Short term holiday hosting vs traditional rentals

We've all heard the horror stories on both sides of short term holiday hosting and traditional rentals, so is one better than the other?

One with higher, variable yield and the potential to be time demanding, or on the other hand, consistent, predictable and less time demanding? These are the questions on most investor's minds.

Short term holiday hosting poses a few questions and things to consider:

• Is the property fully furnished or do you need to outlay capital to furnish it, including linen?

• How often will this need to be replaced and/or upgraded?

• Can you afford the time or money to replace items as needed/broken/missing?

• Potential tenants are not vetted or checked.

• Is the property located in a high tourist area to ensure maximum booking exposure?

• Do you have the time to manage, clean, advertise and organise bookings?

• Bad reviews can impact pricing and income.

• No condition reports at the start of each short term let to note the condition of the property.

• Damage to neighbourhood/community feel as there can be increased noise in a transient residence.

It is argued that the general wear and tear on a holiday home is up to four times more than that of a long term traditional rental. This is due to the increased amount of tenancies per week and the less care taken while the resident is on “holiday”.

With this comes an increase in damages, lost or stolen items and the need to refurbish the property.

Some of the best advantages of long term letting comes with being able to set and forget and get on with your own personal life.

• Consistent predictable income.

• Tenants vetted and thoroughly inducted.

• Detailed condition reports with security bond paid prior to tenancy commencing.

• An agent/agency focuses solely on the day to day management of the investment.

• Legislation to provide a framework of tenancy and expectations.

There is no denying the income derived daily for short term holiday hosting supersedes long term letting for any given property.

This, however, is not the only contributing factor financially.

Short term holiday letting fluctuates and is inconsistent with seasons, weather, sporting events and where the property is located, whereas long term letting is a fixed known amount, predictable for mortgage payments.

For any investor looking at renting their property via either method, ensure that appropriate insurances are taken out to cover: contents, public liability, building, loss of rent and a number of other key components/events.

Ensuring that the correct coverage is taken out for the chosen rental strategy is key to protecting your financial interests.

Kirrilli Cobley - Property Management BDE, Queensland