Preview of Chapter Seven
Rental Income and Property Management in Panama
How To Successfully Rent Your Panama Property
Renting a property in Panama can be a big headache for a few different reasons.
First of all, there is a lack of qualified property management companies out there, especially if your property is located outside Panama City.
Second, there is no centralized system for listing your property for rent. This means you may have to use multiple advertising services and/or rental agents, to try to get the word out about your property for rent.
Which of these methods will actually work and how to go about advertising your property for rent is something we cover in more detail in the full version of Panama 101.
Two Types of Rentals
Before you consider advertising your property for rent, you need to consider whether or not you want to rent out your property on a long-term basis (usually six months or longer) or for short-term periods (less than six months, and in some cases weekly or even nightly).
If you decide to rent your property for a longer term, you may not need to provide appliances or furniture for the tenant. If you want to rent your property monthly, weekly, or nightly, prospective guests will expect a fully furnished property complete with appliances, kitchen utensils, bed sheets and anything else they might need during their stay.
Obviously, which style of rental you offer may depend on whether or not you yourself plan to use the property in the near future and if you have already purchased furniture, kitchen appliances, etc. In Panama 101, we provide a list of contents your property should contain if you plan to rent it on a monthly, weekly, or nightly basis.
Above: Nicely decorated properties that show well on the Internet are bound to fetch a higher rental rate.
Panamanian Government Regulations
If you plan to rent your property on a long-term basis, the Panamanian government has strict rules as to how the deposit money is supposed to be handled and a property owner can be in trouble if these rules are not honored.
Another question we cover in the Panama 101 is how the Panamanian government taxes rental income
and how to ensure you are in compliance with the tax law.
Rental Demand and Advertising
Another challenge related to renting your property is knowing what kind of demand exists for property rentals in Panama and how much you should ask for rent. Since there is very little market data to go by, smart property owners will spend some time researching the market to see what other property owners are offering and talking to property managers in the area where their property is situated.
There are a handful of different property rental web sites that may be useful as research tools and potentially as advertising tools, all of which are listed in the Panama 101 E-Book. Posting notices in popular hotels, cafes, restaurants and other local establishments can also be effective.
Above: A nice selection of art and enhance the perceived value of a rental property and make it more attractive.
Use of Photos
One element we find constantly overlooked by people interested in renting their properties is the inadequate use of photos. Whether you are advertising on the Internet or posting printed fliers, a photo is literally worth a thousand words.
Photos are a critical element to attracting a tenant, and yet, all too often we see advertisements with only one small photo, or a few photos that don’t really show the property
A good rule of thumb is to use LOTS of photos and make those photos LARGE. People want to SEE exactly what they are getting into… many prospective tenants fear that a place will actually turn out to be a dump so providing lots of photos helps to put their mind at ease.
As obvious as this sounds, time and again we see very poor use of photos on the Internet and in brochures. In today’s age of digital cameras and laser printers, the use of large, clear, high resolution photos is the best way for delivering almost any “for rent” advertising message.
Above: Choice of furniture can make a big difference toward attracting a higher-end clientele.
Selecting A Property Manager
Professional management vs. unprofessional. Good property managers in Panama are few and far between and the good ones charge a reasonably high fee. In our opinion a good property manager is worth every penny… just think of the list of things that can go wrong while your property is rented while you are most likely out of the country:
- your tenants walk off with some of the items in your property
- your tenants arrive, but the person who is supposed to have the keys is unavailable
- a toilet overflows, the power goes out, the computer crashes, there’s a mouse in the house… you
get the idea.
- your tenants damage the property, but a security deposit was never collected so you are liable for the expense
The difference between a good property manager and a bad one is, a good manager will simply deposit the rent money into your account, deduct the expenses, and take care of any problems before you hear about them (no news is good news).
A bad property manager needs your help to solve problems that should have been avoided in the first place. Consult Panama 101 for a list of good property managers.
We hope you’ve enjoyed this preview of Chapter 7 – Rental Income and Property Management. Chapter 7 is designed to provide a list of do’s and don’ts when preparing your property for rent. We also identify a few reliable property managers and give you strategies about how to position your property in the rental market to maximize your occupancy levels and increase your return on investment.