There has never been a better time to repurpose your holiday home as a rental property. Regional home values increased 1.4% in the past month alone, double that of capital cities, while vacancy rates in prime regional lifestyle locations across NSW dropped below 1%, pointing to a surge in demand for these areas.
The absence of international travel combined with an increase in remote work arrangements means that holiday accommodation could not only be in demand during peak seasons like school holidays, but increasingly during ‘off-peak’ periods and weekdays as well.
However, making this decision comes with its fair share of considerations and requirements. We’ve prepared a quick list of what you need to know to ensure an efficient, profitable and enjoyable transition into renting holiday homes:
Getting down to business
Renting out your holiday home can be a lucrative income stream when managed correctly as a business and secondary income. A consistent stream of rental revenue is a great way to contribute to your mortgage repayments, yet there are also maintenance and management fees to consider.
“Before listing out a holiday home, you should take the time to understand the ins and outs of your financial obligations to ensure you can maximise the opportunity. It is possible to deduct maintenance costs, repairs and rent with the correct processes and deductions so make sure you keep thorough and comprehensive documentation for all of your expenses as part of the rental process,” says Melinda Cotton of Belle Property Escapes.
Mistakes include claiming deductions on repairs that existed before buying or choosing to rent out the property, claiming back market rates on rentals to friends at ‘mates’ rates, and most commonly, not appropriately accounting for the time spent unoccupied, rented, and occupied by yourself in deductions.
Elevate your holiday accommodation offering
In order to distinguish yourself from other rental properties in the area and attract a premium price point for your holiday home, it pays to invest in creating a desirable home for a wide audience of tenants.
“It is all in the small details that show your guests that you care about your holiday home and their experience. It captures the interest of potential visitors and the loyalty of guests to come back again and again,” Melinda says.
“When guests stay at a Belle Property Escapes home, they are greeted with a curated guide to the area which creates special, local memories they can treasure long after the trip concludes.”
High-quality photography of your property and the provision of amenities like bikes, kayaks and other entertaining additions are simple offerings that will catch the eye of browsers online. Once in the door, provide a local touch for guests to feel at home, such as local produce, toiletries, a property compendium with local guides and activities, or even some loved books and board games on the shelves in case of bad weather.
Holiday home damage control
One of the joys of owning a home is decorating and filling it with treasured possessions. When choosing to rent out your holiday home however, you also commit to sharing this space with tenants.
Unfortunately, accidents can occur. Even the most considerate guest can crash a bike, spill a glass of wine, or put wet swimmers where they don’t belong. In order to deal with this, some choose to install décor and toys that they are comfortable with being damaged while others will introduce a locked storage space in order to secure some of their more valued possessions and ensure that it’s not available for use.
“My general rule is to only leave out the items you’re comfortable with losing, just to be safe. Equally, part of the appeal of rental properties comes from their décor so invest in durable or unfussy furniture that is still true to your style,” says Melinda.
Another frequent issue is general household repairs or failures while tenants are in holiday accommodation. A hot-water failure or broken air-con on a hot day can quickly ruin a guest’s experience. When left unmanaged, this can also lead to tenants demanding refunds to compensate for the inconvenience.
Melinda advises that you should designate a pool of funds to quickly address issues like damages, incidental breakage costs and necessary repairs that can come when you offer your home to others.
Long-term holiday home logistics
A holiday home is the pinnacle of relaxation. This should apply to you, as the owner, as much as it does to potential tenants. In this spirit, consider working with an experienced property agent who manages holiday rentals in the area.
They can assist with rental applications and guest check-in, oversee administration for insurance, liabilities and bond procedures, as well as responding to any on-site issues that arise over the course of a stay.
“Our clients choose to list their holiday homes with Belle Property Escapes because of the depth of experience we offer through our team of real estate professionals and the reach our brand gives to the promotion of the property. This gives time back to the owners, simplifies the rental process for them, and gives peace of mind about their property management,” concludes Melinda.