Short-term Rental Versus Long-term Rental
As the Bard once famously didn’t say, ‘short-term rental or long-term rental, that is the question …’
The main property investment reason for short-term rentals is that you have the potential to make your monthly rent in a week. For example, if your monthly rent is $1000, you may be able to rent out your property for $150 per day.
But there are also other strong reasons to invest in the short-term rentals, such as:
- ⭘ providing your property as a holiday rental and being able to raise the nightly fee when demand is high,
- ⭘ maintaining access and use of your property as a second home or holiday home,
- ⭘ the flexibility of being able to withdraw the property from the market at short notice,
- ⭘ possible tax deductions such as cleaning, maintenance fees, insurance, appliances, white goods, and property management fees,
- ⭘ easier tenant management than with tenants on a longer lease, and
- ⭘ less wear and tear on your property investment.
Although there are strong reasons to convert your rental property into a short-term rental there are some things to consider, such as:
- ⭘ less control of who you rent to as you may be in the hands of home-sharing platforms do not require the same level of traditional background checks,
- ⭘ potential lack of income predictability with potential higher vacancy rates than traditional rental properties,
- ⭘ last minute cancellations because of an unpredictable travel market,
- ⭘ short-term rentals can be more time demanding than long-term rentals, and
- ⭘ changing rules and regulations in relation to short-term rentals as these types of rental property arrangements are still in their infancy.
Once these issues are considered it is interesting to note there is potential to earn around 50 per cent more rental income through a well-managed short-term rental property investment than a long-term property lease.
Accommodate Canberra is a professional property management company and accommodation supplier that manages a portfolio of properties on behalf of its current investors.
Peter Maloney, Accommodate Canberra, Managing Director, says there are many options when it comes to property investment.
“Before defaulting to turning your property investment to long-term rental you should consider the benefits of short-term rental.”
Peter says the short-term rental market could be an option property investors or potential investors may not have considered.
“There is also more demand for short-term rentals with business travel and holiday travel taking off due to COVID restrictions being relaxed.”
Federal and State Governments are also doing what they can to assist people with property investment and property ownership with the announcement of more relaxed border restrictions, share ownership schemes and the resumption of Australia’s migration program.
- ⭘ The Federal Government’s 2022-23 Migration Program is set to see 160,000 new Australians who will all require somewhere to live.
- ⭘ The Federal Government announced a shared equity scheme worth $350 million for 10,000 home buyers where it would take up to a 40 per cent share in a property.
- ⭘ The NSW Government recently announced a near identical scheme when it committed $800 million for 3,000 homebuyers per year and will take a 40 per cent share in new homes and 30 per cent in established homes.
- ⭘ State and international borders are opening up with vaccination declarations no longer required for international travel.
All these decisions will lead to either further property investment opportunities or drive demand for short-term and long-term property leases.
Accommodate Canberra is currently experiencing an increase in demand for short term accommodation. They currently have 80 plus short-term properties under management and can see demand increasing as border restrictions to interstate and international travel are removed and business, education and holiday travel returns.
“We currently have a 95 per cent occupancy rate and are looking to add to our existing properties and would be keen to speak to potential property investors or those that would be interested in converting their long-term rentals into short-term rentals,” Peter Maloney, Accommodate Canberra, Managing Director, concluded.