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Holiday rental vs permanent

Discussion in 'General Property Chat' started by Brendon, 20th Jul, 2016.

  1. Brendon

    Brendon Well-Known Member

    Joined:
    11th Jun, 2016
    Posts:
    46
    Location:
    Vic
    I was just wondering if anyone has opted to rent their IP out as a holiday rental instead of as a permanent.

    Obviously the IP would have to be at a holiday destination to make it even worth contemplating but what are the other pros/ cons?

    The main con I could see is inconsistent rent which could affect future serviceability, would also think that it's higher risk but possibly higher reward too?
     
  2. legallyblonde

    legallyblonde Well-Known Member

    Joined:
    23rd Jun, 2015
    Posts:
    686
    Location:
    TAS
    Higher workload.. managing more tenants... but also cleaning the place between visitors
     
  3. Mick Butterfield

    Mick Butterfield Well-Known Member

    Joined:
    15th Jan, 2016
    Posts:
    408
    Location:
    Bermagui NSW
    Hi Brendon,

    I am in real estate in a tourist location. From my experience there are pros and cons to both, however, in 95% of cases permanent rental is by far the better option. Main reasons being:
    - Less wear and tear on the property.
    - Better screening of tenants/occupants.
    - Better returns (in all but a very few cases),
    - Less on going costs (in general).

    Generally holiday rental is only effective if you plan to use the property on a semi regular basis (outside of peak times) and this is part of the attraction of the property purchase in the first instance.

    Hope this helps,
    Mick.
     
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  4. Simon Moore

    Simon Moore Mortgage Broker - Melbourne Business Member

    Joined:
    4th Mar, 2016
    Posts:
    231
    Location:
    Melbourne
    I have a few clients who use Airbnb to rent out holiday homes and they actually make more than renting it out on a full-time basis. They use a local cleaner, but do spend a bit of their own time messing around with guests.

    Servicing won't be too much of an issue as lenders will accept the rental estimate from a valuation.
     
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  5. drg86

    drg86 Well-Known Member

    Joined:
    25th Jun, 2015
    Posts:
    279
    Location:
    Newcastle
    Just remember you will have to have it fully furnished for holiday rentals.

    I have an IP that I alternate between permanent and holiday. 290/week permanent or 1100/week holiday season. It can work out well if you can lock in certain tenants, example I had a teacher on placement in for the term then she moved out for holidays:D

    Many more expenses with the holiday, but a higher return too.