holiday letting /rental /house

[jsoe]

Hi,
What are the implications of running a holiday letting assuming we'll be self-managing it? i.e. beach front / lake front

Does the house have to be in a particular zoning?
Do you need some sort of a license?
What about CG?

any successful / failed holiday house investor here?

thanks heaps!

 

[Propertunity]

What are the implications of running a holiday letting assuming we'll be self-managing it? i.e. beach front / lake front

Implications:
You will make a lot of money on rental income during peak holiday periods and nothing much in the off-season.
You can't personally stay there during the peak season for obvious reasons.
You need to do an ingoing stocktake and an outgoing stocktake with each tenancy to count the number of spoons, and cups etc.
Be near where people can walk or get a view of the beach etc
Choose somewhere that will not impact too much on the neighbours.

Does the house have to be in a particular zoning?

No, resi is OK

Do you need some sort of a license?

No, not in NSW. B&B is different I think ??).

What about CG?

It moves in line with the rest of the suburb. The house does not know who is living in it

any successful / failed holiday house investor here?

I doubt you'd get a confession from anyone .
Rents normally even out to a similar yield as a permanent rental would be given vacancie sin the off-season.
If it fails it will be because of poor property selection / location I would think.

 

[Ed Barton]

self managing a holiday let is a LOT of work.

presuming you want to make money and not have it as your holiday house and rent here and there....

if you're planning to self manage then you're obviously close by and won't want to occupy it ever?? if it's an hours drive you will find it really hard to self manage, if you have a job. a 'change over' will take you 1-2 hours - even if you're a super fast cleaner you're going to have to wait for the linen to wash and dry, or have multiple sets of linen. add the drive and you could be looking at 3-4 hours. could you do a change over mid week?

Generally agree with prop re yield and vacancy etc. but if you work really hard you can come out way on top, and i mean really hard.

i have a mate who has three holiday let's within 5 minutes drive of his place. it's not a full time job he works hard at it and makes decent money.

 

[Jen_PFR]

Ed, you're on the money. We self-manage four holiday lets, and they are a lot of work. As you said, along with the cleaning is the linen and other inventory stuff - you need to check everything (to make sure there's a full complement of teaspoons, dessert spoons, etc through to saucepans), that they don't need to be washed, that they're not damaged..... We also wash everything in between our lets - doona/duvet inserts, pillows, etc. This does all take a while! Then you need to factor in things like cleaning the oven, getting the carpets cleaned, etc etc etc. This is all assuming there aren't any actual repairs that need to be done, or anything like painting of rooms etc.

That said, our approach is successful in terms of money and also personal satisfaction with how we do things. We only have about six to eight weeks' vacancy per property per year, and we require a minimum lease of eight weeks. We couldn't do it if it were any shorter, it would just be unmanageable. We both have full time day jobs, so we manage the properties around that (and we do everything ourselves).

There is definitely a niche in the market for self-contained holiday lets in Perth, particularly in areas close to the CBD and/or beach. I would love to pick up another property soon but the other half is happy to wait a while, for some unknown reason!

 

[jsoe]

Hi all,
thanks so much for your response. It seems that I might have underestimated the extent of cleaning involved. Have you considered engaging cleaners? Or is that not economical for this type of business?

We only have about six to eight weeks' vacancy per property per year, and we require a minimum lease of eight weeks. We couldn't do it if it were any shorter, it would just be unmanageable. We both have full time day jobs, so we manage the properties around that (and we do everything ourselves).

hi Jen, it's interesting how you have a minimum of 8 weeks lease. What type of customers do you target? Holidayers? Corporates? When I think of a holiday house, I was thinking a couple of weeks lease at maximum at a time.

I've heard of people talking about renting out their holiday let's to retirees during off peak season. Can it be done? I mean, where would these retirees go during peak season?

 

[depreciator]

Does the house have to be in a particular zoning?

I did hear a while ago there were moves afoot up in Byron Bay with the local council to reduce the number of homes being rented out to holiday makers because it is making the local resident's lives hell.

 

[Ed Barton]

Ed, you're on the money. We self-manage four holiday lets, and they are a lot of work. As you said, along with the cleaning is the linen and other inventory stuff - you need to check everything (to make sure there's a full complement of teaspoons, dessert spoons, etc through to saucepans), that they don't need to be washed, that they're not damaged..... We also wash everything in between our lets - doona/duvet inserts, pillows, etc. This does all take a while! Then you need to factor in things like cleaning the oven, getting the carpets cleaned, etc etc etc. This is all assuming there aren't any actual repairs that need to be done, or anything like painting of rooms etc.

That said, our approach is successful in terms of money and also personal satisfaction with how we do things. We only have about six to eight weeks' vacancy per property per year, and we require a minimum lease of eight weeks. We couldn't do it if it were any shorter, it would just be unmanageable. We both have full time day jobs, so we manage the properties around that (and we do everything ourselves).

There is definitely a niche in the market for self-contained holiday lets in Perth, particularly in areas close to the CBD and/or beach. I would love to pick up another property soon but the other half is happy to wait a while, for some unknown reason!

jen i think you have a great business model, hats off to you. your places aren't holiday rentals though, they're serviced apartments. in between a holiday let and a resi lease.

my mate has a different business model to you and operates them like a hotel (he has hotel experience so is very good at it, especially managing yield). he'll do a one night rental if it's low season and the price is right. but it is only job.

 

[Ed Barton]

Hi all,
thanks so much for your response. It seems that I might have underestimated the extent of cleaning involved. Have you considered engaging cleaners? Or is that not economical for this type of business?



hi Jen, it's interesting how you have a minimum of 8 weeks lease. What type of customers do you target? Holidayers? Corporates? When I think of a holiday house, I was thinking a couple of weeks lease at maximum at a time.

I've heard of people talking about renting out their holiday let's to retirees during off peak season. Can it be done? I mean, where would these retirees go during peak season?

is the place close? is it a small local community? yes to both makes it a goer i'd say. my mates experiences....
he hires local single mums to clean when he has multiple change overs in a short period. cheap but they only work for cash because they are on benefits. it's the only casual labour available in the area.

people who rent your holiday let in the most undesirable periods are your bread and butter. it sounds weird, but it's true. anyone can let out a holiday house in the peaks. it's what you do with it during the rest of the year that makes you money. retirees are gold, they take it for months, not weeks and do very little wear and tear, and they come back year after year. but they only pay slightly more than the resi rate. would you rather leave it empty?

although his places are three bedders he markets them as 1,2 or 3. the bedrooms have locks so he locks of bedrooms to create a 1 or 2 bed out of a three and saves on cleaning costs.

if you supply more details of your potential place and your circumstances then i'm sure we can all add more...

 

[jsoe]

retirees are gold, they take it for months, not weeks and do very little wear and tear, and they come back year after year. but they only pay slightly more than the resi rate. would you rather leave it empty?

Thanks Ed. It's so good to hear from the experts. All of you mentioned really great ideas.

How do things work with these retirees? Where can I look for them? I can't help but wonder where they'd go during peak-season when the property is let to usual holidayers?

We're thinking to get a lake front/ ocean view property in Central Coast. It'll be a standalone house with a yard. It'll be an ideal holiday let for families to .. well anyone really. Budget is about $500k. We're planning it next year or so. Regarding the property management, we're undecided at this stage whether to do it ourselves or just engage a REA. I understand the rates are higher for holiday let's. So, we're still weighing up all the pros and cons at the moment (including moving up there as a lifestyle choice - this is completely another topic of course given the number of forums in SS about this issue).

 

[Ed Barton]

Thanks Ed. It's so good to hear from the experts. All of you mentioned really great ideas.

you're welcome. I'm certainly no expert on holiday rentals, and really no expert on resi. my mate, i would consider an expert though. Jen's an expert on serviced places and that's similar to holiday lets - listen to what she has to say.

How do things work with these retirees? Where can I look for them? I can't help but wonder where they'd go during peak-season when the property is let to usual holidayers?

offer a seniors discount, just 5% does the trick, people love something for nothing even if its loaded into the price. in the past my mate has had great success with lineage ads in the motoring (nrma, racq etc) mags, although more and more oldies are using the net these days. if you have an off peak monthly rate then he says that attracts the oldies. give them the same rate whether they stay for a couple of weeks or a couple of months. word of mouth and repeat bookings are his biggest market, but that takes a few years to snowball. wot if is his best sales medium, because people can book and secure instantly. but he advertises on the net where ever he can.

you need to accept credit cards, people love paying in this way. you can also do a 'pre auth' where you take an amount out of their credit card and it expires in x days, this is like a bond. hotels and hire companies do it as common practice. it protects you if they trash the place, and the risk of trashing is much higher in a holiday let.

We're thinking to get a lake front/ ocean view property in Central Coast. It'll be a standalone house with a yard. It'll be an ideal holiday let for families to .. well anyone really. Budget is about $500k. We're planning it next year or so. Regarding the property management, we're undecided at this stage whether to do it ourselves or just engage a REA. I understand the rates are higher for holiday let's. So, we're still weighing up all the pros and cons at the moment (including moving up there as a lifestyle choice - this is completely another topic of course given the number of forums in SS about this issue).

unless you do move it sounds like you are too far away to actively manage. a rea will really sting you and put no effort into keeping the occupancy rate up. it;s not only their commission that is high, you're going to be pay huge cleaning etc fees too.

once again i stress it's bloody hard work to make more out of a holiday let than you could by leasing it as resi.

 

[Monopoly]

Listen to Ed, he's spot on. If you are too far to the holiday property to self manage, much of the (potentially awesome) profits will be consumed by time and travelling costs (to and from the property). That's not even touching on the subject of back breaking cleaning (before and after) each guest stay, and the general maintenance and upkeep.

I own and manage my own holiday (beachside) rental properties which are over an hour's drive from where I live, however I have the luxury many don't, TIME.

There are many pros and cons, but unless you have lots of time to spare and/or are living in close proximity of the holiday let property, (as Ed suggested) stick to residential.

 

[CoastalHolidayR]

Hi there,

I own a Holiday Rental business on the Gold Coast. I'm not too sure about Perth but as a general rule of thumb our properties run at about a 80% occupancy but the Gold Coast is an extremely popular tourist destination.

Ed is correct to say that it is very time consuming, we often have a lot of owners come to us after they have tried to manage the property themselves as well as juggling a family and or a full time job and it all just gets too hard.

Holiday houses are very popular, in fact on the GC we have more guest waiting to book then houses on offer. Allot of families are moving towards booking self-contained holiday homes these days because they can usually share with another family which makes everything more affordable.

Ocean view is defiantly much much more popular here compared to river/lake view.

If you are looking at managing the property yourself you will 100% need a local personal to act as your cleaner and someone that is available to attend to the property if there is an emergency. Think burst hot water service, electricity outage- the guest is on holidays and paying a premium they will expect someone to attend to their every need and only be a phone call away.

Hope this helps!

Kylie Schoormans
Coastal Holiday Rentals

 

[Ausprop]

Holiday houses are very popular, in fact on the GC we have more guest waiting to book then houses on offer.

this is a point of frustration I have with PMs - well certainly is in the south west of WA. If there is more demand than supply wouldn't it make sense to put the prices up until it balanced out? There seemed to be a huge reluctance to do this, to the point where I had to self manage in order to double the asking rates. I had an issue with one renter once and they wanted to go to another house in town. they saw an agent that told them my rent was way too much, so I asked the tenant why they rented mine if it was too expensive and if they don't like it just go rent something else, to which they replied there was nothing Good of the agent to slag my place off too. I'd like to get hold of her owners database and pronounce to her clients in a hoighty toighty voice "oh no no those rates are FAR too low...tut tut tut"

 

[Unit]

Coastal
Would you mind giving a rundown of what management costs are involved in holiday letting on the Gold Coast.

Thanks

 

[jsoe]

There is definitely a niche in the market for self-contained holiday lets in Perth, particularly in areas close to the CBD and/or beach.

hi Jen,
How do you deal with emergency calls as Coastal mentioned above? Do you have some sort of agreement/contract with local repairmen?

 

[Jen_PFR]

We have a very good plumber, plus my husband is very handy. Fortunately we've been lucky and most emergencies have either happened in normal working hours, or they haven't been too drastic, or both.

 

[Ausprop]

hi Jen,
How do you deal with emergency calls as Coastal mentioned above? Do you have some sort of agreement/contract with local repairmen?

would it really be any different to what a PM would do... in the rare event it happens just pick up the phone and start talking?