A true story of an apartment owner who managed the property independently for years — and what changed when he handed management over to Irundo.
I Miscalculated Because I Did Not Calculate.
Renting out an apartment you own sounds very simple at first glance. Most people who own a property they do not frequently use decide to furnish it as a rental apartment without much prior thought or calculation.
Why do we mention calculation?
Because many apartment hosts believe they are earning very well, but reality is somewhat different.
As in any private enterprise, success is measured by the final result after all revenues and expenses of the business venture have been calculated. It is often the case that apartment hosts measure their success based on only one piece of data — the gross revenue from sold overnight stays.
It is not realistic to look only at the money the host received from guests; it is necessary to also account for the costs. Just some of the regular expenses that every host has include online channel commissions, utilities, cleaning costs, linen washing and ironing costs, maintenance, and government levies. Extraordinary costs such as repair of various breakdowns frequently arise as well, and most hosts do not even factor in the cost of their own time spent on this. Many also do not account for the investment and annual depreciation.
To arrive at a true calculation of earnings — that is, profit — it is necessary to include a range of costs that are standard in apartment rental. Below we present two examples of revenue and expense statements for a private host with a one-bedroom apartment.
Example 1. The host is not in the VAT system and has engaged external contractors:
Revenue — 1-bedroom apartment — season Season 5 months, number of days: 150 Average occupancy: 80% Average nightly rate: €90.00 Number of nights sold: 120 Average stay — in days: 3 Number of guest turnovers in the season: 40 Total revenue: €10,800.00
Expenses — season Commission for online sales channels — approx. 15% (e.g. booking.com, Airbnb.com, Expedia.com): €1,620.00 VAT on online sales channel commission 25%: €405.00 Guest check-in (100 kn per check-in): €540.00 Apartment cleaning: €600.00 Linen washing and ironing: €400.00 Cleaning supplies: €80.00 Consumables (toilet paper, mini shampoos, tea, coffee, and sugar): €200.00 Utilities: €800.00 Annual maintenance and/or repair costs (materials and labor): €500.00 Tourist tax — annual flat rate (2 categorized beds): €80.00 Tax flat rate (2 categorized beds): €80.00 Total expenses: €5,305.00
Operating profit for approx. 6-7 months of engagement: €5,495.00
Cost of own time for season preparation, coordination, guest communication, worker communication, etc. (based on 10 hours per week x 6 months, hourly rate 75 kn): €2,400.00
Example 2. The host is not in the VAT system and does everything independently:
Revenue — 1-bedroom apartment — season Season 5 months, number of days: 150 Average occupancy: 80% Average nightly rate: €90.00 Number of nights sold: 120 Average stay — in days: 3 Number of guest turnovers in the season: 40 Total revenue: €10,800.00
Expenses — season Commission for online sales channels — approx. 15% (e.g. booking.com, Airbnb.com, Expedia.com): €1,620.00 VAT on online sales channel commission 25%: €405.00 Cleaning supplies: €80.00 Consumables (toilet paper, mini shampoos, tea, coffee, and sugar): €200.00 Utilities: €800.00 Annual maintenance and/or repair costs (materials and labor): €500.00 Tourist tax — annual flat rate (2 categorized beds): €80.00 Tax flat rate (2 categorized beds): €80.00 Total expenses: €3,415.00
Operating profit for approx. 6-7 months of engagement: €7,385.00
Cost of own time for season preparation, coordination, guest communication, cleaning, linen washing and ironing, etc. (based on 25 hours per week x 6 months, hourly rate 75 kn): €6,000.00
Many will be surprised that the cost of working time for one's own business has been included in the expenses. But this is extremely important to understand because your time = money.
Through this simple calculation, every host can quickly get an answer to the question of how profitable they are and whether they should engage an agency to take over the management of their apartments. Contact us so we can together compare revenues and expenses and find the best strategy for your successful business.
All apartments in the Irundo portfolio have been personally and carefully selected, distinguished by their unique appearance and attractive location. Through its decade of experience and with more than 100,000 completed guest turnovers, Irundo provides all guests with a feeling of home. To you as an owner, we offer maximization of your profit, the highest level of operational and technological service, using the highest business standards.