Whether buying property on the Black Sea coast or in one of the growing ski resorts, Bulgaria will provide an excellent investment return for those prepared to see it through for a five to 10-year period.
Growing investment in the ski resorts will attract more and more tourists. According to Bulgaria's National Statistics Institute, tourist numbers are still growing every year, so triggering greater demand for accommodation. Both Burgas and Varna airports will undergo significant investment to improve their capacity and facilities – obviously with the aim of opening their doors to a greater number of passengers over the next few years.
Fraport Twin Star Airport Management was awarded a 35-year concession to manage the operation of the coastal airports in Burgas and Varna with an estimated 403 million euros to be invested in the two airports.
Now that EasyJet plan to operate flights from London to Sofia from November 6, a real low cost option for winter flights to the ski resorts is already upon us. Not only will this boost tourism within the capital itself, it also increases demand for rental accommodation in the surrounding area. It will surely just be a matter of time before similar low cost flights follow for Burgas and Varna – providing a boost to Black Sea property rentals.