All Topics / Help Needed! / Holiday House WA — good/bad idea ?

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  • Profile photo of jsandsojsandso
    Member
    @jsandso
    Join Date: 2003
    Post Count: 44

    Hi everyone,

    we want to put an offer in for a double story house with ocean views, pool, bbq, shed, duct aircon. We are thinking to rent it out as a holiday house as it seems to be perfect for that.

    I searched through the old posts but did not find to much info about holiday houses. Some people don’t seem to be so keen on, others are.

    I have done a rough calculation and the house would be close to cash positive or neutral if we can rent it out for about 55-65%/year. Is this achievable or I’m dreaming?

    We are considering to advertise it in overseas(Germany, UK, South Africa) and local papers and Internet.

    Also thinking of ringing some bigger companys to offer it for there visiters.
    Someone knows which companys are looking for that type of house?

    Who we have to contact to get a star-rating done?(RAC, NRMA?)

    We are not planing to use it for our selfs as we are living in this area, so it would be available all year round.

    What are your experience, thoughts about a holiday house?

    jsandso

    Profile photo of MTRMTR
    Participant
    @marisa
    Join Date: 2004
    Post Count: 663

    Hi there,
    can you provide more info, where is the holiday home?

    Profile photo of RussHRussH
    Member
    @russh
    Join Date: 2004
    Post Count: 342

    I,d be guessing that this is going to be a rather expensive house.Especially if it is in a good holiday area.If you live in the area and know the type of monies to be expected then it may work but if you have to pay an agent to manage you will find that cleaning and management costs will take a big chunk out of the equation.You also have to factor for bad years with tourism as I know a few people here felt the affects from the sars virus.Do your homework and best of luck.
    Russ.

    Profile photo of boardyboardy
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    @boardy
    Join Date: 2004
    Post Count: 17

    Hi jsandso

    I have also looked at IP’S as short term rentals in W.A coastal areas check your figures against others as you occuoancy rate might be a little higher than some of the ones I have looked at.

    As a guide consider it closer to 40-50% when calculating +ve or -ve to allow for hard times as Russ said.

    Enquire about other real estate properties of the same value p/w and check there vacancy rates, you might be suprised especially in places with high amount of holiday rentals eg. Kalbarri, dunsborough etc.

    Good luck

    Boardy

    Profile photo of MTRMTR
    Participant
    @marisa
    Join Date: 2004
    Post Count: 663

    Jsandso

    Holiday homes – depending where the Holiday home is will deterimine to a degree the vacancy rate and rental income. Holiday homes can be rented on a short term basis say (3 months) which is usually rented at a cheaper rate, often winter.

    If well located/decked out holiday home, views etc. as stated – can be rented to Executives for short-term period, ie ALCOA (if Mandurah area). Once again depends where the property is.

    Our holiday home (Madora Bay) if rented locally we have been advised would probably be rented for 8-10 weeks tops each year (peak holiday periods) and from what we have observed in the area I would say this is correct. This would be at around $200 per night.
    You mention wanting to rent for at least 55-65% of the year, I think this would be possible but you would probably need to look at not just holiday periods (peak rates) but also short term rentals.

    You would also need to be very proactive with advertising etc. Its a very competitive market, but having ocean view will help.

    We also found that this is not a market that local real estate agencies are interested in, there is only one agency we found who managed holiday/short term rentals. Very expensive rate 16%+

    We have a friend who rents his holiday home in Madora Bay and he gave up on the agent and rents and advertises himself. He has rented to Alcoa and this has worked out well for him.[biggrin] If the property is not clean it generally comes out of the bond money.

    For a small fee you can also advertise via the Tourism Commission.

    The positives to having a holiday home if well located, ocean views etc. you are bound to have great capital growth, and if not rented you get a holiday… not a bad deal.
    [biggrin]
    I hope this provides some help

    Profile photo of MTRMTR
    Participant
    @marisa
    Join Date: 2004
    Post Count: 663

    Jsandso

    Holiday homes – depending where the Holiday home is will deterimine to a degree the vacancy rate and rental income. Holiday homes can be rented on a short term basis say (3 months) which is usually rented at a cheaper rate.

    If well located/decked out holiday home, views etc. as stated – can be rented to Executives for short-term period. Once again depends where the property is.

    Our holiday home (Madora Bay) if rented locally we have been advised would probably be rented for 8-10 weeks tops each year (peak holiday periods) and from what we have observed in the area I would say this is correct. This would be at around $200 per night.
    You mention wanting to rent for at least 55-65% of the year, I think this would be possible but you would probably need to look at not just holiday periods (peak rates) but also short term rentals at a cheaper rate.

    You would also need to be very proactive with advertising etc. Its a very competitive market, but having ocean view will help.

    We also found that this is not a market that local real estate agencies are interested in, there is only one agency we found who managed holiday/short term rentals. Very expensive rate 16%+

    We have a friend who rents his holiday home in Madora Bay and he gave up on the agent and rents and advertises himself. He has rented to Alcoa Executives and this has worked out well for him.If the property is not clean when vacated it generally comes out of the bond money.

    For a small fee you can also advertise via the Tourism Commission.

    The positives to having a holiday home if well located, ocean views etc. you are bound to have great capital growth, and if not rented you get a holiday… not a bad deal.
    [biggrin]
    I hope this provides some help

    PS
    Make sure you get the pool inspected. Dont want a dud.

    Profile photo of 1Winner1Winner
    Participant
    @1winner
    Join Date: 2004
    Post Count: 477

    Agree word for word with Marisa, and no she is not my wife.[eh]
    8 to 10 weeks tops.

    The rest is up to you. To bring European tourists or Americans is a good idea but I would not bet the farm on succeeding. I looked into holiday house on the east coast (NSW south coast) before the TV induced boom there and got big red numbers that made me walk away. With today’s prices, it would be a proverbial liability.

    May God prosper you always.[biggrin]
    Marc

    Profile photo of jsandsojsandso
    Member
    @jsandso
    Join Date: 2003
    Post Count: 44

    Thank you all for your time.

    Our PM told us today about an agency which is specialised in providing short term rentals for immigrants mainly from UK.

    Apparently they renting the property, so we don’t have to worry about vacancy and cleaning. We have to give them a call as soon as we get the number from PM.

    >>For a small fee you can also advertise via the Tourism Commission.
    Thanks Marisa, we’ll check that out.

    Unfortunately ALCOA is a bit too far but that is the type of company I’ve got in my mind. I need to look around more what companies are close by.

    >>As a guide consider it closer to 40-50% when calculating +ve or -ve to allow for hard times as Russ said.
    Boardy/Russ
    Ok I’ll consider that, also it does not necassarily need to be +ve as long as it is close to and as long as we can service the loan. I think it is very important with a holiday house to have enough cash to survive times where is no demand.

    Jsandso

    Profile photo of AceyduceyAceyducey
    Participant
    @aceyducey
    Join Date: 2003
    Post Count: 651

    jsandso,

    Just don’t consider this a residential property investment.

    You’re in the tourism market – there are different drivers & trends.

    Unless if the property is suitably located to be a long-term rental proposition, you are unlikely to get the same CG level (less people will be interested in buying it – only investors).

    Equally while short-term rental figures are much higher than long-term rental levels, the occupancy rate is substantially higher.

    Keep in mind – you’re not a landlord, you’re a motel owner.

    Cheers,

    Aceyducey

    Profile photo of jsandsojsandso
    Member
    @jsandso
    Join Date: 2003
    Post Count: 44

    Hi Aceyducey,

    Originally posted by Aceyducey:

    jsandso,

    Unless if the property is suitably located to be a long-term rental proposition, you are unlikely to get the same CG level (less people will be interested in buying it – only investors).

    That’s the good thing about that house, it is suitable as a normal rental property as well as holiday rental. It is situated very close to the ocean in a great residential area, that’s why we expect the CG level to be above average. I probably should say “we belief” and not “expect”.

    Equally while short-term rental figures are much higher than long-term rental levels, the occupancy rate is substantially higher.

    That’s absolutely true and long-term rentals are probably less hassle. That’s for sure something to consider.

    Keep in mind – you’re not a landlord, you’re a motel owner.

    Does that mean we would be running a business and have to collect GST ?

    jsandso

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