It’s no secret that between the Millennials and pandemic, how we work, live, and communicate continues to change and evolve. Only a few years ago employees filed into offices and cubicles without question or complaint. If someone was “working from home” it was questioned and silently considered a day off regardless of what was accomplished. Today, “working from home” is considered routine and practical. But is “home” just another word for “working from anywhere”?
Millions of Americans want to explore new places such as San Francisco, Barcelona, Amsterdam, and Panama City. Places that offer new experiences, the ability to kick back, look at the ocean, study a different language, try new foods and still work. Residence-sharing companies such as Airbnb, VRBO, and Booking.com are betting big-time that individuals will be looking for stays longer than a week (although we like those bookings too!) and one that provides more room for simply spreading out or sleeping additional individuals.
During the pandemic in 2020, the average daily price for a hotel room in North America was $163.90 and for a two-bedroom condominium in Panama City and Coronado, the average was $174. A single room in a home ran $110 on average in Panama City so for the price of a hotel room you could secure a beach paradise in Panama!
With so many individuals and families seeking new places, having income-producing rentals in highly sought areas seems like a no-brainer for investing. After all, aren’t we all starving for a vacation? What about all those postponed weddings and family reunions? The ability to rent a whole house or condominium has been seen as much more appealing than a standard hotel room. Envision feeding the cousins breakfast in their pajamas and not in the hotel’s expensive restaurant!
If you are considering investing in rental property it is vital you do your research to ensure you are not disappointed. Even with high demand, there are many reasons some properties stay solidly booked and others languish without fully realizing their potential. It’s important to consider things such as whether or not to allow smoking on the balcony, how much is too much concerning headcount, and how to safely monitor alcohol intake and partying without being intrusive. If you are comfortable with pets, what about additional security and cleaning fees?
Delivering On An Exceptional Experience
People want to believe they are getting the best possible experience from their rental dollars. After all, it’s never good when a guest leaves thinking it would have been more comfortable to just have stayed home. They want to walk in and think the linens are top-grade, the views breathtaking and the atmosphere peaceful. Here are a few things to consider:
Unless you live comfortably close to your properties and are willing to do much of the work yourself, you will need a property manager. This is someone with a network of tradespeople who can be expected to respond quickly to everything from a clogged toilet to a broken air conditioner. Managers also pay the bills such as HOAs and the internet. New devices have entered the market which allows for keyless entry which is nice, but someone will need to check the rental to make sure the cleaning service has performed to the highest standards, the coffee maker has a couple of packets and the hand soap is topped off and sitting next to fluffy folded hand towels.
Little things make a difference including providing a welcome note with printed information about nearby restaurants and attractions, suggested vendors for excursions, transportation options including approved telephone numbers, and emergency numbers. It’s nice to have a few board games and jigsaw puzzles stacked among some novels (beach reads as opposed to War and Peace or Franz Kafka) for those inevitable rainy days.
Managers also work with advertising the property, making sure bookings are going well, selecting days where higher prices should be charged (Christmas, High Season), and keeping enticing photos listed along with reviews. It is important to know exactly what the property manager is going to charge as some will charge a monthly rate, plus approximately 10% of the bookings or only one or the other. If you choose to fork over 10% of the rental income, you may be pleasantly surprised to find that your property is one of the first to be booked because it means more to the manager.
Unless you are charging very inexpensive prices for your rental you need to have nice furnishings covering everything from wine glasses to the king-size bed. Don’t think about the least costly way to “get things done” but rather what is going to please the customer.
The good thing is that with the right connections you can achieve both lower costs and higher-end furnishings without sacrificing either. Professionals providing furnishing solutions know where to go for the best price when the sales are happening and they are almost always given deep discounts. Many times the savings cover the cost of the professional designer and shopper. Certainly, maintain approvals for large purchases and get a signed contract that clearly outlines costs. Also, remember to be reasonable. Even with discounts and sales, you are not going to get a great king-size bed for $299!
Great Copy And Photos
There are a lot of rental options available so you will need to make yours stand out. The most important individual factor influencing the buyer will be the photos. Help people imagine themself in your rental. If you have a remarkable view of the ships queuing up to transit the Panama Canal, instead of just the view (well maybe both angles) have a shot of someone drinking coffee as the sun comes up on such a remarkable experience. Show the kitchen from several angles and all the bedrooms and bathrooms. On-site laundry rooms are very important to families! If you have a lobby with a smiling concierge that makes people feel secure.
Parking is important and so are the surroundings. Restaurants, transportation, and nearby activities all deserve a photo. It’s also easy to miss a few of the automated pages when it comes to the listings so make sure everything is filled out completely including the number of allowed occupants. Recently, when reviewing a penthouse listing in Panama City, it was laughable to read necessities were not included such as towels and sheets. Of course, they were, but renters turned up with sheets and towels!
Careful If The Projected ROI Is Too High
It’s easy enough to jump in on the residential sharing market, but there are financial things to consider before taking the leap. Investment opportunities from London to Lisbon promising great return on investment (ROI) while building equity in your home can be found everywhere. On paper, these offers really look amazing and can be optimistically skewed. Just make sure things are realistic! Your property will not be rented every night. Look for averages and be realistic. Consider your competition.
One of the best places to start is to consider what type of guests and location with which you are most comfortable. For example, a one-bedroom unit in the residential towers of Royal Palm that comes fully furnished is on the market for $165,000. That property, located in the Coronado-Gorgona area about an hour outside Panama City is located directly on the Pacific Ocean and comes with multiple pools, social areas, and an on-site restaurant. Rentals there generally run from $74 to $100 a night and are attracting families, locals, and honeymooners.
Casa Bonita, with one-bedroom units selling for just over $300,000 is almost sold out. The rentals there are often times from individuals who like to come down during the high season and then recoup expenses by renting during the off-season so they reflect a more personal style. The fact the residential complex shares amenities with the five-star Westin Playa Bonita resort which includes multiple pools, a spa, nine restaurants, and stunning views of the Panama Canal ensures a much higher rental rate. Consider anywhere from $150 to $450 per night.
Even though Casa Bonita is almost sold out, a new residential building is slated to be built next door indicating the demand for the property. The $155 million complex will mirror Casa Bonita and capitalize on the growing businesses located in neighboring Panama Pacifico. While Palma Bonita is years away from occupancy, there is opportunity for early pricing, tax credits, and the ticket to rapid residency, plus you get to pick the best view units!.
Costa del Este vs. the Beach?
Arcadia, located in Costa del Este is aimed toward the digital nomad looking for a more professional environment than a vacation. The rapidly evolving medical tourism associated with the Johns Hopkins-affiliated International Hospital, also located in Costa del Este and steps from the hospital is an attractive rental option for accompanying families of international patients.
There are million-dollar properties attracting executives from multinational companies and smaller units for the growing Panamanian professionals. Much depends on an individual investor’s comfort level of location and type of renter attracted to the property. Then there is also the consideration of whether to rent only part-time when an owner isn’t occupying the property.
I would love to work with you and find the perfect location. I can suggest trusted property managers and furnishing solution professionals. Most managers come with their own photographers, but if not I have a few suggestions. Time has never been better to invest in Panama as we emerge stronger than ever from the pandemic ready to welcome the vacationers, honeymooners, nomads, and working professionals. Reach out to me in the form of communication you prefer and I’ll connect. Let’s have some fun putting people in their ideal rental properties.