Empty space = empty wallet. Don't be afraid to rent!
Do you have unused space? A bed? A room? An apartment? A house? A cabin? A houseboat? An apartment building? An office building? A studio? A conference room? A lounge? An office? A workshop? A desk? A parking spot? A meadow? A garden? Are you thinking about renting it out but don’t know where to start? Are you worried it will be more trouble than it’s worth?
The real estate market is heating up again. Rental housing is currently a gold mine because there’s a shortage of apartment buildings, and a significant portion of apartment owners prefer short-term rentals over long-term ones. This is especially true in large cities—specifically in Prague. If you want a place to live, you simply have to pay. It’s not uncommon for the rent on a standard 35-square-meter studio apartment to exceed 15,000 CZK per month (not including utilities!). Of course, there are exceptions, but those areas are usually “not even served by the metro.”
This situation plays right into the hands of property owners. They can maximize their rental profits and secure a steady income—or even a retirement fund. Many also use the rent to make mortgage payments.
But how do you decide which type of rental to choose?
The most talked-about form is so-called short-term rentals (for a few nights)—in the Czech Republic, most often through the Airbnb.com platform. What began as a very friendly, community-building concept of shared accommodation has grown into a highly lucrative business that attracts many. Prague is, of course, the most attractive destination, but the supply is growing in other cities as well. Short-term rentals are particularly profitable in cities popular with tourists, as they ensure sufficient occupancy rates. However, we must not forget that as occupancy rates rise, so do costs (for administration, cleaning, repairs, equipment replacement, etc.). And most importantly—short-term rentals that include additional services (laundry, meals, guided tours) are legally classified as lodging services—they are therefore subject to VAT, and the “renter” must hold a business license, pay fees, report foreign guests, etc.
Does that sound daunting? If you calculate that your property will generate sufficient income, you can turn to a broker. Their services will, of course, reduce your potential profit, but they’ll also eliminate the stress that could quickly overwhelm you without their help. Many, however, manage everything on their own.
A more convenient option is medium-term rentals (lasting several months). These are typical for corporate (business) clients, specifically foreign companies that need to temporarily house, for example, new employees or employees on long business trips. Corporate travel budgets tend to be generous, so there is significant potential here as well. Again, however, it depends on the property’s location. You simply can’t do without thorough market research.
Long-term leases (one year or longer) are the easiest from an administrative standpoint. You communicate with a single tenant, with whom you (ideally) sign a lease renewal once a year, and (ideally) have no other issues to deal with. Apartments for long-term rent do not need to be furnished, and tenants handle minor repairs (up to 1,000 CZK) themselves.
Managing entire properties is, of course, a much more complex matter and involves many different tasks. In most cases, it’s better to use the services of a so-called facility manager—that is, a professional who will handle everything for you. Countless companies across the market specialize in property management—whether for apartment buildings or office buildings.
Choosing the right rental model depends on many factors—location, the owner’s time availability, and financial expectations. Careful market research and the right strategy can turn rental housing into a stable and profitable source of income. If you’re still unsure which type of lease to choose, the PHC team would be happy to provide you with a consultation.
We look forward to hearing from you!
JJ & Pavel Janský