How to choose the right property for short-term rental investment
There has been a massive increase in the short-term property rental market in recent years. Airbnb popularised this investment model and several other companies have jumped on board as well. However, this type of short-term rental investment certainly works better for some people than it does for others and there are plenty of different reasons why this happens.
Here are some points to consider and questions to ask yourself if you are looking to invest in this type of investment.
Will this be a fulltime short-term rental?
Depending on whether you are planning to stay in this property periodically or if it will be purely for renting out as a short stay could influence how you handle this property. If you are going to stay in it yourself occasionally, then that is fine, just be aware this may limit your earning potential. If you are going to keep this available at all times, then that’s even better.
If you are planning to continuously promote this property for short-stays, you will want to do some research into which areas you might get the best return in. Compare the average full-time rental price to the prices of Airbnb rentals in the area. Don’t be afraid to consider interstate options, if you find something that has the potential to be consistently popular you can always hire an Airbnb property management company to take care of things for you.
If you are planning to stay here yourself from time to time, it means you’ve probably already decided in which area you want to buy in. This will be a personal decision for you because you will be choosing one where you actually want to spend time yourself. This might even be in a place that is convenient to you and not a place with enough demand to keep it occupied. Chances are, the times you want to go there will be during the most popular periods where you could earn the most money.
Know your numbers
Researching the best area with the lowest competition can be time-consuming, but it will be worth it if you find the right location. You don’t want to choose something with too much competition and not enough demand. You will want to invest in a property where you’ll be able to keep your vacancy rate as low as possible. You need to be able to figure out if you can earn more with a semi-continuous stream of short stays than you can with a long term rental.
You must also make sure that you’ve budgeted sufficiently so that you can afford the deposit as well as having enough money left over to get the property ready for renting out. Unlike long-term rentals, short-term rentals need to be fully furnished and equipped. That means furniture, fridge, bedding, towels, entertainment, kitchen, and bathroom supplies. You’ll want it all to look relatively clean and so it looks great in photos. You’ll also want to consider professional photos to make your property stand out against the others.
When considering properties to purchase, be sure to keep in mind how many properties with 1,2,3,4+ bedrooms are available in the area and how popular each type is. You could invest in something that is popular, or perhaps you could find a gap in the market. Research is key.
You will need to ensure your fees will cover all additional costs. Outside of the repayments, you’ll need to also cover local council rates, electricity, gas and water bills, regular cleaning and any management fees if you’re investing far from where you live. There are certain areas that are highly profitable for this type of investment. So, if you do your research, you’ll have no issue at all here.
Don’t put all your eggs in one basket
Don’t solely rely on the revenue generated from Airbnb alone. There are several other similar websites out there for short stay rentals. Maximize your exposure by listing on all of them. Your options may vary from country to country so check what is available in your area. Within each of these sites, you’ll need to learn all the tips and tricks to optimize your listings. Frequently updating your description and photos is a good hack for some of the sites.
Overall, the most important thing is that you shouldn’t act emotionally and shouldn’t rush into this. There’s a lot of property data available out there and the more you watch the markets in the areas you’re thinking about, the more information you can gather. This will allow you to make a more strategic and informative decision.