Long term vs Short term rentals on the Surf Coast

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Living in a highly desirable holiday destination, we are often asked by our landlords and potential investors the benefits of long term vs short term rentals (eg Air BnB). It is a really good and valid question to ask, and we suggest Landlords do some thorough research, weigh up pros and cons and also consider what is going to personally suit their needs, time and lifestyle before making any decision.

We have collated below some valuable questions to ask yourself when deciding on whether a long or short term rental best suits your coastal investment property.

  1. Do I need to pay tax on rentals? Before any decision – seek credible tax advice. Tax rates can vary significantly depending on number of days tenanted, how many properties you own, net income from the properties, land tax etc.
  2. How much is it going to cost me? Permanent property management fees vary depending on the agency but usually under 9%. This small fee deducted from your monthly rental disbursement covers regular routine inspections, tenant reference checks, account administration, rental collection, arranging maintenance/repairs and peace of mind your rental is being well cared for. Holiday rentals have high turn over and even if you are managing yourself and saving on management fees, you will have linen and cleaning expenses between each guest, and more maintenance required for the higher volume of guests that holiday rentals bring.
  3. How good is my tenant reference check? At One Agency we reference check all of our permanent tenants against 3 references and also require 100 points of identification from each tenant. Reference checking is rarely and mostly NOT done through online holiday rental sites.
  4. Do I need insurance to have tenants or holiday guests in my house? Ummm YES! Check your insurance! Some policies may not cover you for short term or casual rentals. Even if you have long term tenants, check that you have the right cover.
  5. What is my time worth? Self managed holiday rentals can be very successful, if you have time to dedicate to it. Many landlords can make a nice profit from renting rooms in their exiting home or studios on their property. If the landlord doesn’t have to sub out tasks like cleaning or washing linen, and has the time to manage reservations,  do meet & greets etc, this can be a great option for landlords. If you work full time, have a busy lifestyle or live a distance from your investment property, then you will benefit from permanent tenants and a property manager you can trust.
  6. Does it need to be furnished? It is preferable that Long term rentals are NOT furnished. Holiday and short term rentals MUST be furnished.
  7. Will tenants / guests look after my property? In reality…Not always. This is where reference checks, insurance, bonds and maintenance are all VERY important. For permanent tenants this is their home. The majority of permanent tenants are house proud and will look after your property. Guests on holiday are generally a little more relaxed, they may not report maintenance issues or damages. They can often have more guests staying to make it an affordable holiday. More guests = wear and tear on the property.
  8. What if I want to holiday at the property? If you do and can afford to cover the repayments during that period, then holiday and short term rentals would be ideal for you!
  9. Do I have a mortgage to repay? If so you may need a set and regular rental income. Your mortgagee isn’t interested in hearing that it’s low holiday season and you don’t have any reservations for the next 8 weeks….

Have more questions? or would like feedback based on your particular circumstances? The experienced team at Natural Real Estate are available to assist with complimentary advice on where your coastal investment property sits in the rental market. Contact the team on 5261 4711.