If you're looking to alter your residential property investment strategy from being purely reliant on long-term rentals to also encompass short-term arrangements, there's a lot to consider.
For one thing, it's important to note that this doesn't have to be an either-or scenario, according to Australian Property Investor. If, for instance, you have a long-term rental that recently became vacant and you are having difficulty finding a new tenant, it might be perfectly reasonable to rent it out on a short-term basis until you can find something more permanent.
Assuming more risk?
There is risk to consider whenever you're making investment decisions, and one of the biggest concerns some may have is whether there will be sufficient interest in the property throughout the year to make short-term rentals an appropriate strategy. Obviously, the times before, during and after holiday seasons are the points at which these properties earn the most. However, you may also find short-term rentals provide enough income during those times to "float" your home loan payments for the rest of the year as well.
On the other hand, you will have to consider whether your chosen property is in a place where short-term renters would be interested in staying. For instance, those in major cities or near major tourist destinations may be ideal for short-terms, but those farther out might be better off staying as primarily long-term options.
What's the difference?
With a short-term rental you certainly have more flexibility about what to do with the space on an ongoing basis and can charge more on a per-day basis for the property. But that comes with certain trade-offs, according to Your Investment Property magazine. In addition to being far easier to manage without the help of a third party, you are also trading rental income with more peaks and valleys for a steady stream, and you won't be taking on as many costs (such as utilities and furnishings) yourself.
It's worth noting, however, that you may be able to claim many of the things you purchase to furnish a rental property as tax deductions.
No matter what course you eventually choose with your residential property investment portfolio, it's important to work with qualified, experienced real estate professionals throughout the shopping and sales process. At Ray White Surfers Paradise, we can help you find the ideal home to start your portfolio, or expand it even further, so get in touch with us today to find out all the options that might be available to you.