WHAT IS THE DIFFERENCE BETWEEN PRIVATE AREA AND CONSTRUCTED AREA?
A property´s constructed area includes the areas used by the outer walls and half of the walls that border on a neighboring property. Private area is the usable space available inside the property, excluding columns and walls.
WHAT MATTERS MOST WHEN RENTING A PROPERTY: THE PRIVATE AREA OR THE CONSTRUCTED AREA?
It makes no difference: Each area type has a different price depending on the type of property, and in the final analysis both methods yield similar results.
IS THERE ANY WAY I CAN MAKE SURE THAT I WILL RECEIVE MY RENTAL PAYMENTS AND THAT THE UTILITY BILLS AND PROPERTY MANAGEMENT FEES WILL BE PAID?
The landlord can take out an insurance policy to cover payment of these services in the event the tenant fails to comply with these contractual obligations.
WHO SHOULD PAY FOR THE RENTAL INSURANCE POLICY?
THE LANDLORD should pay for it. The landlord may gain access to preferential insurance rates through the collective policies offered by rental agencies.
HOW OFTEN SHOULD RENTAL FEES BE INCREASED?
Each individual negotiation has its own features. In some contracts, fees are increased monthly from outset, in others the increased each semester and the most common practice in our market is once a year. Housing rental rates are regulated by law and may only be increased once a year in a percentage equivalent to the increase in the consumer price index.
BY HOW MUCH SHOULD THE RENTAL FEES BE RAISED?
In the case of housing, the increase should be equal to the CPI. In the other types of property, the increased can be freely agreed upon between the parties. In some contracts the increases are set in multiples of the initial fee, but the most common practice is to increase the fee in the CPI plus a few additional percentage points, or at a fixed percentage rate or at a weighted average based on inflation.
WHAT DOES PROPERTY MANAGEMENT MEAN?
It is when the owner of a property grants a third party, usually a real estate firm, the power to rent a property and delegates in this third party all the operational tasks involved in the transaction as agredd upon in the contract.
HOW MUCH SHOULD I PAY IN COMMISSIONS TO A REAL ESTATE FIRM FOR HELPING ME FIND A TENANT?
Each real estate firm sets its own rates according to market conditions and following the guidelines established by the Bogotá Real Estate Board. However, the following are the most common practices in terms of commissions:
1. A single payment once the contract is subscribed for a pre-established amount proportional to the amount of the rental fee and the time period of the contract, plus the appropriate VAT.
2. Payment of a percentage for monthly management plus VAT throughout the duration of the rental contract.
WHAT SERVICES SHOULD PROPERTY MANAGEMENT INCLUDE?
a. Establishment of the rental fee for the property.
b. Advice the property owner on taking out an insurance policy covering rental fees, utility bill payments and management fees.
c. Assist the tenant in filling out the rental documents.
d. Evaluate the documentation presented by the tenats.
e. Legal advice.
f. Drawing up or review and signing of contracts.
g. Procedures with the public notary office.
h. Payment of taxes.
i. Assistance to the land lord and tenant on property upgrades, maintenance and repairs.
j. Handling of the collective rental insurance policy at a low cost for the investor.
k. Supervise payment of utility bills and management fees.
l. Send monthly reports to the property owner on its handling of the account.
m. Collection of rental fees, etc.
HOW DOES THE SLOWDOWN IN THE CONSTRUCTION MARKET AFFECT ME?
The real estate construction market includes different products with diverse features. In 2008, the outlook for each type depends on its location, size type, access routes, legislation, trends, etc. Despite the overall slowdown in the sector, many properties continue to display positive results and good demand. It is important to evaluate each property individually.
IS IT CURRENTLY RISKY TO INVEST IN REAL ESTATE?
It is not common to find negative returns in the real estate market, and in times of recession the real estate sector often becomes a safe haven for investors. In booming times, you may find that property values can double or even increase three-fold from the original price in a very short time period. It is not by chance that worldwide investment funds allocate all or part of their investment funds in the real estate sector.