Are You Thinking About Starting an Airbnb in Italy?
Well, my friend – I think that’s an amazing idea, and here’s how to pick the perfect property.
It’s no secret that Italy is a beautiful country. Just ask the 65 million tourists that consume everything Italy has to offer every year. Renowned for its rich history, delicious food, and heart-stopping scenery every arrival needs a pillow to lay their head and dream of their next day’s adventure.
Whether they are looking for an overnight stop in a B&B or a longer stay in a private villa or apartment, travelers are looking for a combination of great location, price, amenities, and local flair when they are choosing where to stay on their vacation.
Although there are many vacation rentals in Italy, it is still possible to have a fully booked calendar each year if you run your business like a pro! But before you dive into the fun part, let’s talk about how to buy a property that will give you the best bang for your buck.
Location! Location! Location!
You’ve heard it before, and it is true. You can make any property look beautiful inside and out with the right design team and plan, but you can’t change the location. So, analyzing the best location for your purchase should be your #1 priority.
The highest-yielding properties are in the big cities, Rome, Florence, Milan, and Venice, where you can guarantee a constant flow of renters all year. The downside is that your initial investment will also be high, as property prices are premium.
If your budget doesn’t stretch the city, some smaller, highly visited villages in all regions will give you the same yield, with less investment. In other words, a great location doesn’t have to be a big city, it can also be a smaller town with high turnover.
Think of little places like Cortona (Under the Tuscan Sun fame), Taormina (White Lotus fame), San Gimignano, Lake Trasemeno, Assisi, etc. There are endless small to mid-sized towns that would make excellent tourist rental locations and that don’t cost a fortune to get into the market.
Decide on the Reason for Your Purchase
Pick your location based on your goals. It is not easy to flip a property in Italy, and a high capital gains tax will wipe out any profit you may have. Therefore, it is better to consider your mid to long-term investment goals when buying property in Italy.
If you want to make the most money, have a constant flow of clients in all seasons, be more resistant to market volatility, and have a budget to support it, choose Rome, Florence, Milan, or Venice. If you have the budget and want to make the most of your money during the high season, choose a villa in Tuscany or on Lake Como or Lake Maggiore. Property in these locations can bring you tens of thousands a month.
If on the other hand, your income goal is to cover your costs for a few family vacations throughout the year, and your personal preference is more important than high earnings, choose a property that fits you the best.
Either way, your location will impact your earnings, seasonality, competition, and resale, so although you may find the most beautifully decorated property, with meticulous fittings, if it is in a bad location – walk away.
Check Local Regulations
The biggest risk to buying a tourist rental property is the uncertainty of future rules and regulations imposed by the local governments in their efforts to reduce over-tourism and unaffordability for residents.
We have seen this happen in cities like Barcelona or Paris, where investors were buying up all the properties for tourist rentals, pushing the locals out. We are starting to see this happen in Italy too, with cities like Venice and Florence where residential rents have increased significantly, making the local government eager to impose restrictions.
Before buying a property, make sure to learn if there are any current restrictions as to how many days you can rent each year and how many properties you can own. Some cities may have restrictions that will impact your overall financial projections.
Although you could be caught in a change of regulation in the future, you can usually predict the likelihood based on the number of current rentals available for both tourists and residents and the local mood toward over-tourism. It is also more likely restrictions will appear in the uber-popular locations that have a smaller infrastructure.
Stick to Your Budget
As in any investment, you should evaluate the projected return. When you are buying income property, you should calculate your rental rates based on market research and estimate your projected occupancy rate.
Be realistic.
If you are new, without a lot of 5-star reviews, it will take some time to build your business. You may want to reduce your rates for a few months to lure new guests and great reviews, which will impact your income.
Factor your costs and expenses for property management, taxes, mortgage, cleaning, repairs, and marketing. Then decide how many days (based on your rates) you need to rent the property to break even. Give yourself some wiggle room here as there are always some extra expenses that crop up!
With this data in hand, you should be able to budget what you are willing to spend on a property that will return a profit. Once you have this number – stick to it. There is always time to increase occupancy, and profit once you are established. But if you overextend at the start, you will be chasing the money the entire time.
Estimate the Closing Time
Buying property in Italy takes time, much more than you think. Often, a sale can take three to six months to close. Factor this into your buying plan. If you are buying a property that rents in-season only, be sure to time your purchase deed to close in time to catch the season.
Factor in the time you will need to get the property ready, post your advertisements on the rental platforms (VRBO, Booking.com, Airbnb, etc..), and register the activity with the local authorities, all of which can take a few months.
If your property deed closes in November, and you must wait until the following summer to bring in any rental income, this can seriously hurt your operating budget. Alternatively, if your property deed closes in June, you will not open in time for the high season.
Although there may be elements you cannot control, do not forget that timing is key in the tourist rental market.
Starting a tourist rental business in Italy can be a great way to earn money to cover your vacation home or make a solid living as a professional tourist rental business.
I have owned and managed many properties over the years and can say with experience that it is a lot of work, but also, very rewarding. I have met some incredible people that are on vacations of a lifetime and am always honored to be part of their memories.
If you love property, people, travel, business, and of course Italy, then starting a tourist rental business will be a perfect fit! If you need help starting your journey to owning a successful tourist rental property in Italy, give us a shout! Our team of licensed professionals is at your disposal.
Smart Move Italy Property is the sister company to Smart Move Italy and is a full-service foreign buyers agency serving all of Italy. We know where you're coming from because we have been there too. Buying in Italy is unlike anything you have done. The process, negotiations, procedures, and risks are all vastly different from your home country. We understand your worry, get your frustration, and are here to make the process safe, easy, and fun.