Investment properties come in all shapes and sizes and one of our most lucrative investments ended up being a Beach House.
Now let’s rewind, owning a beach house, although on our ‘wish list’ was not something we believed we would become a reality for at least 10-20 years, if ever…… so although we dreamed of it becoming a reality it was a bit of a pie in the sky.
But this is where life is funny and you have to follow your instincts and create your own reality. So we decided on this nondescript day, whilst we were walking along the beach, that we were going to own a beach house and it was going to be in our near future. We spent a few hours at the beach that day discussing the pros and cons and how we could actually achieve it. I was pregnant, I’d decided to leave my job so there was a lot of risk but at the end of the day we decided that if it was all too much we could always just sell it. So that was it we made the decision and we committed to it and wouldn’t you believe it, that afternoon on our way home we passed an open house and the house was just perfect……BAM! We put in an offer.
So this house was in a fantastic location but the thing with short term rentals / Airbnb / VRBO’s or whatever you want to call them is that most investors buying them are investors first so rental income is key and they usually don’tt want to do any work, they want a completely turn key property.
Let’s break it down.
This house was built as a residential home 3 bed / 3 baths. It was a beautiful beach home, one that we could have only dreamed off – big decks, a large outdoor space, ridiculously spacious interiors but it needed a whole lot of work and redesigning to fit with the times and the short term rental market.
So what did we do…..
We gutted it and started again, transforming the space from a 3 bed 3 bath home into a 5 bedroom 4.5 bath home plus we added a pool.
There are usually some restrictions / regulations and requirements with short term rental properties and these are governed by your local city / council so my first piece of advice is to do your homework. A couple of points to consider…….
- You need to ensure you maximise ‘heads on beds’ (HOB) whilst ensuring there’s enough living space (eating / lounging space and seats) to accommodate max HOB’s.
- You need to consider how holiday makers will use the space as they use it very differently to the residential user
- To get top dollar Short term rental properties must be sold turn key, meaning the new owner/investor wants EVERYTHING to be in the house and ready to go, they basically will want to put it on the rental market the day you close / settle.
- Consider the location and required amenities – hot tub, pool, bikes and other amenities to get top rental dollar.
Let’s talk transformation.
The peak rental period is the Summer with a beach house and although the ocean is a stones throw away a pool is required to maximise the rental investment. A house being flipped / rented in this market requires a pool.
You might be wondering if removing access to the garage hurt our resale value or rental income. It’s a resounding NO. An indoor / outdoor games area is very valuable to a future short term rental investors. People who are holidaying for a week and spending $10,000 for the privelidge of staying in your home are far more concerned with the availability of alfresco entertaining and swimming and the comfort of their friends and family than the comfort of their car.
We also removed the grassed area and concreted it to create a low maintenance outdoor dining area thus extending the ability to enjoy the summer, which is why people are renting the house.
If we step inside to the ground floor we opened up the kitchen to create open plan dining and enough space to allow seating for the additional HOB’s – no point sleeping 20 people and only having enough seating for 10. We kept the kitchen cabinets as they were very good quality and painted and repurposed them to create an open plan kitchen and living area, this was a considerable saving.
As this had been a residential home, they had a formal dining room and lounge area. This is where you need to think about the end user, if this were a residential home we may very well have remodeled the rooms for the same purpose however as the end user is a short term renter it made far more sense to create two lounge rooms to allow a separation of space for guests.
Originally the owners had designed this house to include a huge master suite and office, all in the one space. We saw an amazing opportunity to generate more income potential by adding additional an additional bedroom and bathroom. We created a hallway to seperate the master and, what was the office, and created a separate master and bunk.
The original master closet was transformed into a bathroom for the bunk room and a new walkin was built into the sizeable master bathroom.
We didn’t forget the stairs on our reno plan as this was literally the heart of this 3 (or now 5) bedroom home. Thinking outside the box we created more space and more light with this new design.
If you do plan to flip or renovate a short term rental property to sell, or to keep, then ensure you can make changes that will increase the rental potential and thus resale potential. Selling turn key means selling fully furnished with all decor, soft furnishings, kitchen appliances, pots & pans and dinnerware – so you can see costs can add up quickly.
My final tip is to consider storage – you will need some storage for linens and supplies for the cleaner but you don’t need as much as you may for a personal residence so consider how the space could be repurposed. For example there were a number of oddly placed storage cupboards on the ground floor, we were able to reconfigure these to create a large locked storage area for supplies and add a separate WC which was easily accessible from the pool area.
By reconfiguring this space we were able to close off a walk through and create a downstairs ensuite to serve the ground floor bedroom which was now private from the rest of the house.
