Has anyone heard of or had any experience in renting investment property as short term holiday lettings?
I’ve looked at how much these properties rent for and I think the numbers stack up as long as the vacancy rate is low. I’m looking at buying one bed with a view close to the beach to kick it off.
I’m completely new to this with the exception of having read all of Steve’s books. Any thoughts or advice would be really appreciated.
HI there
we have one property we self manage as a holiday letting and one that is with a management rights arrangement.
The rental is usually a lot more than a permanent rental but the costs are also a lot more. You have to pay for cleaning, replacements of items – there is also a lot of wear and tear on furniture. You also can’t guarantee from one month to the next what the rental amount received will be. So if you are after a certain amount each month to pay a mortgage – the short term letting may not be the best option.
With the property the subject of the managements rights arrangement – there was definately a quiet period over December/January – because it is not in a resort area. That didn’t worry us too much because it provided an opportunity to undertake maintenance of the unit.
Like all properties – there are plusses and minuses but be aware with the smaller one bedroom places – it may be more difficult to obtain finance in such a way that you can loan say 95% of the value of the property. With smaller properties, the bank will normally lend you only 80% of the value of the property.you will probbaly find that the comparabel rental returns between long term unfurnished and short term is similar. the appeal is that you get to use it in the off season when it is vacant.
We have only just started doing this with our pool house in the garden so our experience is limited.
However, the experience has been extremely positive. The place is only a studio overlooking the pool and garden and is quite private and tranquil. As a long term rental, we’d be lucky to get around $250-$300 a week at the most. As a holiday letting, we are getting inundated every single day for bookings in the region of $550 – $650 per week. Even though we are now out of the peak of Christmas and New Year, we are finding that it is busier than ever and mostly from locals and Aussies, not overseas visitors.
I think it really matters how well you “dress” the place. Grubby places will fetch grubby prices. Also, it is important to advertise it well with lots of photos and information. We have found a little niche by offering FREE wireless internet (incl. in price of course) and pet friendly for small dogs and cats. Interestingly, EVERY SINGLE renter has asked to be hooked up to the internet and it was one of their primary reasons for choosing us, followed closely by location, pet friendly and quality of the rental.
We wouldn’t try to rent it long term again, just not worth it. As others have said, cleaning and laundry are a pain, nothing has been broken as yet so that hasn’t been an issue. We have found people to be more respectful in the short term rentals than the longer termers. Plus, our pricing probably excludes a lot of the general riff-raff who destroy places.
Cheers
AndreI think that this a lucrative section of the market and if you have the ability to invest and manage it effectively then it will work really really well for you.
We travel a lot and even though we don’t live in Australia per se’ we regularly transit either via Sydney or Brisbane and usually take the time to follow up business or take time for a bit of R&R. Being veteran suitcase people, we prefer the home comforts of a self contained apartment any day compared to a hotel room and as our stay usually lasts anywhere from overnight to a week or more, my booking preference is always for convenience and preferably self contained. Hotel rates in the CBD of Sydney and Brisbane have sky rocketed in the last six months and even the short term bargain places like Rates to go and Lastminute.com do not offer much of a discount for a weary traveller who just wants basic amenties for reasonable charge.
My first stop for booking short term in Sydney or Brisbane is now stayz.com and in there, are hundreds of accommodation offered for this very demanding and lucrative market. Three weeks ago, we had to come to Sydney for business for six days and as I like to keep costs down, my budget is usually 100 – 120 per night if at all possible and self contained. Travelling so much we like to be able to eat food of our choice at our jet lagged hours, which can mean a steak at 3.00am in the morning. Unfortunately, Dick Cheney was in town and there was hardly anything reasonable to stay in and all my normal apartments were booked out. Needless to say, we were so unhappy with our accommodation after moving twice we wrapped in three days and left for Noosa to recover.
Anyway, I suppose after losing myself throughout the above post, as a frequent traveller I recommend that if you have the facility or ability to offer a short term one bedroom rental within a couple of klms of the CBD for say 100 per night then I am sure that you will have no problem with too many vacancy periods. The stayz calendars are also wonderful as you can offer customers an online/live calendar that shows them your free days and they can book direct which will help you and cut your costs.
If you like to see proof of the above you can have a look at stayz and look up one bedroom apartments near the darling harbour precinct that advertise for average 100 per night. Their calendars are almost always booked out way in advance.
Onoiki
Onoiki
Exactly where we are listed. We were going to list it on other sites, but haven’t yet needed to. Ours is also based around $100 to $130 a night on the northern beaches. And like yourself, most of our clients don’t want hotels and do want flexibility.
Cheers
Andre
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