Jess chats to 9Honey to provide insight on what to consider when renting out your home or investment property.
With the explosion of the sharing economy in recent years, many people have jumped at the chance to rent their home or investment property out in return for strong short-term income. If you are going on holiday, or you’ve purchased a holiday home, you might be considering doing the same.
You certainly wouldn’t be alone. According to analysis by ACIL Allen Consulting, the number of nights of accommodation booked in an Australian short-term rental has increased by 26 per cent in recent years. The same report reveals that holiday homeowners earned $1.9 billion in 2017/18.
But before you join the stack of savvy Australians making cash from their own homes, make sure you’ve factored in the upfront costs and set yourself up for success before handing over the keys to guests.
Generally, short-term holiday stays attract rental figures that are higher than a long-term private rental. Sydney, for example, has an average nightly rate of $350 per night in peak season, according to property listing platform Stayz.
That means you can rent out your home for short periods when there’s strong demand, such as Christmas and Easter, while enjoying the property for yourself at other times.
It’s important to remember, though, that the money you earn could be taxable. However, according to financial advisor Jessica Brady, making income from your home can still be great, even if you have to pay tax.
“Make sure you know what impact it will have on your tax (including any potential capital gains taxes when you sell),” she says.
It’s hard to predict the final figure as each person’s situation is different, but the ATO provides some examples as a guide. Again, talking to a financial advisor or tax accountant can help you prepare.
Comfort and style
It’s possible to earn great regular income when you list your property on a short stay site, but keep in mind it’s someone’s holiday so you want to make sure your property is welcoming.
That means you’ll need to provide comfortable bedding, household furniture and other creature comforts that help your listing stand out from the rest, attract positive reviews and generate a good nightly fee.
You may be able to claim some of the costs associated with the furniture as well as the cleaning and any meal provisions you supply, so check with your accountant before splashing out to see if you’re able to recover at least some of your costs.
The great advantage of short-term rentals is you’re able to cut out the real estate agent and administration, plus you get to vet your prospective guests and communicate with them before they arrive so you can ensure they’re reliable and will be respectful of your property. As for all that bonus cash you’ll have coming in? Brady recommends solid planning around what you’re going to do with it.
“While it is fun to have extra play money, is there a goal you are working towards that can be achieved faster if you put it towards that? Is there a big-ticket item that you have been wanting? Make the money work hard for you.”
By Nicole Haddow | 9Honey