What you need to know before renting your property online
Renting your investment property yourself – through an online accommodation service – can be very financially lucrative, and at first glance the returns seem to far outweigh that of a regular long-term rental, however there are some pitfalls you should be aware of. We take a look at what you need to know before renting your property online.
Think about the location
Where your investment property is located should help dictate your strategy. The importance of location is not exactly a new idea when it comes to property. However, it is something that should factor into your decision to use a short-term or longer-term rental strategy. If your investment property is in inner-Sydney or inner-Melbourne for example, then a short-term strategy could be beneficial. This is because these markets have year-round appeal, as they’re serviced by both a business and holiday-maker crowd.
However, if you own an outer-suburban property you run the risk that your room or house may be empty for a large portion of the time, depending on demand, which obviously decreases your return. This means that your room or property should be clean the whole time, to be ready for short notice stays. If your investment property is in a more traditional holiday destination area, by the ocean for example, you may be able to charge higher rates, therefore compensating for the quieter periods.
Know your rights
As with other popular sharing services, some of the laws protecting homeowners, local residents, and renters are not as clear as more traditional services. For example, some local councils can impose hefty fines for investment property owners if their guests continually cause disturbances. And these disturbances may be from something as simple as a higher volume of foot traffic in and out of an apartment. Before you sign up to an online service and use your house as investment, you should check the laws of your local council.
Another type of law you may need to consider is tenancy law. If you intend to rent out your property for periods of longer than 30 days to one renter, you are venturing into long-term rental arrangements, which attract the scope of tenancy law. Under tenancy law, property owners have a lot more obligations to their tenants, for example, giving written notice to vacate. So, if you’re looking to rent out your property in a more long-term arrangement, then online house-share services may not be the best option.
Consider the tax implications
Like most investments – property or otherwise – you’ll have to pay tax on what you earn, as it’s considered income. This will obviously affect your overall taxable income and impact on the profitability of your investment property. Like typical rental properties, there are ways to reduce your tax bill, such as using business expenses as an off-set, or negative gearing. Before you venture into any sort of investment, you should always seek advice from a professional, such as a financial planner or accountant.
Renting your property through an online accommodation service can be a great way to make the most of your investment. However, as with any investment, it pays to do your research and speak to a professional who can advise you on the right strategy to suit your needs.
If you’re looking at borrowing to invest, or using a house as investment, then get in touch with a Suncorp Financial Planner or Home Loan Specialist who can help you make a more informed decision. Give us a call today on 13 11 55 (8.30am - 6pm AEST).
Information is intended to be of a general nature only and any advice has been prepared without taking into account any person's particular objectives, financial situation or needs. You should make your own enquiries, consider whether advice is appropriate for you and read the relevant Product Disclosure Statement or Product Information Document before making any decisions about whether to acquire a product