Fine art of homing in on tourists
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.