Investing in a property for short-term letting
Over recent years there’s been a lot of talk about short-term letting courtesy of companies like Airbnb making major headway in Australia.
But is it worth purchasing a property with short-term rental in mind? In some cases yes, but if the events of 2020 taught us anything, it’s that this market that can potentially dry up quickly in the advent of a natural disaster like a bushfire, or global crises such as a pandemic.
So, if you’re considering investing in a property for the purposes of short-term letting, here’s a couple of factors you may wish to keep in mind.
Investing in real estate for the purpose of short-term letting is all about finding the right property in the right location.
The location of the property should feature some tourism drawcards, whether that’s a quiet getaway from the city in a rural setting, a beachside area, or something in the heart of a CBD close to attractions like restaurants and entertainment.
Then, the property will need to be in good repair and suited to that area. For example, a quaint cottage may suit the rural area, a ‘50s shack might work in a beachside enclave and a high-end apartment might be better suited to the CBD.
That means it pays to do your research in advance, considering the short-term rental market that visits specific areas and seeking properties that are most likely to fit their requirements.
Short-term letting is not a new phenomenon and chances are there will be existing short-term rentals in the area you have in mind.
Again, it pays to do your research here, considering demand and supply, availability and the prices that short-term rentals in that area command.
Council laws and apartment by-laws
Due to the rise of the short-term rentals, some councils have set caps on the percentage of properties that can be used for this purpose.
That means they may restrict new properties coming onto the short-term rental market, or they may charge rates differently.
Meanwhile, body corporates and strata management committees also have short-term letting in their sights, meaning some may have specific by-laws that relate to whether short-term letting is allowed in a complex or how often a unit or apartment may be used for this purpose.
Do you have a backup plan?
Finally, do you have a back-up plan? Last year saw a number of short-term rentals lie dormant due to Covid-19 and the resulting lockdowns.
That means you should make sure you are financially prepared to weather a similar storm or consider whether the property might also be suited to long-term leasing in the event of waning interest.
The final word
Short-term letting can be a great way to have your investment property quickly pay for itself, and in many cases it also offers the convenience of allowing you to holiday at your own personal holiday home when you wish.
But as with any investment, it pays to do your research first and have a back-up plan if the situation changes.
Looking for a property suited to short-term letting? Take a tour of the properties we currently have available for purchase, or speak to one of our friendly Eview agents to discuss exactly what you seek.
And of course, if you’re looking to transfer your existing short-term rental to a long-term lease arrangement, you can talk to one of our expert property managers here.