Holiday Letting as an Investment Option

Discussion in 'Airbnb & Short Term Letting' started by BuyersAgent, 4th Apr, 2019.

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  1. BuyersAgent

    BuyersAgent Well-Known Member Business Member

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    I know the bulk of investors on the forum are hard-nosed business-minded folk who turn their nose up at the idea of holiday rentals as investments (I spent years thinking the same and still tell many people to think twice before doing it) but I wondered how many are out there quietly doing it successfully? I have come across more of the genuine beach home investments in recent years and even seen a few homes pulling close to $100k per annum gross returns. I am bracing for the barrage of "its terrible don't do it" but wondered what people think is needed to actually make short term letting more viable?

    I recently did a blog post on it after getting a few similar enquiries which is HERE but happy to hold open discussions and see what comes out of it.

    Note: I am not talking about buying a holiday home, using it during all the peak periods and being surprised that it loses money, I am talking about actually running it like a business.
     
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  2. Brady

    Brady Well-Known Member

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    Good luck staying emotionally detached from that style of property.
     
  3. thatbum

    thatbum Well-Known Member

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    Basically buying to operate a short stay?

    Yes I've been doing airbnb for nearly two and a half years and its been great. But I think you need to be very, very selective in the type of property you attempt this with - its certainly not viable (in a pure commercial sense) for the vast majority of properties imo - even in "holiday" areas.

    There's also legal issues with whether you need or can get planning approval for the use, which most people don't appreciate.
     
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  4. jodes

    jodes Well-Known Member

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    We have done it- and we think successfully too. I think I have written about it at a high level before on this forum but essentially we were looking for a property that we could use on weekends to escape Sydney and settled on a property in the Southern Highlands. Initially we were going down there every weekend but a) it got too hectic driving down there every weekend (and we found we missed our Sydney weekends and b) our return became too much to go down there that much.

    We usually try now to go down there once every 3 weeks or so but then we get an enquiry for $900 for a 2 night stay and think to ourselves "well, let's just stay in Sydney this weekend and collect that cash". :)

    We are booked out currently for every weekend (that we have available) until September, and quite a few mid week bookings as well (contractors that come into the area stay there). We are easily cash flow positive and also have a fabulous place to stay when we want to head down.

    I agree with @thatbum that it has to be the right area and won't work everywhere
     
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  5. BuyersAgent

    BuyersAgent Well-Known Member Business Member

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    congrats on making it work! Is yours West Coast? What are some of the essential ingredients when being selective?

    Well done and yes the temptation to profit competes with the temptation to use it for sure! Would you do it again? (ie with multiple properties)
     
  6. jodes

    jodes Well-Known Member

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    yes we absolutely would! My husband is supportive but very much "along for the ride" with property investment but he is ALWAYS talking about buying another one in the same area.
     
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  7. FXD

    FXD Well-Known Member

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    Glad I find this thread here as I am also facing a tempting opportunity to consider holiday house
    letting.

    Do I need a proper tourism business license to operate a holiday house letting? What specific
    regulations do I need to meet?

    Where do I start? I am only looking at friends and their friends/relos through words of mouth to
    begin with.

    Thanks,
    FXD
     
  8. BuyersAgent

    BuyersAgent Well-Known Member Business Member

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    I am not aware of any state regulation that would require a license (certainly not in nsw anyway) however some councils do regulate and restrict the way holiday letting is done. It varies from council to council. I suggest you target a region based on your long term ownership goals and the potential of the area to both support holiday income and to experience capital growth first.

    Then research the councils in that region to check for any rules/restrictions once you have chosen an area you like. Following that you need to identify the property managers and expert team members you want to work with in the area (unless you happen to live in a beach town already and plan on doing everything yourself) as this is a very important part of the business case.

    I have good knowledge of the best housing areas (and property managers) for this method in my local area and can help if you need. Specifically on the coast South of Sydney and the Southern Highlands (2 prime regions for both income and growth given the stats show Shoalhaven is the most visited tourist destination in all of Australia and only 2 hrs from Sydney making relocations/migration ever more common. But be aware not all homes in these regions would be suitable for short term letting.

    If you are only looking local to Melbourne I would suggest that supply constrained parts of torquay/surf coast and mornington would offer similar characteristics but you also need to do micro/street level research there too (anywhere really) as holiday makers are fussy when the location or housing type is wrong.
     
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  9. FXD

    FXD Well-Known Member

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    Thanks very much Matt for the great advice.

    Cheers,
    FXD
     
  10. Curoch

    Curoch Member

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    Hi Matt, I don't suppose you've looked at places like Jindabyne (and other towns who survive mainly through the snow season)? I've been strongly considering that recently because of the outrageous prices Airbnb homes are charging for skiiers/snowboarders as well as having a friend who's got a place up there that he says does very well.

    I haven't crunched the numbers to see whether it'd be cashflow positive but I'm sure that'd be the case (so long as global warming doesn't shave a few months off the ski season!) I'm mindful that unseasonably warm weather could really eat into your cashflow. I know Jindabyne gets used outside of the snow season but I don't think it's to the same extent (people can go camping in the bush during November - they're less keen to do that in the middle of winter and so will want a heated house instead!)
     
  11. BuyersAgent

    BuyersAgent Well-Known Member Business Member

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    I am not the right person to predict the weather - but summer use is increasing as the mountain biking infrastructure improves.

    I like the whole Snowy region, last month purchased a client an investment in Cooma for similar reasons as above. For the time being they are renting long term but can of course switch to short term if desired. They actually got offered the chance to rent to Snowy Hydro 2.0 staff - fully furnished for an extra $150pw or thereabouts but decided to go unfurnished.

    Jindabyne has very low vacancy rates always seasonal but falling over recent yrs so the trend (as far as the real estate market is concerned) is good, of course a drastic change in global warming if it eliminated the ski season would have an impact.

     
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  12. HostessMostess

    HostessMostess New Member

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    I'm dabbling in this, bought my first property to rent short term. I will see how it goes, but essentially I enjoy the hosting experience, so although it's not passive income, as I will manage the bookings (remote only, I will hire cleaners for onsite). It's CBD based and is also suitable for long-term tenant if required. I'd love to add more properties this way in the future.
     
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