How do I switch my AirBNB holiday home to a long term rental property?
AirBnB style short-term rentals have been a fantastic investment for many property owners over the last decade. Strong overseas tourism has provided attractive income whilst holiday lettings still provide ample time during the year for owners to enjoy their holiday home themselves. It was a win-win.
Fast forward to today’s Covid-19 world and the outlook for an AirBnB investment property is quite different. All bookings were cancelled and refunded during Lockdown. Popular holiday weekends like Easter came and went, and the borders remain shut with no confirmed date for their reopening. With no overseas tourists arriving, AirBnB owners are left relying on local Kiwis to rent out their holiday homes, but it remains to be seen how much spare money households will have for domestic tourism during this period of economic upheaval.
Unsurprisingly, many AirBnB owners are now switching their properties over to long term rentals - preferring the safety net of guaranteed income for 6 or 12 months, while the dust settles on the pandemic.
But what should owners consider when making the switch to a long term tenancy?
Below we outline some of the key points:
Furnished or Unfurnished – there is a market for both. Most AirBnB's will be furnished and often the owner will keep some of their own stuff there – books, magazines, board games etc. All these bits and pieces will need to be removed. Some long term tenants will be happy to move into a fully furnished home, so to keep things simple you could leave your furniture as is, and rent the property furnished. Alternatively, to appeal to a broader market you could store or sell your furniture and rent your property unfurnished. The choice is yours.
Make sure your property is legal now, and going forward. Legally speaking, not every property you find on AirBnB is suitable to be rented as a long term tenancy. There are many things to consider here, and owners should consult the council or an experienced property manager. One good rule of thumb is that that the property must have its own running water and electricity supply. Additionally, long term rentals will need to adhere to the insulation standards (underfloor and ceiling, where possible) and have an eye on the forthcoming Healthy Home Standards detailing improvements to heating, insulation, and ventilation, and addressing issues with moisture ingress and drainage and draught stopping.
Advertise your property at the ‘right’ price. Knowing what rent to charge is a tricky part of the process. First of all the nightly rent for a long term rental may look low when compared to what you used to get on AirBnB, but you have to remember you’ll be getting rent 365 days per year once you sign your initial tenancy agreement. Marketing your property at the right price can be tricky. Too expensive and your property will lie vacant and your income will be zero. Pitch it too cheap and you’ll leave money on the table. Local property managers will have an accurate opinion on what you should be charging, or alternatively you can hop online and do your homework comparing your property to what you see on Trademe or Realestate.co.nz
Get help from an expert. A lot of AirBnB owners don’t live local to the property, so for them a property manager will be really useful. Also, navigating all the future legislation and getting the property up to scratch initially is something that a property manager will add a lot of value with, on top of rental appraisal, marketing, tenant screening and general maintenance. Of course, you can do all of this yourself in your spare time after work and on weekends but a property manager will take the stress out of the entire process and add a lot of value going forward.
To read more on the subject, click here to read Michelle and Olly’s interview with OneRoof on the state of the AirBnB rental market.