If you are one of the thousands of Australians who has booked a private home or apartment for accommodation while on holiday or business, you may have wondered yourself if it could work the other way around. Could a residential space that you own also serve as an accommodation destination?
It was not that long ago that renting out a privately owned home or apartment was a small and confidential market. It has now become a mainstream activity offering a range of accommodation option. Booking an individually owned home has become an accepted way to have a more personalised experience instead of a say, a hotel, thanks to technology which allows for easier online access to properties, management by the people behind them, and an ease of making a request and payment.
It has also a become a way for many to earn income from their asset. There are of course pros and cons to deciding to offer your property to people for somewhere to stay and there are a few questions worth asking first, to assess what kind suits you best.
For instance, it will depend on your personal situation and how often you need access to the space yourself. Perhaps you wish to make it available just a few times a year when away on your own holiday, or working. Or is it the kind of property that can be turned into a different kind of working investment with a short term let, rather than a long-term lease.
If you are working overseas for significant periods of time, renting out your house while you are away is a simple way to generate some extra income. It also ensures that your house equipment is running and maintained and provides some peace of mind with an occupied property being more secure.
If you own a rental property the attractiveness of switching to a short-term lease is that it provides the opportunity for turnover with a higher return. This option also means that you can access your own property to live in, when need be, by booking it for yourself or family and friends.
As for any real estate, location is a key matter. Some locations may bring stronger seasonal variations, some other may provide a steadier return. As well, the standards and attractiveness of the property will strongly influence how well you can expect it to perform. A short-term rental property manager would be able to advise on a level of realistic returns expected.
It is worth noting that if your property is in a low demand location and the standard is average, rather than high, it may not be able to meet the competition and attract the kind of payment that would make the effort of a short-term lease worthwhile.
However, if your property is located in a popular area that is “in demand”, a short-term option should allow you to generate increased rental income while also providing the means for you to use your property when needed and keeping it maintained.
One concern that property owners considering a short-term lease into market often have is around the risk of damages. The experience seems to demonstrate there is less damages with a short-term let.
This seems to be because guests are moving in for a few days or weeks, and therefore their activities in settling in are different. For instance, temporary guests are not bringing in large furniture and moving it around, or seeking to alter the property. A short-term lease also means the property is monitored and maintained on a weekly basis with an attention to detail to reduce the risk of damage or detect a problem quicker, rather than an issue that causes deterioration over time.
Short term guests are also required to leave a bond of a much greater amount in comparison to the time they are staying in the property. It is usual to see a $1000 bond for a week-long stay compared to a long- term tenant who would be required to deposit about $2500 for a year’s stay.
Short-term accommodation generally attracts temporary visitors who are either on holiday or travelling for business. This means they are more likely to be out and about, not staying in the accommodation all day but exploring or working and taking part in what the city of Melbourne has to offer. This kind of routine for short-term guests can reduce the usual sources of wear and tear such as the daily cooking of family meals and children’s activities inside.
In all situations a free consultation to obtain further advice and assessment with a short-term rental specialist may be time well spent to better determine if the short-term management of your property is an option that helps you meet your goals and needs.