Keith’s Weekly Property News April 10-2022
It was a bit of a frustrating week. We had big plans to ramp it up, but were let down later in the week by lots of last minute cancelations of viewings for a host of reasons. Nonetheless, we have a full line up of 6 viewings tomorrow and we hope to add many more for the week.
I will also be holding a zoom session on upcoming Izmir Round 2, so quite excited about that.
To Airbnb or not to Airbnb, that seems to always be the question.
I have made my views known on this several times, but also backtracked a few times as well. Obviously, I want to do what is commercially in the best interest of my clients, but I am also cognizant of the environment that we operate in. Rather than engage in my usual verbosity, I will put in point form the salient and relevant points.
Pros
-You collect payment in currency (some properties are also suitable for collecting in currency as mid term and long term rentals, by the way, so I am not sure how vital this pro is.
– You can reserve the property for personal use. (You can also do this for mid-term rentals, which are currently in very big demand as well.
-You MAY be able to outperform the yield you would get on a long term rental (do not forget to add your sweat equity and time into that equation). No Airbnb management company takes care of your taxes, btw. Other things will come up that will require your attention and time.
Cons
-It is very hard to operate an Airbnb legally in Turkey. You have to get a special license, which in itself is a headache. But the deal killer is you need the permission of all owners in the building to get that license. Good luck with that. As a result, 99% of Airbnbs operate illegally, to put it bluntly. Of course, most of them operate without issue or interference from the authorities. However, there are many notable exceptions, such as:
1- Because you are operating illegally, there is actually no mechanism to pay the taxes and your income can always be queried. To put it shortly, paying taxes is up to you and it is all very fuzzy because you are basically declaring that you are running an unofficial hotel and proving to the authorities your real income is a pain.
2- Somebody, somewhere does sift through Airbnb to check about taxes. I have personal experience through contacts of fines for Airbnb listings.
3- Turkey is home to strict anti-terrorism laws. Most Airbnb operations do not record their guests with the authorities, as proper hotels do. If a terror event occurs, and it turns out that the perpetrator stayed in an Airbnb, widespread closure is not off the table. As is some messiness in the investigation. Very unlikely scenarios. But add in the fact that local hoteliers have some easy leverage here. I suppose they are pleased these days with occupancy, but should that change, Airbnb is low hanging fruit in terms of a target.
4- Neighbors are also a factor. They OFTEN complain and sometimes even try to extract payment from the situation. I was on the paying end in Istanbul and Budapest, so that is no myth.
I ran the #1 TripAdvisor property in Galata for about five years back in the early 10s. There is much more I can tell you about the experience. Suffice it to say, there are many surprises and unknowns. Just crushing out a big fat yield every year is more fantasy than reality. Below are my tips on what makes a succesful Airbnb in Istanbul (and perhaps Turkey).
The property should be in excellent condition. The half renovated places mostly stay emtpty. The successful one are in good hotel standard, Expect to spend from 5K USD to 10K USD on all furnishing and basic set up cost.
If your property is on an upper floor and there is no lift, it had better have a nice view, otherwise it will not perform well.
For Istanbul, the main areas are Sisli and Beyoglu. Fatih is as well, but it is much harder to find properties in the touristic areas. Besiktas can work as well, but some parts are unsuitable. Kadikoy may work, but I suspect the buy price vs income would not be favorable. Areas like Kagithane and other suburbs are largely untested and would probably have marginal appeal.
Sea view always gets a premium, but decent city view with a balcony or terrace can help.
If your property is such that it would likely not generate 70 USD per night, the endeavor may not be worthwhile. I think the successful Airbnbs are a bit higher end. Better profile of guest, greater income to offset unexpected costs and just, lets say, more worth the headache for everyone involved.
“Aile” or buildings that have many families in them will be unsuitable. In Turkish culture, people really want to know their neighbors.
Neighborhoods where there might be elevated security concerns are also off the table as far as I am concerned. No windy, unlit stairwells leading to secret access through back entrance etc.
Garden apartments have limited appeal. People do not travel with their pets or are not so concerned about having a garden for their children when they travel, and these are the appealing sides of those properties.
Proximity to Metro is key. Not more than 10-12 minutes walking.
Expect low bookings in Jan, Feb, March.
There are many other tips you can get from websites. I have just tried to be specific about Istanbul and the property end of things.
Again, I hope I have not discouraged or alienated too much of my client base. I am trying to present a balanced view on an important issue and one in which I myself have been struggling to articulate in the past months.
We are, and will continue, to run Airbnbs, and most likely, more of them.However, I would like to stick to Airbnbs that meet the above criteria. I am happy to evaluate your property and let you know if I think it is suitable for Airbnb or not. Regarding income, with the ever shifting landscape of dare I say post-Covid, I am reluctant to give projections on income, but could probably give you a good idea about nightly rates.
Now what I really suggest is that you target the mid-term market, which is really under-supplied. I get emails every day asking for rentals for anywhere from 1-6 months. I almost never answer. With these types of rentals, you can achieve all of your objectives while also being on more solid ground legally and in better stead with your neighbors:
-paid in currency
-can reserve property for personal use.
-Ultimate flexibility in tax terms (more on that later).
You can also transition into a long term rental or an Airbnb rental if you are not happy with performance in the first 6 months. I suggest this as an excellent avenue and I will fully support it, as well as apply resources to the enterprise, as I feel it aligns with my interests more closely. I have some concerns about being the repository of unofficial, mediocre Airbnbs lol.
Putting aside being tongue in cheek, it really does seem to be a good path. There are so many digital nomads and remote workers, people coming for extended medical treatments, Erasmus university exchanges, business travelers and more. It is a market long time group member, Andreas, has long been a proponent of. I agree with him fully.
Now on to the market. We are looking for a better week than last week and are taking all steps to make it happen. If you are in country, please be vocal. We are here to try to help you meet your needs and I still feel, in so many ways, that we are the best agency to do this, though we are constrained in some ways by the clients demands for the more popular neighborhoods.
Properties will be distributed in meeting. If you like, PM me and I will send them to you directly.
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