Rentals are categorized into two income categories: Long Term and Short Term Rentals.
• Long Term Rental is a property rental that is more than 3 months
• Short Term Rental is up to 3 months.
1. Short Term vs. Long Term Rentals?
In our experience in the current fluctuating market trends, long term rentals are between 2% and 8% R.O.I per year –if the property was purchased at market related prices.
In Short term holiday rentals we are achieving anything between 10% to 30% returns.
2. How does a does a Long Term Enquiry Work?
A potential tenant will make a list of areas he/her would like to stay in.
They will then venture into the area and visit many Estate Agents who will then show the clients the stock that is available and that meets their criteria.
This is a long drawn out process with a lot of time wasted with clients who are just window shopping.
Ultimately after a lot of hits and misses you successfully acquire a tenant and after the agent has take their comm. percentage you are then left to fend for yourself with your new tenant with R.O.I’s that you’ll often ask why you bother!
3. How does a Short term Enquiry Work?
Accommodation Seekers will do an internet search via a search engines using various key words which will then give them the results of 5 top websites.
They will then browse then relevant websites and make an enquiry with 3 to 5 different properties on each website about the each properties availability during their travel dates.
Note: On each accommodation website there are approximately 1500 accommodation listings!
(Getting noticed is our specialty!)
The first 3 properties to respond back to the Accommodation Seeker with the best offer will move forward into the top order of the pecking list (regardless whether it is the first choice of the client or not).
Once the Accommodation Seeker feels his / her needs are satisfied they will move forward to the booking process.
Enquiry Flow Chart
4. Why the big percentage % difference in Short Term vs. Long Term Rentals?
R.O.I percentage is determined by you, the Owner!
Owners who invest in the marketing of their property yield higher returns – an obvious statement which many an owner forgets!
It is in our experience that if you spend money on our suggested channels your R.O.I will be 15% to 30% each year!
5. The Current Rentals Market in Cape Town
Cape Town is internationally recognized as the 3rd holiday destinations in the World and in 2009 and in 2007 had
2,225,623 International visitors who all needed accommodation!
2008’s quarterly figures have recently been released showing an increase by 11% from 2007 in the tourism market despite our political climate is on the rise for a great future.
See the Cape Town Tourism article published:
(Snippet from the article)
“Cape Town tourism is confident of growth”
October 1, 2008
By AUDREY D’ANGELO
Cape Town -Despite worldwide gloom over the worsening global economic situation, Cape Town Tourism is confident of a bumper holiday season this year, with overseas interest in visiting South Africa, and the Cape in particular, stimulated by preparations for the 2010 soccer World Cup.
Both Mariette du Toit-Helmbold, the chief executive of the city’s tourism authority, and Calvyn Gilfellan, the chief executive of the Western Cape tourism authority, Cape Town Routes Unlimited, pointed out that the latest figures issued by Statistics SA showed that arrivals in this country from key source markets between January and July –normally the slow season –had increased.
“Of particular importance,” Du Toit-Helmbold said, “is the growing interest in South Africa from markets like the US, Canada and India –all markets that favour our off-peak season.”
What is our relationship with Property Owners?
We consider the relationship with you as a business partnership, each bringing something to the table (owners and their properties and Cape Town Waterfront Accommodation with our experience and knowledge).
Our thinking:
We believe that if you have invested R1 mil upwards in your property then you are serious about your investment and the returns it should generate.
To generate good returns you need to take a proactive role in managing and marketing your property with a company that makes the best business decisions for you!
Handing your property over to an Agent just won’t do anymore!
7. What Options and Services do we offer?
We offer 2 Options namely;
A) an Exclusive Management Service
B) Property Management
A) Exclusive Management Service
We provide a complete property management solution based on the income generated in this partnership.
This option is by far the most lucrative as it is a comprehensive strategy that gives you and your property a complete solution to making great returns in the short term rental market.
We manage all the processes of sales, bookings, accounting, admin, IT, maintenance, cleaning, marketing, concierge, services, etc…
This is a service used to prepare your property for the marketing strategy.
The set-up fee incorporates the following aspects:
(all outsourced reputable companies that we have using for the past 5 years)
• Professional Photos –done to specific web standard (Sizing and editing)
• Template Website created for web presents
• Creation of Online Calendar system
• File and stationary opened for all source documents
• Added to ACT CRM Database
• Description write-up
• Inventory Done
• Welcome Note Template
• Directions Written
• Facilities Written
7.2 A) Marketing Costs
Being owners ourselves, we have discovered that the only way to yield great returns for any property is to uniquely create an individual marketing strategy for each property that we own or manage.
This is done so that the property generates its own income and is not reliant on a typical agent system.
For any property to achieve great income it needs great marketing and through our tried and tested strategy (over the last 5 years) we have identified various advertising platforms that yield great enquiries and ultimately great sales!
Some of these platforms require a Setup fee + their annual fee in the first year of advertising with them, thereafter only an annual fee.
This will list your property across 6 “paid“ listing sites, Google and 40 free content sites.
Each owner is required to pay their own marketing costs as we all benefit from the system.
We do not offset the marketing against the rentals as it is detrimental to the property’s immediate success and unfair on all of us other owners who have invested in the marketing strategy
Common Question: As your partners, why are not paying this marketing fee if we are taking a 25% for management?
Answer: We are also owners and it would make more sense for us to put this money into our own property’s marketing and get 100% back from the bookings than put it into your property and only get 25% out.
Our marketing formula works and we encourage you to call the other owners in our system to get their feedback!
We are not scared to spend money on marketing – market ownership is our strength!
7.3 A) Owner Charges
Depending on the size of your proeprty we will quote you according to the number of bedrooms you have and each Owner is responsible for their own charges that we pay on your behalf and deduct from your running account with us.
B) Property Management
This option allows you to have your property professionally managed and market your property through many agents (including our rental agency) and pay no additional commissions other than the agents whom you have taken a booking from.
We will manage the property on your behalf ensuring that the standard of the integrity of the property is maintained.
This option is a great choice for owners who cannot afford the upfront marketing costs and wish to market their property through many agents without paying too many commissions.
7.4 B) The advantages of using our property management system are:
1. No upfront costs for marketing as you will be marketing the property yourself
2. Our fee is a monthly fee and is a set fee – so you won’t have to pay double commissions (to us for the management and the external 3rd party agency)
3. Professional Property Management
4. Online Calendar for you and other agents to book with 100% live availability
5. We will handle all accounting for the property – (following up of deposits and final balances from client’s/agents, manage all accounts, bills processing, financial reporting)
7.5 B) Owners Charges
Depending on the size of your proeprty we will quote you according to the number of bedrooms you have and each Owner is responsible for their own charges that we pay on your behalf and deduct from your running account with us.
10. When does the Owner get paid for each booking?
10.1. The Client pays a 50% deposit on booking.
10.2 The outstanding 50% is due 30 days before the client’s arrival.
10.3 If the Client’s booking is less than 30 days before their arrival the client pays a 100% deposit (full price now)
10.4 The Owner gets paid their share of the money received at month end when the money that has cleared in our account as stated in point 10.1 and 10.2