Investors Choosing to Offload Short Term Rentals

More landlords are considering selling their investment properties due to the cost of holding debt and further legislation restrictions placed on short term rentals.

With increased compliance costs, reduced landlord rights, the time required to manage their properties, together with increasing interest rates, many investors are deciding to cash in on increased property values and get out, amid concerns more restrictions are headed their way.

According to Reiwa.com “…investors are exiting the market, either to take advantage of long-awaited capital growth or in response to interest rate rises.”

In response to the pressure on the long-term rental market, the WA Government is exploring further regulation of short-term rental accommodation services like Airbnb, but acknowledge that banning the service would be “a big call”.

Short-term accommodation like Airbnb can be a positive contribution to local economies and tourism. However, at the same time, it’s harder for tenants who are a permanent part of the community to access affordable rental houses. As a response the State Government has recently introduced a lease cap of 60 days.

There has also been a significant down turn in short-term rental bookings which has resulted in landlords having to contribute to their investment property’s overheads, where previously it was positively geared. People are not spending and not opting to go away due to the recent increases in the cost of living.

Owning and operating a short-term rental can be a lucrative and enjoyable pursuit, until it isn’t. If any of these factors apply to your situation, it may be time to reach out to an estate agency and explore your options.

• Your rental income isn’t covering your expenses – if the income doesn’t cover your holding costs, then it is negatively geared. This means you are having to contribute extra money to keep it afloat. This works if you need the tax break but if you originally invested to bring in a regular income then it may be time to flip or change the property to a long-term rental.
• Big ticket repairs are due soon – these are larger expenses that are required to maintain a home, such as roofing, fencing or window replacement.
• You don’t have the time, interest or know-how to manage your property – you have been managing the property yourself and now in a position where you can’t or don’t want to anymore. You may need to consider third-party management or selling.
• Regulations are limiting your rental income – Local and State restrictions can hamper some property owner’s ability to operate.

The market is favourable for both selling and long-term rental. WA’s property market is strong and is currently experiencing a sellers’ market with house prices and sales activity continuing to grow and selling time has dropped dramatically.

Likewise, if you wish to retain the property, there is still strong demand for longer-term rentals with rising rents and the ability to choose the right tenants for your property.

At Summit Realty, we have an Investor and Tenant Manager who can discuss your options and organise either a free appraisal from one of our Sales Executives or our Property Management team. You can contact Amanda Leipold on 08 9592 8188 or AmandaL@summitrealty.com.au and arrange to meet her at the property or our office in Waikiki.

There are no obligations to proceed but it might just make the current picture clearer for you and help you decide whether to stay in the short-term rental market, change over to a long-term rental or sell your investment property.