With interest rates going up again for nine-straight hikes, some property investors may be considering looking at other options to cover the costs of rising interest rates.

One option some investors may be looking at is moving from a monthly rental to making the property into a short term let, and using platforms such as Airbnb.

But as enticing as that extra cash can be, running a property as a short-term or holiday rental does have its challenges, and there plenty of reasons why this extra few dollars in your back pocket may not be worth it. Here are four of them.

1. A desired location

First and foremost, is the property’s location right for Airbnb? If the property isn’t a very desired location, it will be harder to entice the guests to stay. As well as the price needing to reflect the location to make it attractive to people, there is a strong possibility the property will be sat empty for extended periods of time outside of the peak season.

2. Additional costs

While there may be the option to rent the property at a much higher rate, your set-up and operating costs may be higher.

• Appearance

To get the best price, a holiday let must look good, and the décor must be a high standard.

• Furnishings and appliances

Furnishings and appliances are expected in holiday and short-term, and these are usually expected to be at a high standard. Then there’s the extras. The property owner will need to pay for all utilities, including the Wi-Fi. And as it’s a holiday let, the renters may not be so economical with saving electricity and the like.

• Cleaning and washing

Cleaning and washing bedsheets, towels etc between guests all start to add up too; while there is the option of adding cleaning costs to the as part of the rental agreement, some owners prefer to do this themselves to make the rental price more attractive.

• Increased wear and tear

Then there are the unseen costs; because there is a bigger foot traffic there will be more wear and tear on a property. People tend to be less careful when they are in a holiday let, or short-term rental because they haven’t made the property into their home, and there also isn’t the emotional attachment a long-term tenant gets with the property.

3. Does your body corporate allow it

Some body-corporate complexes have by-laws which do not allow the property to be used on a holiday-let. This is partly because of the high foot traffic causing more wear and tear on the communal spaces, but also because the constant change over guests can be disruptive to other owners in the complex.

4. Have you the time?

For most Airbnb properties, bookings predominantly come from the reputation of the owner, so it may take a while to start earning good money from the property as an Airbnb let. Not only does this take time to occur, but it also involves a lot of work from the owner.

5. Financial implications

There are potential financial implications of switching a tenanted property to another form of rental; if you’re thinking of releasing some capital from the property for other purposes, some financial lenders don’t accept an Airbnb income.

Furthermore, the income can be irregular, especially when you are starting out and getting a presence on the rental platform. Peak occupancy is often seasonal so you’ll also need to budget for times of the year without an income.

Some may argue you have to allow for periods of time without an income, such as between tenancies, particularly as the latest REINSW rental statistics, show Newcastle had a 4.5% vacancy rate in December and 4.1% in January. This is higher than the rest of New South Wales, which is around 1.5%.

However, while Newcastle’s vacancy rates are higher, our vacancy rates are way under this figure, at 0% in December and only 0.3% in January. This is because we have in place very proactive marketing for our rental properties, ensuring properties with us are at the top of the viewing list.

Furthermore, once tenanted with us, generally you’ll know your income for at least the next 12 months and can budget accordingly. And you leave everything to us – finding and managing tenants, making inspections, organising maintenance, ensuring your property meets the latest regulations so your tenants are in a safe property and everything else which goes with managing a rental property.

This frees up your time to do the things you want to do. What’s more, our fee is a tax-deductible expense.

Having been in the business for nearly 50 years, we also come up ways in which we help maximise your rent. If you are looking for a property management agent, come and talk to us.

As a family run business and we treat each and every one of the properties we are entrusted with like our own and our team is constantly looking for ways to get the best out of the properties we manage.

We’d love you to get in touch to tell you more, and also tell you how our property management services can make your life easier.

Drop into the Cardiff office or give us a call on 02 4956 9777. Or send us an email at mail@newcastlepropertymanagement.com.au – we’ve helped many people realise their financial dreams through property and we’re keen to help you.