“Will I make more than I’m currently earning if I move to short-stay managed by you guys?”
It’s a pretty simple question and one we are often asked by our clients, and almost universally our response is: “well it depends..”
At HostKeep, whilst we believe there are many great non-financial reasons for property owners to consider short-stay rentals (such as the flexibility, security and the care we take of your property) we also realise that the financial side of things is extremely important to property owners.
There is a range of factors we consider in responding to individual property appraisals, including location, layout, amenities, and while we’d love to guarantee higher returns in every instance, we are also big fans of “underpromise and overdeliver” so try to be conservative by nature.
That said, we understand it is a useful exercise to understand which apples you are comparing to which oranges, so we have mapped out an example of what a long-term vs. short-stay comparison might look like.
How to compare
In order to demonstrate the financial benefits of short-stay rentals versus long-term rentals, we have reviewed and analysed the financial information voluntarily provided by one of our clients.
We have reviewed the earnings from the client’s property from when it was leased as a long term rental for 12 months, and compared this to the earnings obtained from the same property when it was leased as a short-stay rental for 12 months, managed by HostKeep.
This property was leased to long term tenants at $390 p/w (market value). The rental manager the client used charged an 8% fee for their services, and during the 12 month period, they only had one short period where the property was vacant in between tenants.
Switching the property over to a short-stay rental did result in lower occupancy rates, and the cost of utilities and sundries (such as consumables, etc.) did increase. However, even when these factors were taken into consideration the annual earnings actually increased by more than 25%.
The client also had the flexibility to use their property when family from interstate comes to visit for a week during winter.
Furthermore, since the client’s property was first listed it has gained more and more popularity with guests (through positive reviews), and as a result, it is predicted that the earnings for the client in 2016 will exceed those of 2015.
The example provided demonstrates the financial value of leasing your property as a short-stay rental as opposed to a long term rental.
Whilst it is important to note that every property is different, and past returns cannot guarantee future income, the example provided indicates that short-stay rentals can assist you in maximising your property’s cash flow.
Here at HostKeep, we welcome any opportunity to assist you in obtaining the maximum cash flow from your property.
Please Get in touch if you’d like to know more.