Local Agent landlords have the rare ability to move their properties between holiday letting and permanent rental at various times. Landlords must, however, be aware that while this opportunity exists there are factors that landlords must take into account.
It is not unusual for holiday owners to think about long term renting during the quieter months, and then return to holiday letting to capture the more popular Summer holiday guests. Sounds great, but the practical realities can put a dampener on things.
MOVING FROM HOLIDAYS TO RENTALS:
REALISTIC LEASE PERIODS
Firstly, landlords sometimes consider the period between Easter and September holidays as slower for holiday letting and want to consider renting instead. The problem is this period is always less than 6 months. While properties can be rented for periods of less than 6 months, the number of quality tenants wishing to move in and out of a property within 6 months is pretty rare. While a landlord may be lucky and ‘snag’ a good tenant for that period, it is far more likely that applicants will be less desirable or simply not around at all. In a nutshell, rental leases should be available for more than 6 months to attract quality tenants, and extra time also needs to also be added at the start and end of each lease period to conduct Entry and Exit reports, time to advertise the property on www.realestate.com.au etc, to conduct open home inspections for prospective applicants, time to collate, assess and forward applications to owners, time to receive tenant approval from owners, time to sign up tenants and conduct inventory lists, time to swap water and electricity accounts with providers and conduct water efficiency reports (if needed) and time to negotiate bonds with tenants after they have exited etc. As previously mentioned, owners who want to rent their properties with leases less than 6 months stand a high chance of only receiving poor applications, or possibly no applications at all. Of course, the longer the leasing process takes, the shorter and less desirable the proposed lease period becomes. Assuming everything goes smoothly, a 6 month lease realistically needs almost 7 months to manage the process properly.
SHORT RENTALS OFTEN DONT LAST
Tenants seeking short rental periods are often itinerant or simply looking for somewhere between other options. eg: moved to the Sunshine Coast and working out where to live, waiting for a house to be built or become vacant, or want a long holiday (3-4 months) but don’t want to pay holiday rates. Breaking lease is quite easy for tenants and the compensation they have to pay (if any) for breaking their lease is quite insignificant to many of them. Short tenancies are more likely to be broken by tenants that any other lease period because many of these tenants are ‘on the move’, potentially leaving the owner with a very short vacancy that other tenants simply don’t want to fill.
FURNISHED
Holiday properties are always fully furnished. Renting furnished properties is always harder than renting unfurnished properties, as most people have their own belongings. Once again, a landlord may get lucky and receive an application from a great itinerant tenant who is working at the hospital or somewhere similar for the exact period that coincides with the lease offered, but obviously it can be very difficult to find (and keep) a tenant who matches that profile.
FORWARD BOOKINGS
Owners of holiday properties will usually have forward bookings that need to be considered and managed. It is not a matter of simply cancelling the bookings or moving them elsewhere. Owners who choose to cancel or change forward bookings because they want to move to long term rent must be aware of the potential risks. A summary of the problems associated with owners cancelling forward bookings for any reason can be found by clicking HERE.
MOVING FROM RENTALS TO HOLIDAYS:
Some rental owners with leases that are finishing, consider popping their property into holiday letting instead. Once again, this can sound easier than it actually is.
FURNISHINGS
Holiday guests expect (and pay for) quality properties that are fully furnished with great amenities. Guests expect Wi-Fi and air conditioning, clean and well maintained properties, very good furnishings, fully fitted out kitchens, fresh and modern beds and bedding, smart TVs and the list goes on… Most rental properties are leased unfurnished, or with furniture that doesn’t really meet guest expectations. Fitting out a holiday letting property with nice decorations and everything else that goes with a modern AirBnB style property can be quite a task – and require considerable investment.
SERVICES
While rental tenants often pay for water usage, electricity and Wi-Fi services, holiday owners pay for these services themselves.
BOOKINGS
There is always a lead time for guests to start booking a new holiday property. This means a ne holiday property will often have no or few guests at the start which obviously affects the income to the owner. Unlike rental leases which provide a regular income stream, holiday letting is less predictable and is affected by a multitude of factors beyond anyone’s control. A summary of the factors that affect holiday bookings can be found by clicking HERE.
When launching a new holiday property to the market, it is wise to know the exact date that the property will be available for guests, and start advertising the property as early as possible. Holiday guests typically book well in advance, and so the earlier guests know the property is available, the more likely there will be bookings made into your property as soon as it is available.
MARKETING
Unlike rental properties, holiday letting is highly competitive and quality marketing is essential. Professional photography is an absolute must as guests will simply scroll past your property unless the photos immediately grab their attention.
In a nutshell, owners always have the opportunity to move between Holiday Letting and Permanent Rentals at Local Agent, and this move might be exactly what you need. However, landlords must also be aware of the practical realities of the changeover process, allow for realistic time frames, and consider the advantages and disadvantages of the transition.
As always, expert advice can always be obtained from our professional holiday and rental property managers who will be happy to steer you in the right direction!