1. Seasonal bookings meaning you can actually enjoy your investment property
Bring on the vacation!! YES! Unless you plan to use your short term rental property as a pure investment (spreadsheet investing) then one of the biggest perks is that you and your family and friends have a great property to vacation in. Any property worthy of a short term rental investment will be a great location – the beach, ski fields, mountains, major city….and the list goes on. Wait, hang on, if you are planning to buy in a location you wouldn’t vacation yourself then maybe pause and rethink it!
I loved this about our short term rental property (you can read more about our Beach haven, the Koko Kabana HERE). Although we didn’t live far from it we loved using it to host friends and family and for the cheeky beach weekend when it was vacant.
2.Higher return than long term rental properties
The beauty of a short term rental is that it’s seasonal. Why does that matter, well, people rent it for a week at a time or weekend, depending on the market norms, for a premium over the peak season – think supply and demand. So more often than not you will get more rent in one week during the preak period than you will get for a month in the off peak months.
So a good vacation rental should pay for itself during the peak season (this is not always the case if you’re paying for a premium property or have very high HOA / body corporate costs), with the added benefit of a free holiday or two for you and your family.
When looking for a great rental property you want to ensure the numbers work, the peak period should pay for the property and any bookings outside of that are added value.
I used to work with a lot of investors looking for 10% ROI but I found this progressively harder to find due to rising house prices and the popularity of short term rental properties. I would suggest 6% would be a more realistic expectation however every market is different and if you find a property that needs work or you can increase the rental potential through updates then you can possibly expect more.
3. Retirement plan
I was working in Real Estate when Covid took hold and I saw first hand the flux of the stock market resulting in me having to cancel a number of real estate purchases on behalf of buyers who were then hit with penalties for doing so.
Why you ask, well they intended to use the money they had made in the stock market for their deposit but with the flux they had ultimately lost 10’s of thousands of dollars with nothing to show for it. Although there will always be shares and stocks, there is true beauty in the tangibility of bricks and mortar. Why not have someone else pay off your mortgage whilst you build your portfolio and your retirement plan.
I had a lot of clients when I was selling real estate who purchased short term investments with the intention of retiring to the beach and have someone pay their house off in the meantime. Others saw it as a stepping stone to upgrade later.
I know you’re probably getting excited about the possibility of investing in your future through property!
YAY!! I’m excited for you! Would you like more help? Check out my borrower guide below to start to get your finances in motion.
OR if you’re so excited to get started then check out THE MASTERCLASS.
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