RENTING IN PORTUGAL... FINDING THE SHADOW INVENTORY by Nancie koerber

When we decided to immigrate and retire to Caldas the Rainha, a lovely small city on the Silver coast of Portugal, there were next to no rentals listed on any platforms. We had everything ready for our VFS appointment in San Francisco but the rental agreement. Thus, we had to cancel and the next appointment available was 3 months out. Yikes!!

I emailed to the few properties I found listed but received no responses. I was told that unless myself or someone else was there in person, there was no chance of renting so we hired a company in Portugal to help us. They made big promises, charged us $1,200 and then searched the same sites I was looking at. They seemed to be understaffed and didn’t respond to my calls and emails. We were abandoned.

When I finally found a property, we had to pay for 4 months we wouldn’t even be there while we waited for our visas. Myself and hundreds of other families go through this every season coming to Portugal. I thought, “There must be a better way”. And there is!

After arriving, I found that even the locals struggle to find rentals, yet I see vacant properties everywhere I go. This article is about how to understand the problem and find the magical work arounds to opening the doors of ¨shadow inventory¨.

Scarcity of available rentals in Portugal is driven by several interrelated factors.

Tourism and Short-Term Rentals

Portugal has become a popular tourist destination, leading to a significant increase in short-term rentals like those offered through platforms like Airbnb. Property owners often prefer renting their properties to tourists because it is more profitable than long-term rentals particularly in popular cities like Lisbon and Porto. It also has tax benefits that long term leases don´t have.

Foreign Investors

The Portuguese real estate market has seen a surge in foreign investment, particularly after the introduction of programs like the Golden Visa and tax incentives for non-habitual residents. Many foreign investors in Portugal choose not to rent out their properties and leave them vacant for several reasons including speculation, personal use, and tax concerns.

Government owned Properties

The Portuguese government owns about 12% of the vacant properties in the country. It has been criticized for not effectively utilizing or rehabilitating these properties to address the housing shortage, particularly in the context of the scarcity of affordable rentals. There have been discussions and some initiatives to put these properties back into the housing market, either through rehabilitation programs or by offering them for long-term rental, but the impact has been limited so far.

Ruins

Some of this inventory is obvious to see everywhere we look at abandoned properties that are not habitable. I asked myself, ¨Why don’t the owners just sell the properties or develop them?¨ Due to inheritance laws in Portugal, these properties may be owned by multiple people, some of which cannot be located due to heirs moving abroad for employment decades ago.

In Portugal, property management companies manage approximately 20% to 30% of rental properties. Most real estate offices do not manage rentals and don´t seem to have any interest. If they do, they tend to just handle the short term vacation rentals during the high season and leave the properties vacant the remainder of the year. You might find the occasional agent to steer you to a property to rent but disappear after that because they are only paid by the owner to write the contract. The end result is that you are abandoned with an investor who you can’t find and may not speak your language when there is a problem.

One family told me they rented a new property through a manager and felt they would be fine. “What could go wrong?” they said. Well within the first month, one of the “new¨ toilets overflowed raw sewerage that flooded their house. This happened 3 times and no one would respond to their needs. Yikes! Not a pretty picture.

There are basically three types of inventory:

Short term…. 1 to 30 days…

This one is easy, Airbnb, and numerous other platforms

Mid term…. 1 to 12 months…

Can find on the short term platforms but can be quite expensive. These are appropriate for people scouting the country, digital nomads, housing while waiting for a home to be completed or a purchase finalized.

Long term…. 1 year plus…

These are necessary for those folks who are needing a D7 visa or want a longer term rental.

How do we unlock the doors to some of the shadow inventory?

#2 Foreign Investors: These owners live all over the world and it is difficult for them to manage so they leave them vacant. A friend of mine rents one such property. The owners live in France and they have 3 homes on one plot which is common in Portugal. I call these properties family compounds. Only one is rented and the other 2 sit vacant for years in habitable condition. These properties will never show on rental platforms or at property management companies. Also wealthy investors occasionally vacation in their homes. So how do you find a rental?

The answer is that you have to know someone here to find them for you in non traditional ways. I know of at least 40 on the silver coast. I spoke with one property manager recently with over 100 properties and he is paid by 1/3 of the owners to maintain the properties and not rent them. We spoke about ways to bring some of those properties onto the market. I also just started to talking to local Portuguese and asking them what they knew of. I found 9 homes this week. They might not all be willing to rent but some will now or in time. I continue to add to this list.

#1 Short term rentals: Many of these in the cities are managed by property management companies but the majority nation wide are not. Without knowing how to contact these forks or what language they speak, how do we break into this market and convert them to mid or long term rentals?

I speak to owners every week who are willing to convert to long term if the timing and tenant are right. The shadow inventory is there, it just takes work to open their doors.

Renting a room: Another option is to rent a room from a private individual very inexpensively with a flexible cancellation schedule if you just need an address for your visa. You may or may not ever actually live in this location. I speak with people every week willing to consider such an arrangement.

The key to finding the perfect rental for your needs short, mid or long term is to have multiple options to chose from. Too often it feels like you have none and are forced into an unsustainable decision.

Email me at nanciekoerber@gmail.com with your name and number and tell me what you are looking for. I will see what is hiding in the shadows in a region you want to live in.

Often our dreams are hiding in plain sight! Nancie