I am Elena Jakubovic - your guide to the real estate jungle!
Ever since childhood, we are being programmed for success: „If you study well, you will get somewhere“. Nobody prepares us, that things can go sideways and instead of pride, our property portfolio can become a nightmare one day.
When I moved to Prague 15 years ago, I had the same dream – to succeed. In this high building in Prague 8, I rented my first apartment. At the time I was dreaming about, applying for amortgage and buying my first property once my trial period at work is over. Nobody knew Youtubers, bitcoins and Airbnb back then.
The Airbnb issue is much bigger than it seems to us at first glance. It resembles a pyramid structure. The story usually starts with the apartment owner using his own property for short-term rentals and moving out of the city centre.
He saw that the business model was working, and because one apartment was not enough, he mortgaged his apartment with the purpose to buy another one or two, which he also rented through Airbnb. But even that was not enough for him, so he persuaded his parents to mortgage their own house and do the same.
Or he convinced his close friends to do the same and became the manager of their apartments. Successful business allowed him to add new properties to the portfolio, and nobody expected Covid to come and take the stage.
When the lockdown began in 2020, we tried to persuade the owners of Airbnb apartments to rent them out long term. The wise one who listened to us and found tenants for their real estate did the right thing. If your apartment is still empty, hard times await you in the autumn of 2021.
If you own several properties and find yourself in a difficult situation, I advise you to think about selling part of your portfolio. We tend to get rid of the worst things first, but I recommend you to do the opposite. If you have several Airbnb properties:
As a result of the economic crises at the beginning of 2014, a lot of renovated apartments were staying on the market. Out of nowhere, they became scarce goods. Which caused the prices of apartments to skyrocket in May 2014 - they went up to 30% in Prague 1.
A new, somewhar smaller growth came in 2017 (around 12%) and in 2019 (around 7%). Thanks to Airbnb the prices in Prague 1 went up by 50% in the last eight years!
Nowadays, the selling prices went down a little, but they’re still stable. The question is, for how long. In case of rentals, the operators of Airbnb services first went after small one-bedroom apartments. That’s why in 2014 their rents grew by 21%.
Later Airbnb operators realized, that it was much more profitable to lease middle size apartments, which can be rented to more guests and, in case of vacancy, used by one couple. That’s why in 2017 the rental prices of middle size two bedroom apartments went up by 45%.
Today, the rental prices are on the level of 2015 and the offer of such apartments is three time bigger then of those for sale. It’s just a question of time, when such apartments will move from rentals to sales.
Prague 1 has a big advantage – each apartment in this locality is different from the others. This uniqueness should reflect in the price of rental / sale recommended to you by a professional.
We talked more about pricing in the episode „ How to price your property for sale?”
Last but not least:
In the next episode we will talk about what is important to know when buying a property.
I am Elena Jakubovič, your guide to the real estate jungle.