Setting goals for your Straddie rental property.
Congratulations on your purchase of a North stradbroke island holiday home!
At Discover Stradbroke Real Estate we do business with over 80 property owners with around 100 rental properties between them.
In 2015/16 the median property sales price is $697,000 which might equate to approximately $69.7m in real estate value. These are big numbers in anyone’s language and realistically the portfolio is worth much more since Discover’s rentals tend to be at the premium end of rental properties available for holiday rental.
Buying a holiday rental property on Straddie is always a significant investment no matter who you are. Some people decide to put their property into holiday rental market.
Different people can have a variety of goals regarding their investment. For example, you might:
1. decide that just you and your family and friends will use the property – perfect!
2. decide that you will use the property during the peak holiday times with your family and make the property available for rental during low season. In this case you might be looking to earn enough to pay the rates, body corporate fees and other fixed costs. Good idea!
3. be looking to gear your investment and make use of the tax system provisions available including deductions for variable property expenses, maintenance and interest paid. Great idea!
4. be looking for a solid income stream year round and to maximise the yield and the investment opportunity. Superb!
It is important to work out what it is you want to achieve for your investment at the beginning although you can always change your strategy as things evolve.
Once you have made one or other of the above decisions, and have decided to offer your hard won property as a holiday rental, you then have a few more decisions to make.
1. look to manage the holiday rental yourself, arrange cleaning, list on websites like AirBNB & Stayz, and deal with vetting guest enquiries & security deposits, emails and phone calls yourself, and arrange key delivery, directly. You pay a commission on each booking.
2. look after the housekeeping (cleaning) and provision of laundry yourself and ask an Agent to source and manage guests, your online presence, hand over keys, take security deposits in exchange for commission.
3. appoint a professional Agent to manage your investment for you, provide housekeeping, manage and market your property, source bookings, vet enquiries and provide an end to end holiday solution for your guests.
A good holiday rental agent will provide a complete suite of services including options 2 and 3 above as well as manage maintenance issues as they arise.
The business of holiday rentals has evolved significantly in the last couple of years. Once upon a time you would set your property up, put a sign out the front, an ad in the RACQ Open Road magazine, and sit back and wait for the phone to ring. Easy!
In 2016 with the trend of booking with Online Travel Agencies (OTA’s), there are a myriad of ways to list and promote your property. No longer are you going to maximise your yield by being listed on one or two OTA’s, to get the best chance of being seen you need to be everywhere.
OTA’s like Booking.com, AirBNB, Homeaway, Stayz, WOTIF and a host of others, are all throwing themselves at the unsuspecting property owner and of the course the discerning traveler. There are even sites out in the ether that purport to compare the various OTA’s!
OTA’s will charge a percentage on the bookings they take which varies from 3-15% depending on the channel. In the USA, many of the these sites are now charging 20-25% commission, having increased in the last 12 months. You can expect this to happen in Australia.
How do you get visibility for your property in amongst all that noise? Once again it depends on what your goals are with your holiday property, and how much time you have to invest in managing it.
The vast majority of holiday rental owners make use of the skills of professional property managers who should be experts in the location in which they operate, can advise you on tariffs, manage your digital presence on multiple websites, arrange housekeeping services including a linen, and consumables like bathroom and kitchen products. They should also have a 24 hour phone number for emergency contact.
Ask these questions of a potential property manager;
• How do you source potential guests online?
• How do you vet them for suitability and apply security deposits
• How do you collect feedback from guests and measure success?
• What checks and balances do you use to manage my property?
Setting your goals and getting satisfactory answers to these basic questions will help you make an informed decision. Give me a call if you would like to discuss – 0418225265.
Hope this was helpful – until next time – ciao!