28 Jun 2017

What Investors Should Know about Short-Term Rentals

Property Investors doing Short Term Rentals

According to MadeComfy, the short-term rental experts behind Airbnb, investors can expect to make 40% more from short-term tenants than long-term tenants.

Given this figure alone, you’d expect property investors to automatically favour short-term stays over long-term stays. The point of investing is to maximise the return on your investment, so shouldn’t the higher return option always win out?

While the higher potential for return is certainly enticing, there are multiple considerations investors must take into account when determining the validity of short-term stays.

Suitability

Not all properties are suited to short-term tenancies. Style and location account for much – the property’s demand must be sky high in order to have a guaranteed and consistent flow of interested renters.

So if your property is a little bit on the older side, you may find that short-term tenancies don’t make as much sense. A property that can’t compete will serve investors better by keeping reliable tenants.

Extra hassle and paperwork

While ROI is the key success metric for an investment, not all investors are purely money-driven. Some investors simply want to set up streams of easy income, and for those investors, routinely cycling through tenants is probably not an appealing option.

First, there’s the stress and hassle of constantly dealing with paperwork and legalities. There’s a lot to do when a tenant leaves and when a tenant enters, and even though much of the work can be systemised, the additional activity can lead to headaches.

Then, there’s the matter of insurance. Your insurance companies need to be aware that your tenants are short-stay tenants. There’s more inherent risk with having tenants coming and going, as there’s a statistically higher chance that you’ll wind up dealing with someone on the difficult side of things.

It’s important to consider whether or not short-term stays could be right for you and your property, but if they are, you could stand to increase your ROI.

Mortgage House

At Mortgage House, we’re no strangers to the homeowner’s journey. It’s a long (but rewarding) one.

But don’t worry, we can help with that.

If you’re looking for advice or to explore your options with your investment property or properties, you can contact us for advice about the best options for you.

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