Whether you are a developer or a multi-property owner, what you ultimately want is to achieve the best returns over your investments.
If you’re thinking about what type of leasing will generate the highest rental income possible, considering the short-term rental market is definitely a good idea.
Professionally managed properties can achieve in average 40% higher rental income with short-term rentals than any other type of leasing.
If you are new to the concept of renting out a property through Airbnb and other booking websites, take a look at this quick interview with Daryl Smith, Head of Strategic Partnerships at MadeComfy.
It’s a great chance to learn more about the short-term rental market and why the right property management is so important in short-term rentals:
What are the advantages of short-term rentals in comparison to long-term rentals?
Daryl: In the current flat market conditions, especially in places like Sydney, where we’ve been seeing the highest vacancy rates in the last 13 years, short-term rentals can have a number of great advantages to maximize investors’ returns. These include a higher rental income, greater yield returns, and more cash flow - which allows investors to pay down their properties faster and perhaps re-invest in other properties.
Short-term rental can offer an earning potential of up to 11%, as you can increase or decrease nightly rental rates according to the demand and seasonality.
In most of the major capital cities around Australia, long-term rentals can have fairly low yield returns. One of the reasons for that is the difference between high purchase prices vs lower rental prices, which have not yet caught up to the capital growth in the property.
The other factor is, as we mentioned above, the fact that long-term rental prices are not as flexible as the nightly rates in the short-term market.
As a multi-property owner, how do I make sure my property is well managed?
Daryl: It's really important to use a professional and experienced property management company that specializes in the short-term rental market. We understand what guests require for a comfortable stay and what the property needs in order to attract the right type of guests.
Owners should also have access to bookings details and the performance data from their properties. At MadeComfy, we do that by providing owners with access to the property booking calendar and owner dashboard, which is basically an overview of everything that is going on in the property.
As a developer, where are the best locations for short-term rental properties? How to choose where to invest in Sydney or Melbourne?
Daryl: From the data we have collected over the past 3 years at MadeComfy, we can see that the top performing properties are generally in the Sydney inner city suburbs (eg: Surry Hills, Darlinghurst and Pyrmont) or popular beach side locations (eg: Manly & Bondi Beach). For Melbourne, we can point out the following suburbs: Richmond, St Kilda, Fitzroy and Docklands.
It’s also important that properties are close to public transport (train stations or buses) and major infrastructure (airports, hospitals, convention centres, shopping centres).
We’ve been working with property developers in areas like Pyrmont, in Sydney, with the purpose of building apartment blocks for short-term rental and maximizing nightly rates through bookings for tourists and corporate travelers. In the past, we also worked together with a property developer in Coogee for properties close to the beach. These properties are very suitable to the holiday rental market and executive stays over longer periods.
Are there any limitations for multi-property owners when it comes to the new regulation for short-term rentals in NSW?
Daryl: At MadeComfy we have welcomed the proposed new legislation in NSW, which is due to come into play sometime next year. It allows us to have clear regulations across each council area. We are still waiting to see the exact ruling around how long a "short-term stay" is defined within the new legislation. Read more about the new legislation here.
How does it work with insurance for short-term rentals?
Daryl: At MadeComfy, we advise all of our owners to take out suitable short-term rental insurance to cover their property during a guest’s stay. It’s fundamental to work with a good insurance provider so that your assets are protected.
How do investors create a standout property on Airbnb and other booking websites to maximize occupancy rates and returns?
Daryl: One of the key things to consider when setting up a short-term rental property is design and furnishing. Using our in-house interior design team can save owners thousands of dollars in time for sourcing and installing furniture, appliances and decor.
For multi-property owners, it can also mean having different themes and styles across a block of apartments in order to secure bookings for all of them simultaneously. Our case studies show that a well-furnished property can increase returns by up to 110% over long-term rental.
All that goes along with professional photography and copywriting to create a real wow factor for your listing. A compelling and informative description makes your property listing stand out, what helps increase the occupancy rate.
Head of Strategic Partnerships