People with short term furnished rentals

[mandimoo]

Hi guys,
I have finally got my 3 bed apartment prepared and ready to be rented out, I listed it on Stayz two days ago and already had booking requests for the next two weeks (which is a total surprise as it is in a place very saturated with holiday rentals - Mandurah WA - and I thought it would take a while before I received any interest!).
Anyway I have questions for people who have done this before:
- Did you ever have any problems with people trashing your place and if so what do you do?
- Did you ever refuse a customer and if so what did you base it on and how did you go about doing it? I have a tendency to use Facebook to check out tenants before even considering them, and thus turned away a 3 night stay for this weekend because the guy seemed like a total dropkick (if it was even the same guy) and I was concerned for the other residents at the complex and also of course for my property!
- How much bond did you charge? Mine is set at $300 at the moment, I didnt want it to be so much that it was a barrier to bookings.
- What kind of receipts did you use?
- Is there any kind of legal agreement that people should sign before getting the keys to protect ourselves or do we not have to worry about that because they are not 'proper' tenants?

Thanks for taking time to answer my questions, this is our first holiday rental (obviously) and I am feeling a little overwhelmed because as with most things like this there is no instruction manual and I would hate to get it wrong!

 

[brettc]

Insurance for holioday letting

Hi, I can't help on your specific questions as I only have permanent rentals, and although I don't want to just jump on and "peddle my wares", I would suggest that you make sure you have the appropriate insurance in place. Standard home insurance or landlord insurance is not designed specifically for short term rentals and you need to make sure you're covered in the best possible way.

There are a number of policies around that may suit, our one is RentCoverShortTerm which is specifically designed for properties that have been let for short periods such as holiday letting and corporate leasing. You can get more info at www.rentcover.com.au

If you have any questions feel free to let me know.

 

[depreciator]

Good to know about that insurance policy, Brett.

I've got a short term rental (attached to my house) and was only really looking for liability cover in case some dills falls down the stairs or something. St George told me my existing building cover did that, but I had my doubts. I imagined calling up about a claim and them saying, 'Oh, so this is your home but the accident happened to a person who was renting part of the home? That's a pity.' So I got an additional Home and Contents policy from St George for the same address that declares the property is let out.

I'm not worried about damage or anything like that for three reasons:

1. My short term rental is next door and I think that possibly makes people more inclined to behave.
2. Airbnb - the short stay site I rent through - has a $50,000 host insurance policy.
3. I screen people.

With Airbnb, people have profile with comments from previous hosts. If they don't have a profile, I email them and get to know them before accepting a booking. I have knocked a few people back.

I don't have to worry about receipts or anything like that because Airbnb handle the money. When people book a stay, they have to pay airbnb the whole amount. They hold the funds until the day after the visitor checks in. The funds are then transferred to me. They charge me 3% commission of the booking fee.

You can probably tell I'm a big fan of airbnb.


Mandimoo, don't be afraid to turn people away. Go with your gut feel. Especially given I recall your place is a bit of a drive from where you live.

I've been renting my space out since the beginning of March. Next year, I'll sneak the rate up and make the minimum booking 3 nights I think and see how it goes. Longer bookings are better. I just had a guy leave after a month long stay and that was great - no cleaning and someone to have a beer with occasionally.

Scott

 

[mandimoo]

Thanks Brett and Scott, I just sorted out my insurance A friend had recommended airbnb to me before so I will definitely check that out, do you get many bookings from there?
Stayz is quite expensive, to be honest I am not even really sure how to pay them their fee since they gave me the contact details for the guy whose booking I did accept and we contacted each other through email and he paid bank deposit... will stayz send me a bill or what, who knows!

 

[depreciator]

Stayz are now owned by Fairfax Media. They should be pretty switched on. Airbnb is fantastic - one of the best functioning web sites I have ever encountered. I like not having to handle the money. They take 3% off me and charge guests a fee on top of the booking. I can print out a statement whenever I want so I can do my tax.

I've got loads of bookings. But my place is different from most.

August and September have a few holes, but they will be filled.

October I have a french couple staying for a month - she's a food blogger and wants to eat her way round Sydney. November I've got an English theatre director staying for a month while she has a show on at the Sydney Theatre Company. January, February and March I've got an Austrian radio (ABC equivalent) presenter staying with her daughter.

Because Airbnb is international, and because I'm in Sydney, probably about two thirds of my guests are from overseas.

 

[mandimoo]

That sounds awesome Yeah I dont think many overseas tourists are looking for Mandurah haha .. maybe when we get a Perth one

 

[knightm]

...and just because he is too modest to push it on you mr depreciator may be aware of the additional depreciation allowances that can come with short term rentals! Make sure you check those out at tax time too.

 

[depreciator]

Me, modest? Never.

The 4% building write-off for short term traveller accommodation is a bit of a trap.

Very few properties qualify. Mine doesn't. Mandimoo's wouldn't either. The reason being that somebody could live quite comfortably in both properties. The ATO is not concerned about the patter of usage i.e. the length of time people stay. They are concerned more with the nature of the accommodation itself.

The only things that might meet the ATO definition would be a motel room or a hostel type property with shared facilities i.e properties where people could not really live full time.

Scott

 

[mandimoo]

Cool guys. My brother in law is a CA and he told my husband that we dont need to claim building depreciation yearly on our properties and if we dont do it now it can come off the capital gains amouint when we sell is that correct?

 

[Ausprop]

the asset's written down values reduce whether you claim the depreciation or not

 

[nhg]

Cool guys. My brother in law is a CA and he told my husband that we dont need to claim building depreciation yearly on our properties and if we dont do it now it can come off the capital gains amouint when we sell is that correct?

This is correct, however if you sit down and do the maths, you are still significantly better off claiming it up front than in one lump sum at the end for various reasons.

Look into it and you'll see why.