Apartment rental business: is it profitable to rent out on a daily basis? Pros of a business plan

If you are a business person, but your plans do not include renting a separate office space, then you can simply use your own apartment.

Today we will talk about what legal actions need to be taken in order for the apartment to act as an office.

Of course, the most prestigious option is to rent an office in a business center. Mostly big businessmen do this. However, there is an alternative: you can use your own home, i.e. an ordinary apartment. This method has its pros and cons, and this is what we will dwell on in more detail in the article.

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What's the benefit?

What are the pros and cons of the apartment rental business? Depending on the goals and intentions of the owner, empty housing is subject to a property transaction. The most common ones are rent or sale .

Some owners prefer to sell their home. But they are faced with the question of selling and preserving the proceeds from the sale.

Naturally, if there are no specific plans in the form of business development or the acquisition of other expensive property, the sale may result in losses expressed in:

• in the form of inflation;
• a relatively small percentage when investing in a bank;
• purchasing property that you can do without;
• risks associated with the issue of storing funds.

While the presence of real estate is a guarantee of the safety of investments .

She is not afraid of inflation due to the fact that the cost of apartments increases in proportion to its growth.

But it is not advisable to maintain an empty home. After all, it requires investments for rent, operation of the premises and other costs associated with maintenance. These moments encourage many owners of empty housing to rent it out.

When you rent out a home, there are undoubted advantages :

1. Receiving income from tenants, which allows you to pay maintenance costs and remain profitable.
2. The premises will be under the supervision of tenants.
3. In case of emergency situations, urgent measures will be taken to eliminate them.
4. The premises in which the tenants live will eliminate claims on living space from relatives and friends.

Read our articles about tenants' rights and responsibilities and what they have to pay for.

Here we can highlight some “sharp corners” that are disadvantages in deciding the issue of renting out a home:

1. You may stumble upon unscrupulous citizens or persons with fraudulent tendencies.
2. Residents will be required to register at their place of residence.

If they have minor children or a child is born while living on the rented territory, it will be almost impossible to discharge them.

3. The premises can be “relet” and make a profit, bypassing the owner.
4. Careless handling of the owner's property will lead to losses.
5. Illegal behavior of residents will lead the owner to conflict with the justice authorities.

Find out from our article about how to kick unscrupulous tenants out of your own home.

How to transfer an apartment to non-residential stock

The transfer of residential premises to non-residential premises is regulated by Ch. 3 of the Housing Code. The third chapter sets out all the conditions necessary for translation, as well as the rules and procedure for carrying out the entire procedure.

Minimum conditions for transfer

Before submitting documents to re-register residential real estate as non-residential, you must make sure that the housing fully complies with the standards of commercial real estate.

The transfer of residential real estate to non-residential property is regulated by Art. 22 of the Housing Code of the Russian Federation and is carried out subject to the following conditions:

• availability of additional access to the premises;
• absence of persons registered on the premises;
• absence of third party rights and other types of encumbrance;
• the real estate is located either on the first floor or on subsequent floors, provided that there is a non-residential premises under the apartment;
• the living space does not belong to the municipality;
• translation is necessary for conducting ceremonies of a religious organization.

What documents are needed

Before contacting the municipality about the transfer of housing, you need to collect a small package of documents to confirm ownership of the premises, as well as general intentions regarding the transfer.

Local authorities must provide:

• an application for the transfer of living space to non-residential stock, where the name of the government authority, full name of the owner and his passport details must be indicated;
• documents reflecting ownership of the living space;
• apartment plan, as well as registration certificate;
• floor plan of the house in which the premises are located;
• if necessary, a project for the reconstruction of living space.

Some documents may not be provided if information about the premises is in the Unified State Register of Real Estate, but in this case it is better to play it safe and provide the entire package of papers to the authorized bodies.

The right approach

How to rent out an apartment profitably? What are the pitfalls of such a business? With the right approach to business , problems can be avoided and profits can be increased to maximum sizes.

The main thing is to draw up a written agreement, which requires specifying all the rules of living on the premises.

And the move-in and eviction of residents is carried out by an act of acceptance and transfer.

The act should indicate:

• characteristics of the home;
• its technical and cosmetic condition;
• condition of plumbing;
• presence and condition of furniture.

You can learn how to make an inventory of property when renting out a home from our article. The contract, as well as the acceptance certificate, may include all the information that is useful to the landlord and will help him regulate relations with tenants.

These may include a ban on subletting, denial of the right to register, as well as all actions that are unacceptable from the owner’s point of view.

In this case, the agreements will be fulfilled, and he will regulate the relationship at his own discretion.

Read on our website about the rights and responsibilities of a landlord.

How to earn?

Is it worth opening a business in this direction? The business of renting out an empty property has different levels of implementation , which begin counting from the delivery of housing with partial amenities or without them in a small locality.

How to rent out apartments for more money? From the point of view of a person with an average level of well-being, such models of earning money do not apply to business . But for the homeowners themselves, the income received is very significant.

Which housing is more profitable to rent? Naturally, the income received from luxury housing located in a prestigious metropolitan area or, at least, in a regional or regional center can provide the property owner with a complete financial resource. That is, the decision to develop a business on the territory of an existing apartment is entirely within the control of the owner.

You can find out how to purchase a patent for renting out a home on our website.

You can earn money by renting out your home in several ways:

• hand over under an agreement for use at the discretion of the tenant;
• transfer into trust;
• rent daily.

Each option may have its own advantages that will ensure maximum profit .

If you do not take into account the elementary fact that expensive housing obviously sets a high rental price, but proceed from the concept of business decisions, then you need to provide for all the characteristics that will affect the flow of cash. These include:

• footage of housing;
• the area in which it is located;
• technical condition;
• availability and quality of repairs.

The business concept is built taking into account the totality of existing characteristics. Let’s say that if there is a large territory of the facility, no repairs and distance from the center, it is quite advisable to rent it out to a construction team or other visiting workers as a bed .

If the territory is large enough, but it is clean and comfortable, you can accommodate female students (students) here, distributing the payment between them. It is more convenient to rent out a one-room apartment to a family . And if it is well-maintained and located in a prestigious area, it can be rented out on a daily basis .

Such combinations are very important. The success of the business and the amount of income received depend on how clearly the entrepreneur puts them together.

Time trend

The main disadvantage of apartments for developers is limited demand. Most Muscovites prefer ordinary apartments. In addition, apartments are not a cheap pleasure. The average price of apartments in Moscow, according to Penny Lane Realty, is $9,500 per square meter. Most of the apartments, about 65%, are, according to Olga Shirokova, business class; about a third belong to the category of elite properties. In economy class, only one project has entered the Moscow apartment market - the Parus complex on Yaroslavskoye Shosse. De jure it is a hotel, de facto it is an ordinary panel house. The history of the project is as follows. In the early 2000s, the PIK company received from the city, under a preferential program, a plot for the construction of a hotel on Yaroslavskoe Highway, property 122–124. But then the developer erected an economy-class residential building instead of the hotel.

Another disadvantage of apartments is the inability to register in them. And if there is no registration, then all the amenities that Muscovites receive at their place of residence (kindergarten, obtaining a foreign passport, treatment at the district clinic and much more) are not available to apartment owners. Apartment owners have to pay more significant amounts for utilities compared to ordinary apartments.

Perhaps, for the owners and top managers of large companies, the above disadvantages are insignificant, but for the majority of Muscovites they can play a key role when choosing a place to live. Thus, the PIK company sold the project at 10–15% cheaper than its analogues. Today, according to experts, apartments from Yaroslavka are entering the secondary market at a discount of 15–20%, but are not in particular demand.

Buyers of apartments can be divided into several categories. “The main thing is foreigners for whom this format of real estate is familiar and familiar. They form a significant part of the demand for apartments in Moscow,” notes Alexander Ziminsky, . — The second category is Moscow companies that use the apartments as executive apartments. The third is regional and foreign companies that provide apartments for their employees while they live in Moscow.”

Another category is the owners of their own business and top managers of large companies who already have an apartment in the capital or a country house in the Moscow region. However, there are few such people, so if they start building apartments en masse, it won’t be very soon. “Today the supply of apartments in the capital corresponds to demand,” says Alexander Ziminsky. “If the number of projects increases significantly, then developers will have to reduce the price or wait for years for buyers.” According to Pavel Karasev, in 2011–2012 the number of projects with apartments will continue to grow, but then this trend will decline.

Is it a business activity?

From a legal point of view, such housing rental can equally be determined by entrepreneurial activity or not. The answer depends:

• on the number of events held by the lessor and the amount of profit received by him;
• on the number of participants in the activity;
• from the landlord’s intentions and plans to register an individual entrepreneur.

In accordance with Art. 608 of the Civil Code of the Russian Federation, leasing does not bind the lessor, the owner of the premises, with the obligation to register an individual entrepreneur. However, he is not exempt from paying tax .

The position of the tax office on this matter is clear: the landlord has the right to rent out housing, paying tax and filling out a declaration in Form 3-NDFL, since he receives income from renting out housing. The declaration form is regulated by the Order of the Federal Tax Service of the Russian Federation, No. ММВ-7-3/760, approved on November 10, 2011.

You can learn about the liability for illegally renting out an apartment in our article.

The Federal Tax Service of the Russian Federation and local inspection branches are guided by:

• officially - Information letters of the Ministry of Finance dated November 7, 2006, No. 03-01-11/4-82 and dated September 22, 2006, No. 03-05-01-03/125;
• a higher tax rate imposed on individuals, which is 13% of the total rental price.

When registering as an individual entrepreneur and switching to a simplified taxation system (STS), citizens pay 6% of the profit received, minus the costs of maintaining the facility from the total payment.

Accordingly, the registration of individual entrepreneurs is not so much regulated as it is beneficial to the owners themselves.

What kind of housing is in demand?

Which homes are more profitable to rent?

Income can be obtained not only if the current situation is correct, but also by managing it.

According to statistics, greatest demand for accommodation.

It is more convenient to rent them out on a daily basis. Usually these are budget options that attract the middle class of citizens, and also do not require serious investment from the owner.

Based on this, citizens who have embarked on the path of entrepreneurship exchange more expensive housing options for two or more objects, which allows them to mobile use the received resource.

Rooms in shared ownership are less convenient. Room owners have to negotiate with other owners, based on their permission.

If scandals and complaints from co-owners arise, you can acquire legal problems, as well as systematically lose tenants. In addition, the profit received from such objects will be minimal , and renting them out on a daily basis is simply not realistic.

Working with luxury housing . But the difficulties that arise have other properties:

• the high cost of the overall cost and operation of the facility inflates its cost, which dictates the condition of high rental rates;
• the property requires enhanced control by the landlord. As a rule, such objects are owned by citizens with a high level of employment, which does not allow them to take direct part in working with housing.

Renting housing allows you to arrange trust management in the direction of a competent specialist working in the real estate market. You can learn how to issue a power of attorney from the owner for the right to rent out an apartment in our article.

Rescue through apartments

Before the crisis, half of the apartment projects were concentrated in the Moscow City area. In Moscow City, part of the space in the City of Capitals, Federation and Imperia Tower projects was allocated for apartments. “Life is not limited to being in the office. In the area of ​​the business center there should be places where people can eat, spend time, and spend the night,” says managing director Evgeniy Skomorovsky . Apartments in the City were positioned as a special format of executive apartments for temporary residence in an elite enclave. However, let's be honest: in the pre-crisis market of the capital, the idea of ​​apartments was not particularly popular among developers.

Over the past three years, a new situation has emerged. The market is faced with an oversupply of office space. “Three million square meters of business centers under construction in Moscow have been frozen. And another two million square meters of space in the built business centers of Moscow turned out to be vacant,” says Marketing Director Irina Naumova . “The office market is still not in the best condition,” confirms Denis Sokolov . “At the same time, today not all developers can launch a project with their own funds, and it is almost impossible to get a loan for the construction of a business center.”

So, for frozen office projects, the transition to the apartment format is a salvation. What do developers do? They transform an office building into a house with apartments: they divide it into small blocks, providing communications. What are the benefits for the developer? To implement an office project, you need to build a building and only then rent it out or sell it. Today, only a few can take this path; the demand for offices is very small, and from an economic point of view, this is not a very profitable investment. But there is a demand for apartments, just like regular apartments. Apartments can be sold during construction. Through retail sales to individuals, it is possible to build a financial scheme for the project, minimizing investments from the developer.

However, the main secret of the popularity of apartments lies in the economic sphere. “The selling price of office space in the center of the capital does not exceed 5 thousand dollars per square meter, and apartments - no less than 7 thousand,” notes Pavel Yanshevsky .

Mandatory requirements

To rent out a residential premises, it is necessary to adapt its condition to the relevant sanitary standards established by SNILS .

It must have the appearance of a living space and be provided with the conditions necessary for life support (it is necessary to clarify the optimal size of the dwelling for rent).

If they are violated, residents have the right to file a complaint , which may prohibit the rental of their home.

If the condition of the home is not proper, but does not pose a danger to the residents , when transferring it, the deed requires a list of existing defects, under which arriving citizens must put a handwritten signature.

You can find out how to apply for a security deposit when renting out an apartment on our website.

The premises rented out for housing must be documented as a residential property.

It is unacceptable to rent out for housing:

• utility rooms, basements;
• emergency housing;
• seized real estate;
• country and garden houses.

Is it possible to rent an apartment for an office?

Today, the real estate market offers entrepreneurs both non-residential and residential premises, the design of which ultimately turns out to be much cheaper. However, it is worth understanding that not all types of business activities can be carried out on the territory of a residential complex.

What the law says

Provisions of Art. Art. 288 and 671 of the Civil Code, establish as an axiom the following provision: any residential premises are intended only for the residence of citizens, and these articles refer to paragraph 2 of Art. 17 of the Housing Code, which in turn allows the use of apartments or houses as offices for individual entrepreneurs, subject to several conditions:

1. The apartment is owned by the entrepreneur.
2. The establishment of an office does not interfere with or violate the interests of other persons living both in the apartment and in the house.
3. The apartment meets all the requirements of a living space when creating an office-type room or an office as a whole.

In other cases, it is necessary to re-register the house as a non-residential premises.

For individuals who are tenants of residential premises, administrative liability may arise for using an apartment as an office, in accordance with Art. 7.21 of the Code of Administrative Offenses of Russia, therefore it is important to comply with all the subtleties of conducting business activities on the territory of residential areas.

Daily rental

How to make money renting apartments daily? There is an opinion among entrepreneurs that if you rent out your home on a daily basis, this will be the most profitable business in the real estate market.

It is beneficial to organize it when the apartments are located in an area where infrastructure is developed . In historical places, daily rentals can attract tourists and city visitors.

In quiet, romantic places, close to a lake or park, there may be a stream of lovers looking for a place to meet.

The same can happen when popular entertainment venues . That is, there must be bright places that the entrepreneur uses to advertise the apartment.

In order to earn decent money, most entrepreneurs sign a rental agreement for apartments that are chosen carefully and thoughtfully.

The agreement specifies the terms of sublease .

Based on the agreement, they develop an operating business that attracts considerable funds from relatively modest investments.

The same is permissible on the basis of trust management of the object , upon receipt of an agreed percentage of the profit received.

Where to begin? Starting a business is the registration of entrepreneurship, which will guarantee the legality of actions, which will allow you to find protection in court in difficult situations and eliminate risks .

Next, it is advisable to formalize the terms of taxation according to the simplified tax system , which provides for the payment of taxes only on the income side, taking into account all expenses.

After this, you can start organizing your business:

• find a premises and draw up a contract;
• improve and make repairs;
• advertise;
• receive guests.

To draw up a business plan, you will need to take into account expenses, taking into account regional prices or the cost of housing and services in federal cities. Accordingly, they can vary significantly. In general, expenses include:

• registration of the status of an individual entrepreneur in the Federal Tax Service;
• payment for drawing up and concluding a lease agreement;
• rent for 2 months;
• expenses for renovating the premises, purchasing furniture, etc.;
• running costs for advertising, cleaning and laundry.

The issue of carrying out repair work must be specifically discussed and included in the text of the contract as a separate clause.

Some landlords agree to reduce the rent by an amount equal to the cost of repair work in general or the purchase of material.

But this depends on the original condition of the apartment. If an intermediary improves it to attract clients, this is his personal initiative.

If the repairs were not made, he may come up with a similar proposal.

You can calculate profits based on the time the apartment is occupied .

At full occupancy, its cost increases by 3 times or more compared to rent.

You should not ignore the possibility of risks that an entrepreneur bears. Being in the status of an intermediary, he will have to smooth out all the rough edges that this mediated activity brings.

The most common problems are when tenants who move in cause property damage and refuse to compensate for it. All the hassle of compensation and responsibility to the lessor rests with the intermediary.

Problems with the law are also common when premises are rented for a day for illegal business, which may be associated with drug trafficking, prostitution, and gambling.

In this case, the entrepreneur will be saved only by his conscientious delusion, according to which he did not know and could not know what was going on in the apartment he rented.

To do this, all required documentation for leasing and subleasing must be in compliance with legal regulations .

Factory housing

Denis Sokolov from Cushman & Wakefield attributes the surge in the implementation of apartment projects to the shortage of development sites in the center of the capital. Theoretically, there is land, but with rare exceptions, sites are formed through low-income and complex programs for the resettlement of housing stock or the removal of industrial zones. However, after the plant is moved outside the Moscow Ring Road, in order to build housing on the vacated site, the purpose of the land must be changed. “This will double the cost of land. At the same time, if you build apartments, then transfer and additional investments will not be required,” notes Evgeniy Skomorovsky.

One of the main apartment builders in Moscow is KR Properties. Today she has three apartment projects under her belt. Before the crisis, the developer acquired several industrial enterprises located in the center of the capital. Initially, it was planned to build office buildings there, but during the crisis the developer’s plans changed. And instead of business centers, apartment complexes began to appear. In each of the projects, the buyer purchases non-residential premises with a set of utilities, which, according to the developer, can be used in fact as an ordinary apartment.

The first project is “Danilovskaya Manufactory 1867” in the Tulskaya metro area. It includes 42 loft apartments ranging from 37 to 200 sq. m. m. “The apartments are located in red brick buildings of a former manufactory, built in the 19th century. Irina Kirsanova, director of the marketing service of Peresvet-Invest Management Company . In 2011, the first stage of the facility was commissioned. The price of the apartments is $7,000 per square meter.

Another project is located on Verkhnyaya Maslovka and is called Manhattan House. Apartments with an area of ​​43–103 sq. m are sold at prices of 5–7 thousand dollars per square. Finally, a couple of months ago, KR Properties launched the Nikolaevsky House project. After reconstruction, the seven-story former hotel building on Komsomolsky Prospekt will house 60 apartments. Apartment area – 30–90 sq.m. m, prices - 7700–9900 dollars per square meter.