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Advice for Holiday Letting

Discussion in 'Real Estate' started by CCinvest, 24th Sep, 2008.

  1. CCinvest

    CCinvest Member

    Joined:
    6th Sep, 2008
    Posts:
    13
    Location:
    Sydney, NSW
    Hi guys,

    My parents have a brand new apartment on Sydney beaches they would like to rent out. I am helping them out, and so would appreciate some advice from forum members who have experience with leasing/renting out their IP.

    The 3-bdr apartment is top-end and beach front. The goal is to achieve maximum rental, minimal fees, and also the option of using the property when vacant. We are considering several options
    1. long-term lease - 1+ year
    2. short-term leasing for say 3-6 months
    3. executive rental (fully furnished) for varied time periods
    4. holiday letting (fully furnished) for min 1 week (or perhaps weekends if needed)

    After having several local agents through the property, I am left possibly looking at option 3 or 4 (more likely).

    They say the area rents well through out the year, and vacancy rate is about 60+%

    Agent fees are about 15-20%, which too me sound high.

    I am considering listing and managing the property myself, including
    - taking photos of property
    - listing on various rental sites
    - perhaps have a dedicated website with more details/photos
    - meet guest for key exchange and payment
    - cleaning

    I would like to know from anyone the best websites to list a holiday property, also some do's and don'ts.

    Also what do people think of this option to have both flexibility and return, or am i foregoing a considerable amount of guaranteed return with extra headache.

    Cheers in advance
     
  2. D&K

    D&K Well-Known Member

    Joined:
    14th Nov, 2005
    Posts:
    206
    Location:
    Canberra
    CCinvest,

    Haven't done the short term thing myself, so feel free to ignore everything I suggest.

    Agents may prefer the short stay (option 4) because of the higher fees, is this inclusive of booking and advertising or just a percentage on rent? However, the increase is probably justified as they have to do work for every single week it's rented, not just sit back and collect money once a month. Another issue for you to manage is that short term rents like this might attract GST.

    Advertising yourself could be through somewhere like Stayz - No 1 in Holiday Accommodation Rentals.

    Think also about the issues of high turnover, e.g. you could be up for regular cleaning bills between tennants, higher rates of lost keys, etc.

    Executive rental can be good if you can get it. You can depreciate the furniture at a decent rate, to help offset purchase costs. Tennants may expect more attention in terms of minor maintenance. You can end up with longer vacancy times between tennancies, depending on demand for that level of rental property in the area.

    HTH, Dave
     
  3. CCinvest

    CCinvest Member

    Joined:
    6th Sep, 2008
    Posts:
    13
    Location:
    Sydney, NSW
    Thanks Dave,

    They charge a booking fee to the tennants, and advertising is included in the percentage fee.

    Can you explain why GST would be included?

    Where do I get info about security bonds, leasing agreements, and other requirements of holiday letting?

    Thanks

    CC
     
  4. D&K

    D&K Well-Known Member

    Joined:
    14th Nov, 2005
    Posts:
    206
    Location:
    Canberra
    I'm not 100% on the GST, but I think it basically comes down to what the government figured they could tax. I think short term accomodation, such as hotel and holiday rentals get GST-ed. Longer term "essential" accomodation was exempted; do you remember to permanent resident caravan park GST debarcle? I don't know what the cut off is, I think that's a tax accountant question.

    I don't know about the security bond issue. I have a friend who had done holiday rentals in QLD, and their PM held a bond, but I don't think it needed to be lodged with the rental tenancies board due to the short time period. This could vary with the state by state tennancy laws.

    Sorry that I couldn't be of more help.

    Cheers, Dave
     
  5. AsxBroker

    AsxBroker Well-Known Member

    Joined:
    8th Sep, 2007
    Posts:
    1,448
    Location:
    Sydney, NSW
    The booking fee is a service. Hence, Goods and Service Tax is charged on it.
    Same as long term lease where a realestate agent would collect rent for you and they charge a chunk as a fee/commission which is a service. Naturally this would be seen as an expense in generating revenue ;)

    Cheers,

    Dan

    PS Your parents should be speaking to their accountant or tax adviser about these sorts of things.

     
  6. CCinvest

    CCinvest Member

    Joined:
    6th Sep, 2008
    Posts:
    13
    Location:
    Sydney, NSW
    Thanks Dan and Dave,

    After speaking to my parents yesterday they have decided to go with the medium term rental option, via executive rental. They would prefer knowing they were getting a more guaranteed return, as well as less turnover traffic.

    They spoke to one company that deals with both short (3 month) to long (2 year) rental periods, either furnished or unfurnished (depending on if the tenants bring their own furniture).

    Does anyone know of other executive rental companies that relocate locals or foreigners to Sydney southern beaches.

    Cheers

    CC
     
  7. Jacque

    Jacque Team InvestEd

    Joined:
    16th Jun, 2005
    Posts:
    1,885
    Location:
    Sydney
    Hi CC

    You could try Holiday Accommodation, Holiday Rentals, Homes & Serviced Apartments in Australia – Rent-A-Home.com.au or similar companies to see their commission rates, conditions etc for short term executive or holiday rentals.
    It doesn't matter how "nice" the apartment is, however, unless you're advertising in the right places you aren't going to attract anyone, so my suggestion would be to think like a "tourist" and google as if you're the tenant doing the searching. A few minutes will reveal the biggest and most popular site, as well as other companies that may be better placed to assist.

    If you're keen on doing it yourself, however, I second the suggestion about the stayz site- it's excellent and used by lots of short term renters.
    Best of luck with it all :)