How to make your property a guest accommodation earner
With Covid-19 restrictions finally easing, travel is once again on the agenda for both local and international visitors to NSW – and that means new opportunities for savvy property investors.
The pandemic stopped the booming short term rental accommodation (STRA) business in its tracks for most of the past 12 months, but already bookings and listings are surging as people start to plan those long-delayed holidays.
And for many of those travellers, traditional hotels and motels are out of favour and a holiday spent in a private home is seen as a more relaxed, intimate way of reconnecting with friends and family.
Hits on STRA platforms like Airbnb and Stayz and boutique local providers are on the rise as the peak summer season approaches and, in some cases, it’s already too late.
“We’re already 100 per cent booked out for the Christmas and new year week,” said Claire Marriott, from Palm Beach Holiday Rentals, an exclusive enclave on Sydney’s northern beaches where a week’s getaway can set you back from between $8,000-$50,000.
That’s a juicy return for the owners of those homes, far in excess of the rental charged on a regular long-term lease. And it’s the same story elsewhere in NSW.
“In some cases, owners using their property for STRA can double the normal rent,” said property lawyer Anthony Cordato. “The high seasons may provide a small window when it comes to local tourists, but international visitors will soon be able to start filling those gaps.”
Along with the premium rental income that comes with an STRA investment property, the major pro is flexibility as it gives the owner the opportunity to still use the home themselves if they wish.
But potential investors will need to familiarise themselves with a raft of state government regulatory changes that have hit the STRA industry over the past 18 months.
The most contentious were changes to strata legislation which allowed owner’s corporations to pass by-laws prohibiting STRA within strata schemes for unhosted apartment use, and a 180-day annual limit on STRA stays in properties within the Sydney metropolitan area.
In December 2020, a code of conduct was introduced for hosts and guests and includes a two-strikes-and-you’re-out clause for repeated breaches that can potentially ban both from taking part in STRA for five years.
And from November 1, 2021, house owners need to include themselves and their properties on the NSW government’s STRA register, plus comply with a new STRA fire safety standard.
With the exception of the 180-day limit, the changes have been welcomed by the industry.
“Having worked closely with hosts to help them understand and meet their obligations, we know that they’ve welcomed the clarity and certainty that these new rules have brought to support their hosting business,” said Susan Wheeldon, Airbnb’s country manager for Australia and New Zealand.
Once you know what being a STRA host involves it’s then about finding a property and it all comes down that most important real estate truism – location.
Where to buy
In Sydney, the rule of thumb is to buy somewhere close to the CBD, beaches, universities or hospitals.
But, according to Stayz’s director of vacation rentals Darren Karshagen, some of the best investment opportunities are in regional NSW, in areas where the 180-day limit doesn’t apply.
“People are looking to get out of Sydney,” he said. “Those drivable distances two hours from Sydney – the north coast, south coast, and inland – is really where the demand is. It’s larger properties with amenities like multiple bedrooms, full kitchens and swimming pools.”
Once purchased, you can choose to manage the property yourself or have it listed on one, or several, of the available STRA platforms.
For a five per cent commission, a site like Stayz will assist you in determining the best rate for your property, vet guests, provide basic mandatory insurance coverage, cover any damage costs and arrange cleaning and linen services.
“I think an agent is better,” said Mr Cordato. “You’re getting a premium with a short-term rental and they don’t take all of that premium with their commission, just a bit of it.”
For more information on the NSW government legislation on the STRA industry, go to: planning.nsw.gov.au/STRA
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