Some property investors are starting to look into the short-term lease strategy as the next step in their property investment journey, but as it is a somehow new field in the vast landscape of property investment, many remain reluctant to jump into the short-term rental market.
Quirin Schwaighofer and Sabrina Bethunin of MadeComfy—an end-to-end service provider empowering property investors to maximise their returns by leveraging online platforms in the short-term rental space—said that first and foremost, investors must conduct a thorough analysis of the exact location of their property.
"You should identify that there [are no] oversupply of properties available for short-term rental and that this seasonality doesn't impact significantly the return of your property," Sabrina said.
The business partners share their "three key pillars" for identifying if the short-term rental strategy is the best route to take in one's property investment journey:
1. Good location
A good location ensures a strong return, Quirin says.
He explained: "You can't change the location once you buy it, so make sure that the location has a strong return on short-term rental. And there's data you can look at—that's something we usually provide."
2. Attractive property over empty property
Short-term rentals are all about the property's aesthetic appeal and properties that appear "nice, funky, and quirky" often get the most number of rentals.
"Make it really attractive... It's not about just having an empty property—it's about mak[ing] it really look nice, funky, quirky. Something different to hotels and something that stands out and makes people to click on your listing, and then want to stay in it so people can start to dream," Quirin said.
3. Providing amazing guest experience
Having to deal with different people's expectations in a short amount of time might be the point where property investors deem the short-term rental market too stressful for them. This is where management companies such as MadeComfy come into the picture—to ensure that guests enjoy their stay well enough to make them come back or, better yet, get them to recommend the property to their friends who are traveling to the same area.
According to Quirin: "What you see in most short-term rental platforms, reviews are almost everything. So whilst it's great to have a good location, a great looking place, you need to also provide the experience to the guests so they'll leave a great review, even come back, and make sure that your occupancy and your rates that you can achieve are on the higher side."
While there may properties that could be exceptions to "low-season" months, Smart Property Investment's Phil Tarrant still advised investors who are looking into exploring this new market to "have plenty of buffers."
"I can double my income in summer months. But it means in winter months, I need to make sure I've got plenty of buffers in place or good cash management so I can still pay my mortgage during those periods," he said.
Sabrina concluded: "I will invite property investors to explore the additional opportunities they have in the market to optimise their property portfolios, and see how also including short-term rental properties in their portfolio they can improve returns and improve the yield of their investment properties."
Tune in to Quirin Schwaighofer and Sabrina Bethunin's episode in The Smart Property Investment Show to know more about their insight into the key differences between short-term versus long-term rentals, as well as how property investors can ensure they’re getting the most out of their portfolio.