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5 factors to consider before renting out your home

By Amy Cooper
As seen on SMH.com.au

Thinking about letting out your property as a holiday rental? Here are some important things to think about before you start.

Do the numbers add up?

To know if holiday renting makes financial sense for you, it’s useful to do some essential maths upfront, says Carolyn Parrella, Head of Niche Distribution which includes Terri Scheer Insurance.

“Talking to local real estate agents will provide valuable knowledge about whether or not your property’s going to be marketable as a holiday home, or whether it might be better as a long-term rental,” she says.

“You might also find it useful to seek the advice of a financial planner or somebody who can help you work out the cash flow. If your property is in a popular summer holiday destination, for example, your income will most likely be highest in peak season, but could drop back at other times of the year. Annually, is it likely to be what you’re hoping for?”

Maximising the profits from your holiday rental might also mean rethinking your own holiday plans, adds Parrella. “If you’re intending to stay there at peak holiday times, that’s most likely when your paying guests will want it.”

The damage factor

“One of the things to be really mindful of when turning your property into a holiday rental is the greater risk of wear and tear,” says Parrella.

“With people coming and going on a regular basis, you’re more likely to see scuff marks on the walls from suitcases, as well as broken items, spills or other damage. Most people don’t mean to cause harm, but they’re relaxed and on holiday, so accidents can happen.”

Parrella suggests tough, washable paint on high-traffic areas, and kitting out your property with easily replaced and inexpensive items. “You can spend less and still find things that look great,” she says.

Managing your property

Holiday rental properties require the three Ms: management, marketing and maintenance, and, while an owner can take responsibility for all three, you need to be sure you have the capacity to do so.

“I would recommend using an agent to help manage your property, because it’s hard work doing it on your own,” says Parrella, who also recommends considering online listings platforms such as Stayz and Airbnb.

“They’re great for giving your property more exposure, and they also provide a marketing platform and resources to help manage your property,” she adds. “All this comes at a cost, but it’s not prohibitive and it can be worth it.”

Committing to cleanliness

A holiday property requires next-level cleanliness – the sort of immaculate hygiene you’d expect at a good quality hotel. While some property owners are willing to shoulder those cleaning duties, they can be more arduous than you might expect, says Parrella.

“You might think you can do the cleaning yourself if you live nearby, but it’s very hard work, especially if you’ve got people leaving at 10am and your next guests coming in at 2pm, for example,” she says. “Even in a smaller property, that’s not a big window to do a really thorough clean, change all the beds and make sure everything is absolutely spick and span and spotlessly clean for the next people.”

A professional cleaning service could be the smartest option, she believes – especially in the current climate. “During Covid, people want more than ever that comfort of knowing there’s been a really deep clean.”

Is your paperwork in order?

A holiday rental comes with s specific set of laws, regulations taxes – and insurance, too.

Says Parrella: “If you’ve previously been living in your holiday rental as a home, I would strongly recommend checking your insurance policy is still appropriate. Often a standard home and contents policy won’t cover holiday rentals. Be sure to get across all your paperwork and know that everything is in order.”


Disclaimer:

Insurance issued by AAI Limited ABN 48 005 297 807 AFSL 230859 trading as Vero Insurance. In arranging your insurance, Terri Scheer Insurance Pty Ltd ABN 76 070 874 798 AFSL 218585 acts under authority given to it by Vero Insurance. Read the Product Disclosure Statement before buying this insurance and consider whether it is right for you. Contact Terri Scheer on 1800 804 016 or visit our website at www.terrischeer.com.au for a copy.

The information contained in this article is intended to be of a general nature only. Terri Scheer does not accept any legal responsibility for any loss incurred as a result of reliance upon it. This article has been prepared without taking into account your particular objectives, financial situation or needs, so you should consider whether it is appropriate for you before acting on it. The Target Market Determination is also available.

For further information, call 1800 804 016.

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