First of all - wow! Thank you all for your concerns. I’ll try to explain the whole story as it looks like a hot topic not often discussed.
As @azreala said, I have bought a property from foreign owners who originally bought this apartment as a second home for their annual holiday in Buenos Aires several years ago. The rest of the year the property was rented out by the owners mainly on VRBO and recently also on AirBnB, and was managed locally by a PM firm. My feeling is that the previous owners just wanted for the property to ‘self-support itself’ - they weren’t much looking into profits. In fact, they haven’t made any upgrade throughout the years and were keeping rates quite low to have it constantly booked. The PM firm rarely booked the property themselves as the previous owners wanted to stay involved with the bookings.
I bought this property for two reasons:
- Business - It looked like an investment worth making as the property is in a great location very popular among expats and tourists, in a fast growing area. I run some numbers looking at similar properties nearby and I thought I could keep the STR business going and improve it, and with the extra income I could easily keep renting a LTR for myself and still save some. As the property was already managed by a PM, I would get some help to ‘enter’ the STR business and I figured I wouldn’t have to start from scratch, so that was a no-brainer.
- Personal - I live in the suburbs of Buenos Aires, 1+hr from this property (very central) and I have a standard long-term lease (2 years in Argentina). Worst case scenario, if the STRs don’t take off as I’d like to, I can move to the property once my lease is up (my husband and I would love to live there!).
Initially, I though to find a LTR for ourselves in the same area as my new property, so that I could manage it without the PM firm. HOWEVER Argentina has a terrible inflation right now, and as @azreala said, the BA market is saturated, as many foreigners bought property 10-15 years ago when the market sunk and property was extremely cheap for those earning USD abroad and are renting them out most of the year. Inflation also means that it is hard to make long-term plans - should I commit to a 2-year LTR and take on the business risks associated with STRs, with so much competition?
In other words - When my current lease will be up (in 6 months), how much would a LTR in the ‘cool’ area cost? And how much will I be making with STR at my property?
So the strategy right now is to try and boost my STR before my lease is up to see if I can make enough money from it that it would make sense to keep it is as business, instead of a home.
When I was buying the property I made clear that I wanted to keep renting it. The former owners were ready to cancel any booking or to wait until the last booking was through to close the sale. On the day of the sale, there was a compensation - net profits from future bookings were split 25% to the former owners and 75% to us (I was told these shares are ‘customary’ in this line of business). We are talking about two guests only, so not much. Specifically, there was no provision about booked guests and honoring reservations and terms of booking on the contract itself, but we signed a paper in front of the notary saying that as a form of compensation for future utility bills and considering the future bookings, we were receiving XXX USD from the sellers.
Also, I had requested that the calendar would remain open as people coming to Buenos Aires are planning their holiday months in advance, however the sellers didn’t do it. In a way, it simplified the booking handover, in another way it ‘damaged’ my business as last second bookings are quite rare in Buenos Aires, from what I get.
All in all, I wanted this to be more of a business transaction - I wanted an open calendar, historical data about guests - where are they mainly from? How long is the average stay? How much has the rate increased over time? What time to they typically arrived with their intercontinental flights? - but the physical distance and the real estate agency filtered these requests. I know only my side of the story and I know that the sellers were very concerned with the oversea transaction, and they didn’t see as a business, so I didn’t insisted too much because I really want to purchase this property for its unique features and location.
I saw the former listing on VRBO and there is no mention of check-in and check-out times. I wasn’t able to find the ad on AirBnB, so I can’t tell. In the case of the 7AMers, since they were regulars they booked directly with the owners or the PM firm, I don’t know exactly, so whatever the check-in and check-out times on VRBO/AirBnB they didn’t apply. These regulars are so trusted that they will pay cash on arrival, they were booked on their word.
The former arrangement with the PM firm was to leave one day between a guest and the next to allow for the cleaner to come in and do a 4-hour deep cleaning, so having 7AMers checking in or 5PMers checking out did not change much with the previous arrangement. As owners, we have no problem in going there on a Sunday afternoon and on short notice, but we realize we can’t pretend that the cleaner - who lives even farther than us - will drop whatever she’s doing and run to our place. (She also charges double on weekends.)
However, I want to give the STR a faster pace, as I have a business to run rather than just costs to cover. But I will have to face cultural differences in approaching work - people here aren’t much concerned with making more money ‘just because’ and most people have a scammy attitude. Once you find a serious and reliable partner (a PM who shows up on time, a cleaner who won’t steal from guests, whatever) you think it twice before getting rid of him/her.
Yesterday we were already traveling to the property to stay there as it was vacant when the Instant booking arrived. We were planning on cleaning the place, just for ourselves. Instead, we spent 5 hours in two to deep-clean it. Again, the deep cleaning of an owner is way deeper than the deep cleaning of a cleaning lady (on a fair note, such a deep-er cleaning like the one we did yesterday is not necessary after each guest, it was more of a big deep cleaning to make maybe once quarterly or less often).
All in all, I think it is not easy to manage a property when you live thousands of miles away. For as good as a PM and a cleaner can be, only an owner really owns the place and will strive to make it nice, clean, fancy…
As for those talking about insurance for STR and liability, there is no such thing in Argentina.
About being legally bound to oblige to any previous booking, I don’t think that the same rule applies for both STR and LTR. In case of a LTR you are discussing someone’s home, in case of a STR the occupancy is of a more transitory nature.
