At Aticco Living, we understand that every property owner wants to maximize the return on their investment while minimizing complications. In this article, we’ll explore the two most common contract models we offer: the Fixed Lease Contract and the Management Contract. Both models have their advantages, but we want to show you why the Management Contract is an exceptional option for those seeking optimal profitability and a hassle-free experience.
Fixed Lease Contract: Stability with Certainty
What is it?
The Fixed Lease Contract is a classic choice for those looking for security and predictability. Under this model, we guarantee the rental of your property for the agreed-upon time, regardless of occupancy. Additionally, we handle the fitting, furnishing, and maintenance of the property.
Advantages:
- Income Certainty: You know exactly how much you will receive each month, whether the property is occupied or not.
- Less Personal Involvement: You don’t need to worry about daily management or understanding the coliving market.
Disadvantages:
- Static Profitability: While you have security, you miss out on the full potential of the growing coliving market. The net profitability for buildings or apartments in city centers typically hovers around 3%.
- Limited Visibility: You don’t have access to detailed business or occupancy information, which can limit your understanding of your property’s actual performance.
Management Contract: Profitability and Flexibility
What is it?
The Management Contract is a modern, flexible alternative that allows you to fully capitalize on the potential of the coliving market. In this model, we partner with you to manage the property, optimize its performance, and ensure you achieve the highest possible profitability. This contract is increasingly chosen by professionalized properties for its ability to maximize asset returns.
Advantages:
- Higher Profitability: Net profitability for owners under this model ranges from 4-7%, reflecting the strong demand and growth in the coliving and flex living market.
- Comprehensive Management: Aticco Living handles everything, from marketing and commercialization to maintenance, so you don’t have to worry about a thing. As a professional operator, we ensure that your property is in the best hands and that any potential issues are managed efficiently.
- Business Visibility: Property owners have full visibility into the business, ensuring focus on important aspects such as preventive maintenance.
Disadvantages:
- Variable Profitability: In adverse economic situations, returns may be lower. However, given the strong demand and professional management, it is unlikely that this reduced profitability will occur in the coming years.
Comparison in Different Scenarios
When choosing a contract model for your property, it’s crucial to consider how it will perform under different economic conditions. Income stability, market adaptability, and risk management are key factors that can influence your investment’s profitability. Below, we analyze how Aticco Living’s Fixed Lease and Management Contracts perform in three possible scenarios. This comparison can help you make an informed decision on which contract model best aligns with your long-term goals.
1. If the Economic Situation is Negative:
- Fixed Lease: The tenant could renegotiate the contract or abandon the property, affecting your income. As seen in past crises like the pandemic, fixed income isn’t always fixed and can vary depending on circumstances.
- Management: Profitability will be lower than planned, but Aticco Living efficiently handles challenges to minimize the impact on your income.
2. If the Economic Situation is Stable:
- Fixed Lease: The landlord will earn a similar return to that of a standard residential lease, approximately 3%.
- Management: The landlord can enjoy higher profitability, between 4-7%, reflecting market growth and the high performance of the coliving model.
3. If the Economic Situation is Better Than Expected:
- Fixed Lease: The landlord will earn the same as in the previous point.
- Management: The landlord can enjoy even higher returns, potentially reaching 6-10% net profitability.
In Summary: While the Fixed Lease Contract offers stability and supposed certainty, the Management Contract with Aticco Living provides the opportunity to achieve higher returns and comprehensive, hassle-free management. Consider your goals and needs when choosing the model that best suits you. At Aticco Living, we are committed to offering you the best option to maximize your investment and simplify your experience. If you’re ready to explore the advantages of the coliving model, don’t hesitate to contact us for more information. We’re here to help you grow your assets in the best possible way!
Frequently Asked Questions about Contract Models for Property Owners
1. What is net yield or NOI, and how does it affect my property’s profitability?
Net yield or NOI (Net Operating Income) is a way to measure the profitability of your real estate investment. It’s calculated by dividing the net income you earn from renting the property by the property’s value or the amount you’ve invested. For example, if you purchase a property for €500,000 and, after covering all expenses, earn €25,000 annually, your yield would be 5%.
Yield helps you understand how profitable your property is. In the case of a Fixed Lease Contract, yield tends to be stable but lower, around 3%, as you have guaranteed income but cannot benefit from market growth. With a Management Contract, your yield can be higher, between 4-7%, as you can take advantage of the growth and high demand in coliving.
2. What happens to my income in the event of an economic crisis?
In an economic crisis, with a Fixed Lease Contract, your income could be affected if the tenant renegotiates the contract or abandons it, although this model generally offers more stability. In contrast, with a Management Contract, income may decrease, but Aticco Living manages the situation to minimize negative impacts on your rent, leveraging our experience and market knowledge.
3. How is the maintenance of my property ensured?
Regardless of the contract model you choose, Aticco Living takes care of all preventive and reactive maintenance of the property. We have a team of architects and maintenance staff who ensure that your property remains in the best condition, avoiding unpleasant surprises that could affect its long-term value.
4. How can I ensure I’m maximizing the coliving market?
The coliving market is growing, and choosing the Management Contract allows you to optimize your returns by benefiting from the increasing demand and Aticco Living’s expertise in managing this type of property. This model offers the flexibility and profitability needed to maximize your investment in a dynamic and competitive environment.
