Like any smart investor I have a diversified portfolio.
I have both commercial and residential properties on the go.
Not only that, I have some residential that is just that… rented out as a family home. I also have residential that I treat as commercial and let on a short term holiday basis.
It means there is a nice balance of capital growth and cash flow.
In the long term, this kind of balance provides stability. It means that you become, in a way, market proof.
It means that there's growth, there's cash flow, and there's flexibility.
My favourite, however, is really the mix of commercial and residential and particularly residential in an area that will support short-term holiday rental.
Air BNB had completely changed the face of what you can do with this kind of property.
I've been doing short term holiday rental for years… I live in Byron, so there's never any shortage of people wanting a place to stay that's close to town.
It also means that you can see what other options people have and price the rent accordingly.
This sort of market ‘intel' is usually for the CIA or internet marketers, but now it's coming to holiday rentals. Great.
Typically I could get $450-$700 rent a week for an average house in Byron on a regular residential lease. The same place might go for $265 or more a night on a short term holiday lease.
At 265 a night that’s $1855 a week.
And that’s just for a reasonably nicely presented 1 or 2 bedroom bungalow.
Sure there are quiet times and sometimes the place is not rented, but the reality is that the more of these kind of sites pop up the more those ‘Gap' are filled.
And after all Byron Bay is a very popular destination. I get people from all over the world coming here because they've heard that this is the place to be…
They can barely speak English, but they know about Bondi and Byron Bay.
Sure there is a bit more work involved in renting a property as a holiday destination but here's the good thing…
It's also launched a whole new industry:
Holiday letting management.
This used to be the realm of estate agents and property managers, but these days I keep seeing people starting up little businesses managing these properties for people.
They'll organise keys, bonds, sheets, cleaning and even gift baskets for your more upmarket properties.
It means it becomes a completely hands off experience with excellent cash flow.
Somewhere in the extra money you need to find a but to pay these managers, but they can get a decent slice of the pie and still leave you way ahead.
The other great thing about having the market intelligence that comes from being on sites like Stayz and AirBNB is that you can also see what else there is out there…
…and what is not.
If you use your noggin and get a bit creative, you can set yourself apart from the competition in one way or another.
Get professional photos done, offer gift baskets, cut deals with the local car hire place, supply breakfast… whatever it takes.
It becomes all about filling in every available spot and making sure that people are happy when they leave.
Tiny changes can make a big difference to your bottom line. It's more important to get the place filled than putting the price up… but of course, if you can find a way to do both then… awesome.
It's important to note that you need to choose your location carefully if you want to use this strategy.
Choose high traffic tourist areas and get as close as you can to either the main drag or the main attraction. In the case of Byron it's the beach.
Finally, unless you've got a bit of a designer in you, get some help to style the place. Make it look clean, bright and light. Make it comfortable and modern.
I've seen some horrible mistakes on AirBNB recently.
Ugly old Nana beds… bad photos… seriously one photo I saw was of a wire door… and not a security type photo… more like they just tripped on the way out the door. Crazy.
The money you save not getting some of this stuff done professionally is money you'll probably lose in vacancies and lower rent.
Get it done right and your place will attract great rent 24/7/365.