corporate letting and short term rentals

[bianca]

Has anyone been involved in the corprate letting market?

I know there are a lot of threads about "serviced apartments" and holiday letting, but what about the short term rental market and corporate letting?
And doing it privately, without involving on site property managers?
Has anyone been involved with this and what are the thoughts, because the returns, if done correctly and in the right areas, could be pretty good, as far as I can see?
Apartments in Small boutique buildings,depreciating furniture packs, much higher then avarage rents,as long as the body corp allows short term,and you can get a reliable property manager nearby for the keys, inspection and cleaning issues, with the current rental market this option seems fantastic.
Go on...knock my dreams of owning lots of beatifully furnished apartments right down... I am prepared.
Do I have blinkers on, or are there huge issues that I am not looking at?

cheers everyone

bianca

 

[alexlee]

Just going off the top of my head here, but I would think the main problem is finding the tenant? Do you sign a lease with a company that will house its execs there during work stints? I think it's a fairly management intensive thing. I remember reading about a guy who did this in Canberra, and he seems to spend a lot of time screening and looking for tenants. I'm sure vacancy rates will be higher as well.

I've thought of, say, contacting hospitals and asking them whether their doctors need accomodation. I've heard that there are a lot of locum (overseas contractors, almost) doctors in Australian hospitals. e.g. buy a block of units near Westmead Hospital in Sydney and get referrals from the hospital. Still seems like a management intensive exercise, though.

All in all, a good business if you can get tenants but I think it's not a set and forget strategy.
Alex

 

[stargazer]

Hi Bianca

What you have said is correct and no problem finding a tenant. Personally would have a property manager but that's a choice i guess.

cheers
BC

 

[JoannaK]

Hi Bianca,

Your idea certainly has merit. I've done what you're thinking about and it worked a treat!

I used to be a property manager and I had a client who purchased an OTP at an extremely inflated price. The agent couldn't lease it at $500/week so he thought he'd made a mistake and bought a dud investment. Tried to re-sell it via auction a year after he settled the purchase and it was passed in at.

I came across this guy and after learning about his difficulties convinced him to furnish the apartment and turn it into a serviced apartment.

Neither of us had done something like this before, but I was constantly getting requests from people for short term accomodation, so we decided to take a punt. We calculated that the apartment needed to be occupied for 30 weeks out of 52 in order to break even.

So, we spent a few weeks furnishing, connecting telephone, foxtel, arranging supplies (little soaps, shampoos, coffee, sugar and milk) etc etc.

Once it was ready, we advertising only in the SMH and let local agents and relocation agents know about it. It was leased at an average of $1,100 per week. The rental was calculated on a sliding scale depending on how long the length of the tenancy.

In the last 12 months that had been operating he'd had only 4 weeks vacancy and the NET income generated from this property was around $42,000 compared to a gross income of $26,000 on a normal unfurnished 12 month tenancy.

He paid for electricity, foxtel, 10% management fees, telephone line rental (occupant was charged usage), cleaning once a week when the property is occupied and drycleaning linen and towels once a week (when the property was occupied). The tenant paid for a final clean when they vacated.

A good property manager should be able to do this for you if the location is right, but you need to find one with a bit of entreprenaurial flair.

 

[GIDDO]

Sure thing Bianca,
I am doing it right now - in fact I am so hands on that I am going to do some janatorial work in a moment. Just took $260 from a guest for a 2 night stay.

See our website www.standrewsplace.com.au

We nett about 9% before our own wage, and live on site.

You could do it with management I reckon - returns may be down a little.

Our building are only 3 years old and near a private hospital.

Certainly PM me if you are wanting any more info.

 

[units4me]

I've got a small block of four flats that I've been thinking to do exactly that. What's stopping me is that they are all well rented as they are, but it would be money well spent according to my research.

 

[GIDDO]

re my previous post

The 9% return is nett after all expenses rates, ins, phone electricity etc are paid but before tax and wages( if applicable)

 

[depreciator]

I heard the other day (and it could be a complete fabrication) that in parts of Melbourne where developers are holding lots of stock, they are renting out furnished apartments to enterprising local girls. These girls use the apartments for short stay clients. The duration of the stay is around an hour.
Scott

 

[geoffw]

I heard the other day (and it could be a complete fabrication) that in parts of Melbourne where developers are holding lots of stock, they are renting out furnished apartments to enterprising local girls. These girls use the apartments for short stay clients. The duration of the stay is around an hour.
Scott

A friend once investigated hotels around inner Canberra. They were reporting occupancy rates of 110%.

Apparently rooms were let out just for the lunch break as well as for overnight.

 

[farone]

What are you suggesting there 'depreciator'?

 

[arriety]

I have thought of this in the past and think I could get most of everything done eg cleaning etc but how do you collect the rent? If people only stay a couple of week, they usually pay a deposit and then the rest at the end of the stay, don't they? I decided it would get too tricky collecting the money. My long term rentals are just banked by the tenant.

 

[JoannaK]

Arriety,

I had a credit card machine set up and the occupant was required to pay a deposit equivalent to two weeks rental (as it was a minimum 2 week stay), then every 2 weeks I would debit their credit card.

 

[arriety]

Joanna - thanks for that. Sounds like it would work well. I hadn't thought it through properly. Might consider it again when this present lease runs out. My apartment is in the city, it would have worked a treat!

 

[ani]

I have thought of this in the past and think I could get most of everything done eg cleaning etc but how do you collect the rent? If people only stay a couple of week, they usually pay a deposit and then the rest at the end of the stay, don't they? I decided it would get too tricky collecting the money. My long term rentals are just banked by the tenant.

My property is listed with www.ozstays.com and I follow their terms and conditions.

50% deposit on booking, balance paid 7 days prior to arrival. Tenants just deposit into my bank account.

 

[crest133]

You could try approaching several or all of your local motels. Many motels are happy to assist other property owners with the motel's overflow when they are full - because phone enquiries keep coming ( phone enquiries can't see the "No Vacancies" sign.) Better for a motelier to assist current and future clients with an option (rather than turn them away to a competitor), take some commission out of the credit card payment, write a cheque, or do it all as cash even easier, handle keys, arrange cleaners etc. Too easy, we moteliers do it all day (yeah and sometimes half the night too).
Might be some extra business in it for you.
cheers
crest133

 

[arriety]

My property is listed with www.ozstays.com and I follow their terms and conditions.

50% deposit on booking, balance paid 7 days prior to arrival. Tenants just deposit into my bank account.

thanks for that, the site I was looking at charged $200 just for the listing. This looks better.

 

[JoannaK]

My property is listed with www.ozstays.com and I follow their terms and conditions.

50% deposit on booking, balance paid 7 days prior to arrival. Tenants just deposit into my bank account.

Hi Ani,

I'm just curious as to the enquiry rate you achieve from this site and what sort of occupancy rates you have?

Thanks in advance!

 

[bianca]

Hi all

Now that we have an interesting possibility suggested by Joanne, there remains the question of the all important KEY??
Anyone have any brilliant ideas on how to structure key pick and delivery, so that the"4 week stayer" does not fly back to Perth with key in pocket? Where do they deliver it? So the next person can pick it up? How does the cleaner get it to clean?

Looks like a real estate agent has to get involved?

I know a guy who has this set up beautifully. He picks the guestst up, hands them the key, collects it on departure, and does an inspection . But this wont work if you dont live in the same place as the IP.

Interesting also to find out exactly how the ATO will treat all this--is this classed under "holiday rentals, serviced apartments, short term letting, or as private letting? Cheers All

 

[itinerantotter]

Bianca

I have used an apartment which had a secure box containing a key on the wall outside the door - the manager gave me a number code with which to access the box after she had received my payment. The code could be reset (by the cleaner?) in between lets.

 

[ani]

Hi Ani,

I'm just curious as to the enquiry rate you achieve from this site and what sort of occupancy rates you have?

Thanks in advance!

Sorry Joanna, I missed your question before.

Enquiries run at about 1 a day, occupancy about 70% in the last year.