Car rental business: how to organize and where to start. Business plan: tool rental - cost calculation, list of common tools

Dmitry Fokin - about what can be rented out, and how the era of consumer activity is being replaced by the era of rental

IT tools used by Dmitry Fokin

• Slack
• Redmine
• Skype

Entrepreneur from Omsk Dmitry Fokin believes that the current economic crisis will radically change the consumer behavior of Russians: in his opinion, more and more people will rent necessary things, rather than buy them and stand in queues. Dmitry and his partners launched Rentalist - a website for renting out and renting almost any thing. People can choose and rent various good options ranging from toys to a car. The main advantage for the client is the cost of the service, and for the organization - constant income and goods in property. Dmitry Fokin told the Biz360 portal about what kind of profit you can get, how to open a business, find premises and equipment.

Dmitry Fokin, entrepreneur, co-owner of an online rental service Rentalist.me. Born in 1979 in Omsk. Graduated from the Moscow State Construction University and the Institute of Real Estate and Construction Business. Gained experience in various fields - consulting, economics, trade, law, e-commerce, etc. Since 2015 - one of the founders and head of the Rentalist.me rental service.

Dmitry Fokin

Russians are cautious about rentals

This is not our first business. After completing the next project, we began to think about where to move next. By that time, the dollar began to jump.

My partner and I simultaneously came up with the idea of ​​creating a rental service, combining a large number of offers on one site. At that time, we believed that everyone desperately needed a service where they could rent something, and as soon as people found out that there was such a place, all our servers would immediately go down.

In fact, people need rentals, but many don’t think about it, they simply don’t allow the idea that they can just call and rent from other people for half a day, for example, a saw or a bicycle for the weekend. There is a stereotype that if you need something, you can find it from friends, or go buy it, or borrow it from work

After the New Year holidays in 2015, we composed everything, and in April we started. Quite quickly we realized that people themselves were not yet ready to make money on the things that were lying on their balconies. There are professional services that provide rental items, some owners of these businesses willingly cooperate with us, but there are also those who say - why, we have our own website, why duplicate somewhere else.

Thickness gauge for rent

If our project is compared with something, then it can be compared with Avito - of course, in terms of structure, and not in terms of scale yet. On Avito, an auto store can display its own cars, and an ordinary person sells Zhiguli. It’s the same here: there is an opportunity for rental businesses to exhibit their range, and anyone can rent out their skates through us, which they’ve had on their balcony for 20 years. Accordingly, you can rent anything - from mixers and board games to construction formwork, cranes, and heavy equipment.

The assortment is quite wide, we included almost the entire product range, made catalogs - you can find everything from rakes to helicopters. For example, renting a hookah per day costs 300 rubles. Or here’s a thickness gauge to see if the car is painted or not, 300 rubles a day. Soap bubble generator for events - 400 rubles per day. Go-pro camera - 500 rubles. From the original - a set of hex keys, 5 rubles per day. Books, board games, roller skates, photographic equipment, lenses, tripods, carnival costumes, wedding accessories, historical uniforms, life-size puppets, wigs, evening dresses, cocktail dresses, etc.

At the start, we devoted a lot of time to creating a digestible catalog so that a person could find what he needed. We have divided all this into 11 large sections, and they also have subsections that include more categories.

Marketing and promotion

As for promotion, we probably haven’t invented anything here, SEO promotion, content marketing, etc. The project is federal, we implemented geolocation, that is, if a person is from Yekaterinburg, for example, then he sees proposals for Yekaterinburg. While the programmers were finalizing the service, we were collecting a database of rental companies that do this as a business. We collected about 2 thousand companies across the country and sent out a newsletter. The result was this: website traffic increased, but the amount of content at the very beginning did not meet our expectations. That is, rental services decided that they probably don’t really need it now.

We went to the second round of promotion, sent out press releases to local and federal media. An online news platform responded and we recorded an interview. Then the local TV channel, then the Metro newspaper. Attendance has increased twenty times.

The bulk of visitors are people who want to take something, because demand is now leaning from purchases to the consumption of rental items. But ordinary people don’t want to rent them out yet.

When we launched the project, we studied how things were with rentals, for example, in Soviet times. There was a system of rental shops, many people used rental TVs for several years, this was due to a total shortage. In the 90s there was nothing at all, in the 2000s there was a surge in consumer activity, people simply forgot about rentals. Now, due to the economic situation, people will remember him little by little.

When we launched, we were aware that this culture needed to be developed - both by people who are consumers of rentals and by those people who provide things for rental.

This is a forgotten story, but if you remember it, people will start using it. A couple of months ago I took part in a comparative interview, where the guys studied how things were going with box office in Russia and America. They said that in America they rent out a lot of things, and it is very popular. When they receive their diplomas, those famous gowns with tasseled caps, for example, are also rented. There is a whole industry there, there are things that are needed once in a lifetime and there is no point in buying them. This has been an idea for more than one year to somehow develop this topic.

“We need to reach high speeds”

Now there are more than 1.5 thousand products on the site. The main cities are Omsk, Moscow, Krasnodar, Irkutsk, Krasnoyarsk, St. Petersburg. At the same time, more people from neighboring countries are joining us - Ukraine, Belarus, Kazakhstan.

So far there is only an investment in the service. This is a kind of investment in the future, it will work someday. When some quantitative limit is passed, it will begin to bring in money.

The system of interaction between the tenant and the landlord works through our service; settlements are also carried out through us, so that people do not exchange money. Reserving deposits on the website, signing lease agreements, providing some paid services, advertising. The commission percentage is 5-10%, the question is in turnover. Now the question is not about self-sufficiency, but about reaching some high speed. We set a deadline of a year or two. Investments in the site amounted to around 100 thousand rubles.

We are currently developing a system for automatically adding products to the service to expand the range. I see that there are many requests for products in cities where we are not present. That is, people go to search engines, see us, go further and do not find what they were looking for. It turns out that there is demand, but we cannot satisfy it yet. As soon as we satisfy it, the client flow will grow and recognition will expand. When people start renting, they will be able to rent.

Rentalist project team.

Nowadays it is almost impossible to find a person who has never thought about starting his own business. After all, working for yourself promises a high income if everything is organized correctly.

The main problem is that you can start any business only when you have a good idea in your mind and a competent plan for its implementation.

One of the most popular ideas is to organize your own car rental. Many people try to open a rental business, because it seems so simple: lend a car for a while and eventually get money for it. And indeed, this type of business activity is one of the most accessible, since most people who need a car prefer to rent a car to use it as a taxi, or are looking for leasing.

But, like any other type of entrepreneurship, it has its own characteristics. Before you decide to transfer your car to someone else, you need to take into account several very important nuances. Initially, it is necessary to correctly draw up an agreement and indicate the main terms of the transaction. This type of earnings carries certain risks and in the end you can lose a lot of money.

To prevent this from happening, you need a properly drawn up business plan, in which you will include all planned expenses and income, and also take into account possible errors. But how do you know exactly what expenses you will have to incur and what the profit will be? What do you need to remember so as not to create unnecessary problems for yourself? Let's try to figure this out.

Initial Investment

We previously wrote that many consider this type of business to be one of the most profitable. Initially, only a small initial investment is expected. This is partly true. But only partly.

There are several important “buts”. If a person is going to rent out a car that has been traded for decades, he should be prepared for unpleasant consequences. When driving such a car, especially without technical training, a potential renter is practically guaranteed a breakdown on the road. This in turn may lead to demands for a refund and even compensation.

To avoid getting into such a situation, you will need to carry out a complete diagnosis and necessary repairs of the machine, especially an old one. Identified faults in a domestic car can cost an average of 20,000 rubles. Correcting and bringing an old foreign car into proper technical condition can cost up to 50,000 rubles or more. The best option would be if you, having an understanding of the vehicles you are renting out, can replace and repair everything you need yourself. This will save you a lot of money.

You will also have to spend money on acquiring individual entrepreneur status or creating an organization. In theory, it is also possible to engage in illegal business activities, but it is better not to take risks. The legislation establishes great responsibility for this.

Annual investment

And, of course, you should not create illusions that to organize a business you will need to spend money only on one-time technical training. Rented cars will inevitably require maintenance at least every year. Or maybe more often. In this case - depending on your luck.

There are necessary costs, without which a rental car will quickly turn into a pile of useless metal. There is hardly a client who wants to pay his money for a vehicle that rattles and constantly breaks down.

Also, over time, it is worth thinking about expanding your business and saving the necessary amount for major repairs and purchasing another car. And then - again and again. Business should not “tread water”; it should strive for constant development and improvement.

Some funds will have to be spent on advertising. For example, advertisements in newspapers and magazines, creation and maintenance of a website on the Internet, and in the long term, advertising on a local TV channel, otherwise clients will not be able to find out about the existing service.

In addition, you will have to renew your car insurance every year by purchasing an unlimited MTPL policy. Without it, you simply cannot move by car. In some cases, you will have to spend some money annually to organize convenient parking.

Monthly investment

When organizing a rental, you will also have to bear operating expenses. The need for them will definitely arise every month. A certain amount will be needed for both routine repairs and maintenance of your car. Don’t forget about such “little things” as changing oil and other technical fluids.

The appearance of the car should also be as presentable as possible. After each use, it must be completely washed, or better yet, the interior must be dry cleaned.

Someday, a successful tenant will save up for his own parking lot, but for some time the car will be forced to spend the night in “other people’s” parking lots. And of course you will have to pay for security.

If things “go uphill”, then it will be necessary to use the services of accounting organizations. With their help, you can correctly calculate all taxes and fees from income-generating activities.

To find potential tenants, you may have to spend money to access various databases.

Organizing document flow will require costs for various office supplies and consumables: printer ink, paper, staplers, stamps and much, much more.

Income

So, how much can the income from a well-organized car rental business be? This depends on several factors.

1. Class of the car being rented. For example, if you rent out a domestic car, its rental will cost no more than 1,000 rubles per day. A foreign car will cost the renter more: from 1200-1500 rubles for a Hyandai Solaris class car and up to 2,000 on average for a foreign car like FordFocus.
2. Number of cars for rent. Several middle-class cars will allow you to earn at least 30-90 thousand rubles per month, and maybe more. Over the course of a year, income from renting several cars can reach up to 1-2 million rubles. The income for renting one car will be much more modest - approximately 300-400 thousand rubles per year.
3. The type of area in which the landlord operates. In a small city there will not be strong demand. In this case, maintaining a large vehicle fleet is completely unprofitable. 1-2 cars for rent will bring about 200-300 thousand rubles of income per year. And, on the contrary, in the center of the metropolis it will be necessary to try to increase the number of vehicles. High demand can provide you with a profit of up to 2 million rubles per year.
4. Rental specifics. A rental car can be equipped with additional elements of decoration and luxury for special occasions such as weddings and anniversaries. Or cars are available for rent for traveling and conquering off-road terrain. Their price may be even higher than executive models. In this connection, the income will be much greater.

Profit

Income level is a significant indicator. The only thing more important than that is profit. What is the difference between these two concepts? Income represents all the financial resources that a company or citizen receives from business activities. And profit is the amount that remains if taxes, fees, expenses and other costs arising in the work are subtracted from income.

What do you need to subtract from your income to see your profit? First of all, this is VAT - 18% and personal income tax, which is 13%. A legal entity will pay tax on its income in the amount of 20%.

In addition to taxes, you need to take into account the costs of servicing and maintaining cars, paying for parking, buying insurance, etc. Only if you subtract all this, you can find out how much profit the lessor will ultimately receive.

Many aspiring entrepreneurs feel intimidated by having to incur so many expenses. As a result, they abandon the idea of ​​their business. This is extremely wrong, because there are many ways to save money and ultimately get a decent profit. For example, you can switch to a simplified taxation system, according to which you can pay only 6% of profits and not worry about anything else.

Also, in this case, there is no need to purchase a cash register and special equipment.

As a last resort, you can save on parking and simply park your cars near your home or office. It is not so safe and somewhat risky, but such a risk is often well worth it.

Common mistakes when renting a car

So, according to statistics, the following mistakes are most often made when organizing a car rental.

1. Purchasing a new or used car for rent at an unreasonably high price. There is absolutely no point in buying a new car. It will simply take a very long time to pay for itself. It will be ridden by many different people who are deeply indifferent to its condition. They obviously won’t spare the car. Therefore, there is absolutely no point in overpaying. Instead, it is better to buy several used cars without additional options.
2. The appearance and aesthetics of a used car do not matter. Don't waste time trying to choose a car without a single scratch and with a perfect interior. The main thing is that the body is not rusty, especially the sills and bottom, and the engine and main systems must work smoothly. Thus, the main priority becomes the optimal price-quality ratio. The less a car costs, the better for business.
3. Search for tenants. It must be remembered that the main goal is to make a profit. The identity of the tenant should be of little interest to you, the main thing is that he pays the money on time and provides a passport with a mark of registration of his place of residence.

• Market prospects
• Description of services
• Production plan
• Selecting OKVED code
• Business risks
• Financial plan
• • • • Similar business ideas:

Business plan for opening a company providing car rental services in a tourist city.

How much money do you need to open a car rental company?

According to business plan calculations, it will be necessary to invest about 5,900,000 rubles to open a car rental:

• Arrangement of office premises - 200,000 rubles.
• Purchase of cars - RUB 4,500,000.
• Insurance, purchase of additional equipment - 650,000 rubles.
• Advertising budget (website creation, outdoor advertising, etc.) - 150,000 rubles.
• Business registration and other organizational expenses - RUB 100,000.
• Reserve fund - 300,000 rubles.

The capital for opening a business will be formed from the personal funds of the organization’s founders (40%) and borrowed funds (bank loan). The interest rate on the loan will be 15% per annum, and monthly payments will be 45,500 rubles.

Step-by-step plan for starting a business

• Search for sources of project financing
• Selection of the location of the organization
• Registering a business, creating a legal framework for the company
• Conclusion of a rental agreement for premises and parking
• Hiring
• Purchase of cars, insurance and registration
• Starting a business
• Active advertising of services, website creation

Market prospects

Car rental as a business in our country is still in its development stage. Unlike Europe, where cars are rented mainly by tourists, in Russia they rent cars, as a rule, for weddings and all kinds of celebrations. At the same time, about 2/3 of the entire rental market is in St. Petersburg and Moscow. According to some data, no more than 40 thousand cars are rented in Russia, while in Europe there are more than 2 million units.

Car rental cannot develop without the development of domestic tourism in the country. Therefore, the most promising regions for opening such a business at the moment are the Krasnodar region (Black Sea coast), the Republic of Crimea, the Irkutsk region (Lake Baikal), the Leningrad region, the Moscow region, and the Altai Republic.

Description of services

To provide rental services, it is planned to purchase a fleet of 10 cars, including such models as: Lada Granta, Chevrolet Lanos, Daewoo Nexia, Renault Logan, Chevrolet Lanos (automatic), Lifan Solano, LADA Largus, Nissan Almera (automatic), Peugeot 408, Chevrolet Cruze. All cars will be insured under CASCO.

The rental cost will be influenced by such factors as the class of the car, technical characteristics and type of transmission. The price of the organization will be as follows:

• Chevrolet Cruze — 2800 RUR/day.
• Peugeot 408 — 2800 RUR/day.
• Nissan Almera (automatic transmission) - 2800 rub./day.
• LADA Largus — 2200 rub./day.
• Lifan Solano — 1700 rub./day.
• Chevrolet Lanos — 1,700 rubles/day.
• Renault Logan — 1500 rub./day.
• Daewoo Nexia — 1300 rub./day.
• Chevrolet Lanos — 1300 RUR/day.
• Lada Granta -1200 RUR/day.

The minimum age of the renter must be 24 years, and the driving experience must be at least 4 years. Such a sharp age limit is due to the fact that providing cars to people under 24 years of age and with little driving experience is much more dangerous for the condition of rental cars (young people like to drive fast, break traffic rules, etc.).

To rent a car, the driver will be required to provide the following documents: passport, driver’s license, Taxpayer Identification Number, pension insurance certificate, health insurance card. The minimum rental period will be 24 hours. The total mileage rate per day is 600 km (everything above is paid additionally).

According to preliminary calculations, one rental car will operate for an average of 25 days per month in the high season (May - October), and 16 days per month in the low season (November - April). With an average rental cost of 2000 rubles/day. monthly revenue in the high season will be 500,000 rubles (with 10 cars), in the low season - 320,000 rubles. Thus, the organization’s annual revenue, according to preliminary calculations, will be 4,920,000 rubles.

Download a business plan for car rental from our partners, with a quality guarantee.

Production plan

To accommodate rentals, the business plan provides for the rental of office space with an area of ​​40 square meters. m. and parking area of ​​550 sq. m. The rent will be 25,000 rubles. per month. For office equipment (purchase of furniture, office equipment, minor repairs, etc.) you will need about 200 thousand rubles.

About 4,500,000 rubles will be spent on purchasing cars. Another 650,000 rubles will be spent on vehicle insurance and the purchase of additional equipment. equipment and registration with the traffic police. The total investment at this stage will be 5,150,000 rubles. The purchased cars will be sold after approximately three years of operation, since rental wear and tear occurs very quickly. Selling a car at a later date will affect the loss of value of the vehicle.

Which taxation system to choose for an enterprise

The organizational form of the enterprise will be a limited liability company. The status of a legal entity is most suitable for such a business, as it reduces the risk of loss of property, increases trust in the organization and allows you to work more successfully with large corporate clients. As a taxation system, it is planned to use the simplified taxation system - a simplified taxation system, 15% of the organization's profit.

For the successful functioning of the organization, it will be necessary to create a staff of first-class employees. First of all, the organization needs a mechanic (2 people) to inspect the car before renting it out; a lawyer who resolves legal issues and draws up rental agreements; an operator (2 people) who accepts payment and advises on rental issues and a manager who coordinates the work of the organization. The total staff will be 6 people, with a monthly payroll of 90,000 rubles. It is planned to outsource accountant services.

Selecting OKVED code

When preparing documents for registering a company with the Federal Tax Service, it is necessary to indicate codes for future activities, according to the all-Russian classifier. In this case, it is:

• OKVED 71.10 - rental of passenger cars;
• OKVED 71.21.1 - rental of cargo vehicles.

Be sure to remember/write down the information provided.

Preparation of documents for car rental business

Resolving issues related to the preparation of documents that are necessary for the operation of a company specializing in vehicle rental must begin with the choice of an organizational and legal form. If you are planning to organize the work of a small company, it is quite enough to go through the procedure of registering an individual entrepreneur, but for a more serious business (with a fleet of 10 cars or more), it is more rational to draw up LLC documents.

In addition, in order to rent out a car, the following documents are required:

• Registration certificate and insurance policies (both mandatory CASCO and voluntary MTPL).
• Vehicle rental agreement with acceptance certificate.
• A document confirming the technical serviceability of the vehicle.

Practice shows that a vehicle rental agreement should be drawn up by a lawyer specializing in resolving such issues. Even the most experienced driver will not be able to draw up a document in such a way that it takes into account any force majeure that may happen on our roads.

Business risks

According to our assumptions, the main risks when running this business include:

• Inadequate legislative framework in this industry
• Long term return on investment
• High capitalization of investments
• Increasing competition in the market

Financial plan

Let's move on to calculating the main indicators of business economic efficiency. The fixed monthly costs of a car rental organization will include:

• Salary - 90,000 rubles.
• Insurance contributions to the Pension Fund and the Social Insurance Fund - 30,000 rubles.
• Loan payments - 45,500 rubles.
• Rent of premises and parking - 25,000 rubles.
• Accountant services - 7,000 rubles.
• Car repairs and maintenance (washing, dry cleaning, etc.) - RUB 50,000.
• Advertising - 25,000 rubles.
• Other expenses - 20,000 rubles.

Total - 292,500 rubles.

Annual expenses according to the plan will amount to 3,510,000 rubles.

How much can you earn by providing car rental services?

Thus, the organization’s net profit per month (annual average) will be 99,875 rubles. The company's profitability is 34%. Taking into account the period for promoting the company, the return on investment in the business will occur no earlier than after 60 - 65 months of work (5 years).

The rental business has been and remains popular for many years, since many people do not have the opportunity to purchase housing, and companies seek to reduce the level of one-time investments in development activities. The range of objects that can be provided for rent is constantly growing: at the moment you can even rent out such things as roller skates, skis, etc. - everything that is not in constant demand, but is an object of seasonal use.

However, the most common option is still renting a property. In order to receive a certain income from the provision of a particular premises for rent, it is necessary to take into account a number of nuances that will be discussed in this article.

It is necessary to understand that real estate is usually classified into 3 groups - land, housing and non-residential premises. The most common types of services in this market are the provision of rental housing and non-residential premises.

Among non-residential properties, commercial real estate is usually rented. At the same time, all reputable analytical agencies identify the following types of it:

• office rooms;
• trading;
• warehouse;
• industrial.

In addition, some organizations rent a separate type of premises - the category “for special purposes”. Here buildings are allocated for kindergartens, schools, hospitals, churches, etc.

In addition to real estate, you can rent out land, gazebos, equipment, cars, special equipment, inventory and much more. However, this is a rarer and more complex form of business.

What's the best deal?

If we talk about residential real estate, the average cost of a one-room apartment 10-15 minutes from the metro in a residential area in Moscow will cost 5-6.5 million rubles. At the same time, the average rental rate for such rooms is about 25-30 thousand rubles. As a result, when calculating, it can be obtained that the minimum payback period for a one-room apartment will be about 15 years.

Accordingly, this option cannot be called very profitable from an investment point of view: the only case in which this can really pay off is when the housing is inherited.

If we talk about office premises, they are somewhat more expensive than residential ones, since their location should be in more accessible places, and their area is larger. In Moscow, a small office space will cost 6.5-7.5 million rubles, provided that the area is about 60-70 square meters. In this case, the rental rate will be calculated per 1 square meter.

According to the Knight Frank agency, at the end of 2015 the rental rate for class A offices was about 25 thousand rubles, and for class B office premises - about 15 thousand rubles per year. Accordingly, the maximum payback period will be about 8 years.

Retail premises are even more profitable to rent out than office premises - their payback period is 5-6 years. But there is an important limitation: for such real estate, location is one of the key factors. The premises should be located in a central area, in an area with high traffic levels. Finally, it must be well executed.

In general, commercial real estate is inferior to residential real estate in only one parameter: the level of risk, since it depends on the economic situation in the country and a particular city.

To learn where to start and how to develop such activities, watch the following video:

How to organize such a business from scratch?

1. First of all, you need to find a suitable premises for rent. In the case of inheriting living space, the procedure will begin with the preparation of documents confirming that the entrepreneur is the owner of the property.
2. In a situation of searching for a ready-made premises, it is best to turn to the services of professional agencies who will help assess the real cost of housing or commercial real estate: an inexperienced businessman can easily miscalculate.
3. Next, you need to complete the necessary documentation for the property. If this is commercial real estate and you plan to rent it out to special organizations (for example, those working in the catering industry), you must take care of obtaining additional permits and conclusions from certain services.
4. After completing the initial documentation, it is necessary to carry out redevelopment and repairs: in the case of residential real estate, it is important to purchase a certain set of furniture and household appliances, since apartments in which you can live immediately after moving in can be offered at a higher cost. In the case of commercial real estate, it is important to focus on increasing the free space and the possibility of subsequent redevelopment to suit the client’s needs.

In Russian practice, many people rent out residential real estate without concluding a contract - this allows them to get rid of the personal income tax of 13% and reduce the payback period. However, this is associated with certain risks - in particular, those associated with the unreliability of clients. Therefore, both in the case of non-residential and residential real estate, it is necessary to formalize the relationship with the tenant.

Where to look for clients?

Finding clients through standard advertising options (placing ads in public places or print media) is not effective within the rental business. Advertising can be carried out through social networks (this is especially true for the situation of renting out residential real estate) - here the “word of mouth” effect will work.

In addition, posting on thematic sites and forums is suitable. For retail premises, especially those located in shopping centers, it is possible to post a “for rent” sign with the owner’s phone number. This will expand the circle of potential customers to all visitors to the shopping center.

Finally, there are 2 more fairly effective ways to find clients - maintaining a thematic website or blog with unobtrusive advertising of services as a landlord, as well as distributing brochures and business cards.

Necessary costs

If an entrepreneur is going to engage in such a business, he must understand that among the main cost items it is necessary to include redevelopment costs: in this case, clients are ready to enter into rental agreements at much higher rates (the difference can be up to one and a half times). This happens because after redevelopment, the percentage of usable area most often increases, in addition, the room can be changed to suit your own needs.

Among the costs it is also necessary to highlight:

• Expenses for construction or acquisition of premises.
• The cost of services of a specialist who can estimate the market price of real estate.
• Expenses for maintenance and security of the premises.
• Costs for electricity, water supply, etc.

Underwater rocks

One of the pitfalls is determining the optimal investment of money. Often, inexperienced entrepreneurs incorrectly assess the value of a particular premises, thereby investing in illiquid objects, losing a large amount of money.

In addition, it is important to pay attention to the legality of the business, changes in legislation and the process of paperwork (primarily this applies to commercial real estate).

Please note that tax legislation in the rental business is constantly changing.

When calculating costs and the level of payback, it is necessary to determine several development options - optimistic, most realistic and pessimistic in order to determine the approximate payback period of the object, as well as the fact of how to diversify risks. It is imperative to have other sources of income in order to insure yourself against a situation of lack of money.

Pros and cons of this area

This type of business, like others, has a number of advantages and disadvantages that arise from its characteristics. Among the disadvantages, the main one can be highlighted - the search for a tenant can take many months (primarily this applies to industrial facilities and retail real estate in impassable places). As a result, even a high rental price will not be able to compensate for the financial costs that the lessor will have to bear during the entire period of downtime.

Also among the disadvantages are:

• a fairly long payback period;
• not very high level of profitability;
• high level of initial costs.

In this situation, the only rational option is to purchase liquid property (one for which there is always a certain level of demand). To do this, it is important to have a good understanding of this area or seek the services of a specialist.

Among the advantages of business are:

• long-term contracts for a period of one year or more;
• stable level of profit;
• the income will be received by the lessor constantly;
• passive nature of making a profit (the landlord does not need to expend any effort after signing an agreement with the tenant);
• the possibility of organizing a business without registering as a legal entity.

Thus, the rental business is quite an attractive area for earning money. However, it is best to combine it with other sources of income in order to insure yourself against possible risks.