Making money from holiday rentals: Good guests, happy neighbours, right insurance
By Chris Dougherty, General Manager, Westlawn Insurance
26 November 2014
Are you, like so many Northern Rivers residents, blessed with living in an idyllic holiday location? Perhaps your home’s just a short stroll to one of the many picturesque north coast beaches. Your deck may offer a cool summer breeze to complement the expansive river views. Or you may enjoy that perfect rural outlook from the front verandah.
If you feel like you’re on holidays whenever you’re at home, chances are, others would be willing to pay for the privilege of holidaying at your place too.
The market for short-term rentals of private homes is growing across Australia, and locally too. This is thanks to the popularity of accommodation websites such as Airbnb, HomeAway and LoveHomeSwap.com.
A quick search on Airbnb lists private homes, spare bedrooms and in one case, even backyard camping, being offered for short holiday stays across the Northern Rivers.
So should you get in on the action and advertise your home, spare room (or backyard) for holiday rentals? Doing so could provide a tidy windfall. Not to mention the opportunity to meet interesting people from across Australia and around the world.
But while some will feel comfortable letting out their apartment, house or holiday home to strangers, it’s probably not for everyone.
Good tenant/bad tenant
In the 6 years since Airbnb was founded, over 25 million guests worldwide have booked accommodation from a choice of more than 800,000 listings in 34,000 cities and towns across the globe. That’s a lot! And in most cases, homeowners have had no problems with their short-term guests. There have, however, been some real horror stories. But with 25 million-plus guests, there are bound to be a few bad apples.
To help you avoid your own horror story, Airbnb provides host reviews of potential guests just as those looking for a short-term rental can read guest reviews of each property. This can provide peace of mind when accepting a guest’s reservation, but it’s still no guarantee.
Consider your neighbours
After your guests leave, will your neighbours still respect you in the morning?
Many residents of inner-city apartment buildings are becoming increasingly frustrated as apartments are being used as short-term rentals for groups to party in the city over the weekend. In fact, for many strata boards, it’s becoming such a problem many are attempting to ban the practice.
And it’s not just in the cities where this is causing concern with the locals. The Northern Star reported back in January 2011 of the growing frustration caused by some sub-letting in the Byron area.
“… the holiday letting debate in Byron Bay intensified after nine backpackers narrowly escaped a raging fire in a private two-bedroom home on December 29. The dawn inferno left firefighters shaking their heads in frustration, with one saying that little more than luck had saved the lives of the occupants.”
If you decide to go down the path of listing your property, always choose your guests carefully … for the sake of your neighbours as well as for your own.
Choosing the right guests, however, is not all you need to consider.
Will your insurance cover any damage, loss or liability?
Opening your home for holiday renting, whether through an online listing or even through relatives or friends, may be considered carrying on a commercial enterprise by your insurance company. Your private home and contents insurance may, therefore, be voided.
To be properly covered for any loss, damage or liability, you may need to pay an additional premium on your existing home and contents insurance. Or, you may need to take out a different policy entirely.
Campbell Fuller, from the Insurance Council of Australia, told the Sydney Morning Herald that home owners need to check with their insurer.
“Don’t assume that your home and contents policies will cover you,” he said. “You may need to consider a more appropriate form of policy.”
If you don’t sort out your insurance prior to renting your property, you could be up for thousands of dollars in damages or loss to your property. And if a guest is injured while staying at your home, your public liability may not cover you.
Obtaining appropriate insurance that covers short-term renting for your property may not always be easy as many insurers are reluctant to provide such coverage. Be sure to contact your Insurance Broker for assistance before booking your first guests.
Tips for getting started in short-term rentals
You’ve weighed the pros and cons and you feel comfortable opening your home to guests. Here are some tips to help you get started out in short-term rentals:
- Choose where to list your property after researching each option. Do a local search on each listing and ask fellow property owners about their own experiences – both good and bad.
- When setting up your property profile, provide as much information as you can about your property in a friendly, conversational tone. What does your property have to offer? Bigger, more rooms, modern kitchen, outdoor entertaining area, panoramic views?
- Take flattering photos. Try to get each room from 2 angles. Light and airy beats dark and dingy every time. Add some photos of local attractions, such as beaches, the jetty or café strip.
- Determine the right price. Research the cost of local accommodation, and price accordingly. Remember to change rates according to the season, holidays and local events. If you price competitively, don’t go so low as to attract “the wrong crowd”.
- Include those extra touches that guests will really appreciate: a bottle of wine on arrival, free Wi-Fi, a coffee machine, a guide to local attractions and things to do.
- Anticipate what your guests will want, and expect from your property. Plenty of fresh linen, milk in the fridge and, of course, a spotless home.
- Before listing your property, contact your Insurance Broker to ensure your property will be covered for any damage, loss or liability.
Contact your Westlawn Insurance Broker today
- Call us on 1300 WESTLAWN (1300 937 852).
- Email us firstname.lastname@example.org
- Enquire at your nearest Westlawn branch.
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Westlawn Insurance Brokers Pty Ltd ABN 65 075 847 291 AFSL No. 246520