Every savvy investor has a “List”. These are the things that are non-negotiable when they purchase a new property. The list might vary depending on budget and location, but here are some essentials that every investor should consider when purchasing property for short-term leasing:
This is always a major consideration when it comes to property. The old real estate adage of buying the worst house in the best street rings true when it comes to long-term investment. When you buy an older property in a great location, you are investing in capital appreciation, and need to be prepared to hold onto the property long-term to reap the rewards. The draw-back is rental return on an older property vs. a new property. You can of course renovate an older property to compete with new ones, but this needs to be budgeted for.
Short-term tenants want to make the most of where they are staying, since they are only there for a finite period of time. You can’t beat the convenience of a property in the centre of town and the heart of the action. Any incentives you can create with local businesses for your guests will set your property apart, such as discount drink/dining vouchers, cinema tickets or short-term gym passes.
A property located close to government departments will be appealing for executive guests. Short-term tenants are often prepared to pay a higher rate for the convenience of a centrally located property, knowing it is for a limited period of time, compared to many long-term tenants.
Just ensure your “centrally located property” has sufficient privacy and soundproofing. Whilst it’s great to be in amongst the action, you don’t want your poor tenants to be kept awake by loud music from the bar downstairs or traffic from the main road outside their window.
Modern developments have really raised the bar when it comes to amenities. Resort-style gymnasiums, pools and entertaining areas have become somewhat standard in new developments. This is attractive for short and long-term tenants, as they can exercise and relax without leaving their building, or spending money on a gym membership. Luxury developments are starting to take the resort concept one step further with drink and dining options onsite, as well as day spas and communal gardens. Short-term tenants appreciate unique experiences they can’t get at home, and these added perks are appealing to business guests who want to relax after a long day.
If you are considering purchasing an apartment in a new building, familiarise yourself with the developer of that building. Check out other properties they have built, particularly ones that are a couple of years old so you can get a feeling of how the building, fixtures and fittings will age. Also note the building’s quality of soundproofing between apartments above, below and adjacent to the property you are considering. You want to ensure you are getting the best quality and value for money so you don’t encounter too many maintenance headaches further down the track.
Also find out how the building is managed. Is there a 24-hour concierge at the front of the building, or swipe card/key fob only access? How do tenants report a disturbance or damage in the building? Secure, managed buildings have better control over other tenants throwing wild parties, etc.
But you can get to know them. Carefully observe the other people coming and going in the building and consider the demographic of building’s tenants. Will your prospective short-term tenants feel comfortable staying here? If there’s more music than Mardi Gras, this building is not going to appeal to a business traveller who’d like a good night’s sleep!
Many apartments come with at least one car space. Whilst it might be attractive to rent this out independently if you don’t live in the building, spare a thought for your short-term tenant who has driven to stay at your property. Only three hours from Sydney, it is feasible to think that many short-term tenants would drive to Canberra, especially since it is handy having a car to get around Canberra. If you include a complimentary car-space with your property, make sure this is a key selling feature in your property description.
Investigate all other costs associated with your property, such as: body corporate fees, rates, and utilities. Body corporate fees vary immensely between properties, depending on the size of the building and its amenities, such as a lift, pool, and garden that need regular maintenance. Find out what these costs are likely to be so you can factor them into your rental rate. Your rental rate will need to be competitive with other properties in your building/area, so do your homework! It is important to do the math to ensure your property will be financially viable.
Once you’ve prioritised your list, follow it by all means, but don’t let it completely dictate which properties you consider. Investing in property is all about compromise. The trick is knowing what you’re not willing to compromise on…and then sticking to your guns!