Property investors are constantly exploring creative strategies in order to boost their rental incomes, some of which carry more risk than others. With sites like Airbnb.com and Stayz.com now available to the everyday property owner, many are leveraging their services in order to supercharge their rental returns.
It’s a really clever way to generate some serious increase in income, provided you can handle the risks involved in this type of strategy. But, just how profitable is it to short-term rent your home or your investment home? And, can you genuinely and significantly boost your property’s rental income?
The Positives of Short-Term Rentals
The biggest and clearest positive to short-term renting your property to holiday travellers is the potential to generate higher rental returns. Plus, this strategy gives you the added flexibility of being able to owner-occupy from time-to-time.
The likelihood of unpaid rentals is also at an all-time low, with the aforementioned websites requiring upfront payment from guests. And, contrary to what you may think, short term rentals actually experience much less wear and tear than a long-term rental.
Things to Consider Before Short-Term Renting
The biggest consideration when renting your property as a holiday home comes from operating costs. Though you may see higher rental returns, in conjunction you will also see higher operating costs (such as management fees).
The second thing to consider is the time involved in holiday letting. Being invested in your guest’s experience is going to take up a considerable amount of time when compared to long-term rentals. You simply need to decide if the time involved is outweighed by the income you make.
The Risks Involved in Short-Term Tenants?
The most important question you need to be asking is what are the risks? The most obvious risk is income. With holiday home rentals the risks of cyclical income still exist, but this can generally be avoided by properly planning for the year.
The second biggest risk is damage. This is where guest screening, security deposits and a clear list of terms and conditions are going to be your best friend to minimise this risk. Adequate insurance is also going to be a very important step if deciding to short term rent.
Other Considerations of Short-Term Tenants
Everyone has neighbours. If you are renting your home to holiday travellers keen on having a great time, it can cause some upset with surrounding homes. You need to ensure that your rental terms and conditions are appropriate for your area and that you are renting to the right type of tenants. A quiet neighbourhood is not going to look on appreciatively as you rent to young adults and large groups. It might cause you some big issues with the local area council.
Speaking of council, you need to ensure that you have all of the appropriate permissions and meet the local regulations on holiday rentals. Not complying with local laws can get you into big trouble down the track.
Are Short-Term Tenants the Right Choice for Your Investment Property?
If you plan ahead, create the right risk profile and hone your budgeting and money management skills to ensure sufficient year-round cash flow, a holiday rental has the potential to generate thousands in extra rental returns.
Don’t forget, though we’ve only mentioned holiday rentals, short-term tenants can also include corporate or executive rentals. If you have a property suitable to this type of tenant, you have the advantage of adding a serious premium to your weekly asking price. It can be an exceptionally lucrative type of tenant, but only if you can accommodate them appropriately.
What you need to take away from this article, is that you as an Australian landlord have the potential to significantly increase your properties rental yield, sometimes to as much as 35%! If you’re looking to supercharge your property investment, this is one of the most lucrative well-proved strategies.
This doesn’t mean you shouldn’t be thinking outside the box for other unique profit-boosting strategies. Only you know what your property has to offer of value to a potential tenant. This might include extra car spaces on that you can rent out on CarNextDoor.com.au, or even offering some housekeeping as an extra to holiday renters as a way to make a little more.
If you are willing to spend the time, then there’s no reason why you can’t be supercharging your investment through short-term tenants.
