Fine art of hom­ing in on tourists

The Weekend Post - Real Estate - - Front Page -

I MET a Syd­ney-based cou­ple who bought a house at Trin­ity Beach to rent out to short-term hol­i­day­mak­ers.

It was an in­vest­ment strat­egy I had not pre­vi­ously thought too much about, but af­ter ask­ing around, ap­par­ently Cairns is a hotspot for these types of ven­tures.

The trop­i­cal cli­mate, prox­im­ity to the Great Barrier Reef and Aus­tralians want­ing to hol­i­day do­mes­ti­cally be­cause of the low dol­lar value has cre­ated a mini surge in the short-term hol­i­day mar­ket.

The cou­ple I met said they were plan­ning to re­lo­cate to Cairns in about 12 months but wanted to spruce up parts of their prop­erty while they were still liv­ing down south.

They also didn’t want the prop­erty to be va­cant for long pe­ri­ods, hoped for some sort of in­come and wanted a cheap op­tion for their own hol­i­days.

It all made sense, but do the num­bers add up?

On my quest for data, I found a Roy Mor­gan sur­vey of al­most 17,000 Aus­tralians which re­vealed one in 40 Aussies own a hol­i­day home and part of the at­trac­tion is the ex­pec­ta­tion of high­oc­cu­pancy rates.

Thank­fully Cairns is pop­u­lar with tourists year-round and also has a low rental oc­cu­pancy rate, but CEO of Your Em­pire and buyer’s agent Chris Gray said buy­ing the “right” prop­erty in a lo­ca­tion where hol­i­day­mak­ers find con­ve­nient is also an im­por­tant fac­tor.

“Nor­mal res­i­den­tial longterm rentals get around 4 per cent to 6 per cent per year (in­vest­ment yield) while hol­i­day rentals would ide­ally get closer to 5 per cent to 10 per cent,” he said.

“That’s based on the fact in­come might be more volatile and it costs more to fur­nish the prop­erty and man­age and main­tain it.”

But be­fore list­ing your prop­erty on Airbnb or Stayz, it is rec­om­mended to work out the peak hol­i­day sea­sons, how long they run, and how many weeks you or your fam­ily will be us­ing the home for hol­i­day pur­poses.

Other con­sid­er­a­tions in­clude bud­get­ing for clean­ing and man­age­ment costs, and a back-up plan if the prop­erty isn’t rented out for ex­tended pe­ri­ods.

At the end of the day, prop­erty in­vest­ment of­ten takes on a va­ri­ety of forms but as Mr Gray has said, about 75 per cent of hol­i­day home own­ers have pur­chased for emo­tional rea­sons, rather than for in­vest­ment.

CHEERS: A Stayz prop­erty at Trin­ity Beach.

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