How to boost your rental income by more than 40%
Property investors can secure at least 40% higher rental income from short-stay guests than from letting their properties to long-term tenants, according to analysis undertaken by MadeComfy, a company specialising in short-term rentals, based on the properties it currently manages.
So why don't all landlords follow the short-stay trend and rent their investments on Airbnb and Stayz?
First, not all properties are suitable for tourists and corporate travellers. Location, style and condition are the key determinants as to whether a property is suitable for short-term renting, says Quirin Schwaighofer, MadeComfy's co-founder.
Those in the CBD or inner-city suburbs are likely to be booked year round. And modern, styled and well-maintained properties will also secure more bookings than those that are old and rundown.
"While guests want more authentic experiences staying within private homes, they still expect a good level of comfort and cleanliness from a property during their stay," says Schwaighofer.
And even if you have an inner-city pad or trendy home that fits the bill you may be turned off by the hassles involved in short-stay rentals: think servicing, including cleaning and changing the linen regularly, organising key pick-ups and drop-offs, dealing with repair and maintenance issues, not to mention the possibility that your precious real estate may be trashed.
And then there are the insurance issues of short-term letting. It's important your insurance company knows your tenants are short-stay so you're covered.
And it's vital to have adequate insurance. Airbnb provides a $1 million "host guarantee" but this does not cover cash, personal liability or common areas in buildings.
There are a number of companies that claim to take the hassle out of short-term renting, including MadeComfy, Host My Bnb and HostKeep. Of course this doesn't come free, and full services will cost you between 20% and 27% of rental income.
All the managers claim they can increase your income from short-term rentals. MadeComfy, which operates in Sydney and plans to extend to Melbourne this year, says it consistently delivers 20% to 40% higher returns to its property owners than equivalent Airbnb listings by combining its smart pricing policy with its property management expertise.
Host My Bnb, which operates in Sydney, Brisbane and Melbourne, claims on average you can earn up to 30% higher rental yields using its services than you could from long-term lettings.
It says it has developed a tool that can decide the optimal pricing for your property. HostKeep, based in Melbourne, also claims to help property owners to dramatically increase rental cash flow.
Hostility to short-term lettings from other owners in some buildings can also deter landlords from offering their property to tourists and business travellers.
But MadeComfy claims its professional management can help mitigate this by working with strata and building managers to control short-term rentals and ensure building and community rules are followed by guests.
Host My Bnb says it works with councils and strata managers, following the Holiday Rental Industry Association's code of conduct for Airbnb property management.
Whether you rent your property to long- or short-term tenants, the income is still taxable. You can claim all your expenses, including interest on your mortgage, but if you are renting out short-term you can only claim these for the period your property is actually available for rent.
Another way property investors can achieve higher rental returns than those available through long-term leases in Australia is to check out offshore investment opportunities.
One currently being marketed is a new serviced apartment building in Dubai, UAE, which expects to achieve net rental returns of 10%-12%.
By comparison many Australian property landlords are struggling to achieve 2%-3%.
Montrell Apartments, in a prime location close to the prestigious Expo 2020 site and Dubai's most iconic communities, such as the marina and Sports City, is being promoted internationally.
The studios and one-bedroom apartments, complete with a furniture package, are being marketed by UK-based Aspen Woolf, a real estate marketing company claiming to have assisted clients in 120 countries.