Investment unit - Permanent vs. holiday letting

[spottygoose]

Hi

I guess this question is more pertinent to those that live in tourist areas eg Gold Coast. Aside from the direct rent issue what have people found to be the pros and cons of letting your unit to permanent tenants versus putting it in the buildings holiday pool to be let. Any pros, cons, tips, advice - self managing, agents, where to find good tenants etc etc. Thanks in advance.

 

[tech/a]

Re: Investment unit - Permanet v holiday letting

I have 2 in SA.

Pros.
At times far better return.
Apartments are pristine due to constant cleaning.

Cons.
Costs of cleaning---we do it ourselves if we had to pay everytime this would be a killer.
Costs of rentals,we advertise ourselves and let ourselves doing this through an agent would be a killer as well.
Occupancy
While the beach suburbs of SA arent the Gold Coast our Occupancy is poor 35% as such we are (after 5 yrs) decided to look longer term.

For us we have found a niche for shorter term (3-6 mths) F/Furnished rentals
for home owners between building and sale of houses.
We only need a few of them a year.
We can get 50% more a week than normal longterm tennancies.

Seriously short term remtals if your paying a fee for letting AND paying for Cleaning---both biggies plus any management fees unless you have 85% plus occupancy youll be either going backwards or very disappointed.

Look long and hard at it.
I think youll find what we have!
Go longer to medium term.
There are markets for logerterm executive rentals.
Cut down costs---they end up with your profit!

 

[spottygoose]

Re: Investment unit - Permanent vs holiday letting

That is some good advice there tech/a especially re targeting those mature couples who are looking for a short term fix while building or longer term executive rentals. Our unit is already furnished so I would prefer to leave it that way and I also imagine these types of tenants are less likely to bother with "frivolous" requests.

Do you meet your prospective tenants at the property and ask for references etc and generally suss them out?

 

[tech/a]

Re: Investment unit - Permanent vs holiday letting

For those medium term tennents yes we will.
They will sign a short term lease.
Short term (holiday rental) is simply credit card and you'll find the keys---blah.
Check with Banks or very large business in your area who are likely to fly in execs.Mind you the decor would need to be pretty swish.

I believe there is a web site for rentals such as this up there.
Ive heard figures of $2000/week but this was a 2 mill home.
We are looking at $500/week for a $500K apartment on the beach.
To give you an idea.
Rental perminent here is $350 for the same apartment and in peak $1000/week for Holiday rental.

 

[spottygoose]

Re: Investment unit - Permanent vs holiday letting

Thanks again tech/a - our apartment is also worth 500k and on the beach and the permanent rental figures being bandied around are $500 - $550. If short term leases mean a premium to this it certainly sounds interesting. I am going to do a bit of research and see what I can come up with.

The executive thing is probably out as the bathrooms need a bit of updating. The managing agents want all the furniture in the holiday pool units replaced with their selections but I don't see the point in doing this when we have only just recently updated it and the bathrooms are looking a bit sad. If I was a holiday maker i would be more concerned with this than the furniture.

This was our impetus to finally start thinking about taking it out of the pool and putting tenants in. Our plan is to leave remodelling as long as possible so that when our dog moves on to greener pastures (god forbid) we can sell our house move into the unit, re-model it and put it on the market when we find somewhere for ourselves.

I think a short term rental would be less fussed re outdated bathrooms etc as they know what they are getting and they have a ocean view unit close to the heart of Surfers P. with a tennis court, pool, sauna etc to compensate lol anyone interested?

Thanks again tech/a.

 

[Siraitken]

Re: Investment unit - Permanent vs holiday letting

Hi Spottygoose and Tech/A

I suggest you check out this website.
http://www.propertyinvesting.com/

It is an Australian Property Investing Forum which is very good. It was created by a renowned property investor Steve McKnight who is also an author. There is approx 60,000 members. It has loads of information to search from and majority of it is high quality.

I'm sure they will have the pro's/con's of what your looking at.

All the best
Dave

 

[spottygoose]

Re: Investment unit - Permanent vs holiday letting

Great site Siraitken. Thank you for posting.