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Strategies to maximise rental returns

Discussion in 'Property Management' started by Mgs4, 14th Jul, 2016.

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  1. Mgs4

    Mgs4 Member

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    11th Jul, 2015
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    Sydney
    All,

    Some of you might know someone who rents out a rental property using Airbnb or other short term stay strategies to maximise rental returns. There's now interesting companies like Kayla (Bed linen, bath towels, toiletries, housekeeping - Kayla) who provide management services to property owners using mutiple short term stay platforms to maximise rental returns given optimal day rates, occupancy rates and duration of stay.

    If you consider professional property asset managers like Meriton, they don't do long term leases they run services apartments for short term stays because that maximises rental returns. Now there's some companies that can provide this professional management services to the average property owner.

    Have any property owners tried short term stays or service providers like this?
     
    Perthguy likes this.
  2. MyPropertyPro

    MyPropertyPro SE Qld Property Management & Investor Services Business Member

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    It can be a lucrative return however you're more susceptible to seasonal and economic cycles using this approach as the bulk of your tenancy will be driven by corporate traffic. We have some clients who have apartments in inner city Brisbane where the on-site manager provides the service you're talking about. The fees are higher but obviously the amount of rent charged is also higher and the occupancy rate seems to be better for a one bedroom than a two bedroom. There are also some short stay management agencies that will provide a minimum guaranteed return where I guess it's essentially run like a hotel.

    Personally, I would prefer and lower, stable cash flow but depending on your risk appetite it can be a great way to increase your overall return provided you can ride out periods of vacancy.
     
  3. Mgs4

    Mgs4 Member

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    The risk of periods of vacancy should be minimised with dynamic algorithms adjusting average day rate prices in real time to maximise rental returns. If this was done manually be a person I'd agree with you there's more risk but using efficient algorithms in real time should minimise this effectively.

    I've heard this type of approach can improve typical returns 20%-40% on a net basis after fees. Therefore even if vacancy drops and you need to reduce average day rate to maintain vacancy there's a fair bit of existing margin there.

    Has anyone else here had experience using some of these services?
     
  4. thatbum

    thatbum Well-Known Member

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    Uh, really? You make it sound like some algorithm is a magical solution to the issue of short stay rental demand.

    I get that making the rent lower when there is less demand might be a good idea, but the downsides to short stay accommodation don't suddenly go away if you try and tweak the numbers better.
     
    Perthguy likes this.