Czech Property Management Company Promised You Rental Income? Here’s How to Avoid the Trap

If you search on Google or Facebook for the term “property management in the Czech Republic“, you’ll likely come across countless ads from property management companies that will flag you as a potential client. Soon enough, you’ll be bombarded with ads promising 100% guaranteed rental income.

And what if there are no tenants? Don’t worry – the property management company promises to pay the rent so the property owner can rest easy. Sounds like every landlord’s dream, right? Well… not quite.

Anyone with experience in property management or a good business sense will quickly understand that these companies – who spend a lot of money on advertising to lure landlords – are not taking any real risks and certainly aren’t losing money.

So what’s the problem with a promise of guaranteed rental income for the property owner? Keep reading to discover the truth behind the pretty words.

These Companies Don’t Lose – They Actually Gain

Property management companies that offer guaranteed rental income actually enter the apartment as tenants. They sign a rental contract with the property owner allowing them to lease the property. So far, so good. But…

These companies charge a 15% commission for their management services (almost double the standard management fee of around 8%). The commission is supposedly for the “risk” they take if the apartment remains vacant.

Another issue is that these companies rent the property from the owner at a rate far below market value. This ensures they can then sublet the property at a profit.

This way, you as the property owner are essentially paying twice – once in the form of an inflated 15% management fee, and again in the form of reduced rental income (the remaining 85%) that’s far below what you could get renting at market rates.

So What Can You Do?

In fact, the rental market in Prague – or in any other major city – is vibrant, and demand usually exceeds supply. That means you really don’t need to worry about finding tenants for your property. As long as you price the rent correctly, your property will be rented relatively quickly.

Also, a rental contract with these companies usually doesn’t include any actual property management obligations. In fact, it’s just a lease agreement between the property owner and the “management company”, with the latter acting as a tenant that has special rights to sublet.

And the moral of the story? If someone offers you a deal where they supposedly take all the risk – read the fine print. There’s always a catch.

If you’re looking for a solid and attractive quote for property management (with no false promises or guaranteed rent schemes), contact us and receive exceptionally fair offers. We have over a decade of experience managing properties in Prague.