Experience with short term leases?

[Ryan80]

Hi,

We have just settled on a property in Gladstone and are looking at renting the house on a short term lease instead of long term (6 months plus)

While staying at the local camping grounds we found that a cabin is renting for nearly $1000 a week and believe we will have enough tenants to make this work ..

Has anyone gone the short term way and is there anything to look out for? Different insurance etc? All advice greatly appreciated!

We will be furnishing the place also.

 

[wobbycarly]

If you're in Perth and the property is in Gladstone, I'm guessing you're not self-managing.

You will need to be aware that this will be a lot more work for a PM, and therefore more cost to you. If the PM takes 1 week rent for each tenancy, and assuming that they have fairly standard PM rates (say 8.25% inc), that starts eating into your margin pretty quickly.

You may also need to cover electricity, water, gas, etc, as the tenant may expect that included on a short term lease (think Quest managed apartments, or similar), especially when furnished.

Do your sums carefully, IMO.

Can't comment on whether it will work or not.

 

[Jen_PFR]

We do this.

There are a few things to keep an eye out for. Firstly, I can't imagine it would be viable if you get a PM - we self-manage all of ours, and for a reason: if you're renting short term, there's a lot of work involved. To pay a PM to do what we do in terms of self-managing would cost us a fortune. Even things like ensuring the property is properly cleaned between tenants takes a while, and we don't farm that out - we do it ourselves. You need to like cleaning ovens and showers, often after putting in a full day's work at the day job.

Secondly, you need to determine exactly how and what market you'll be pitching at. We specifically went for two bedroom ground floor units which are close to everything (city, beach, shops, public transport). However you may wish to go for one bedroom or studio properties, or 4x2 houses - but you need to be very clear who your potential market is, and what they want.

The initial set up cost is much greater, because with short term properties you need to provide all furniture, plus things like crockery, cutlery, linen, towels, etc etc etc. In order to get the most benefit from this you should also get a good property accountant, and a good tax depreciation schedule drawn up.

Also think about what happens when things go wrong? If you do self-manage, you are the person who gets called. We have had tenants lock themselves out of a property and call us at 1am to come and let them in. We have also had overseas tenants arrive at 3am and have been at the property to let them in. Things like this do happen (not all the time though) and you need to consider if you are up to it. If you go away on holiday, who will take over that responsibility?

I could go on for days about it, but all I can say is this: it works for us. However we don't have kids and we don't have hugely demanding jobs, so you do need to take these factors into consideration also when making a decision.