As a result of COVID-19’s impact on our living, working, and traveling patterns, key players in Australia’s real estate industry have had to pivot their business models to adjust accordingly. That’s why Guesty met with industry experts to discuss how real estate professionals in Australia can work with property management companies to optimize ROI by incorporating flexible inventory into their existing portfolios.
During the online meetup, Guesty’s Managing Director (APAC), Yoav Tourel, shared the stage with an all-star panel of experts from Australia’s real-estate industry – including Daryl Smith, Head of Strategic Partnerships at MadeComfy; Barry Liddle, Founder of Ozway Realty; and Josh Symons, Strategic Industry Principal at MRI Software – providing tips on how real estate professionals can adapt to the hybrid business models emerging from COVID-19 and support different lengths of stays through portfolio optimization and new technology.
Yoav kicked off the event by introducing travel trends that have emerged such as last-minute bookings, shifts to longer stays of 28+ days and higher average nightly rates for properties across Australia. He then went on to share insights on the Build-To-Rent boom, a promising third-housing option for Australia, that shows how traditional real estate professionals and short-term rentals can merge together and capitalize on this rising trend to earn a higher profit potential during this time.
Daryl then presented an insider’s guide to short-term rental management with advice on how real estate developers can transition their operations to provide various lengths of stays. He took the audience through a discussion on long-term vs short-term stays, highlighting the differences between regulations, visibility on advertising platforms, rental income returns and more. To ensure your short-term rental property is successful, Daryl advised real estate developers to focus on providing an ideal location, different types of property, an “X-factor” quality, and smart pricing tools in place. He then debunked some common misconceptions and myths of the industry as well as shared operational challenges that may surface when entering this new market.
Up next, Barry introduced the relevance of short-term rentals in today’s new reality and the possibilities that come with entering the short-term rental space, such as higher returns for landlords and agents, growing industry partner relationships and diversified offerings that better cater to the current market. Based on his experience as founder of Ozway Realty, Australia’s first real estate membership and leading aggregation platform, Barry emphasized the importance of making sure your business models align with guest expectations as well as working with the right partners and adhering to strata regulations to make sure your short-term rental is a success.
From a financial and trust accounting perspective, Josh provided considerations that should be taken into account when diversifying your portfolio, for example the impact on management fees and rent roll valuation regarding your revenue. Other accounting decisions to consider include choosing between separate or unified trust accounts for all property types, making changes to financial reporting, and deciding which software solutions to leverage that will ensure your rentals comply with licensing restrictions. He recommended that real estate professionals conduct a cost-to-benefit analysis on their business before diversifying their portfolio to improve profitability as well as have the right processes and team in place to take on short-term rentals.
Following the panel discussion, we addressed questions submitted by our audience throughout the event. Here are some highlights (edited for clarity):
Q: Short-term rentals are not regulated by fair trading in Australia and thus, hosts can’t use normal lease agreement or insurance policies. How then can real estate professionals safely rent out properties for the short-term?
Daryl Smith (MadeComfy): Every state has different legislation around short-term rentals, but as a general rule of thumb in terms of leases, anything over 3 months would need to be signed as a residential lease agreement, while anything less than 19 nights will be considered a short-term rental. We highly recommend that every owner has short-term rental insurance, such as ShareCover or RentCover, that provide specialist policies, based on the lengths of stay and property type, that insure both short-term rental owners and their guests.
Q: What should real estate professionals consider when pivoting to short-term rentals?
Josh Symons (MRI Software): When going from long-term to short-term, you have to understand the legislation in the field you’re playing on. You want to make sure you are aware of the impact of strata bylaws in particular buildings on the short-term vs long-term and how this will overall affect your business in the long-run. Having informed conversations before you make that change is critical.
Q: With an oversupply of long-term rentals causing significant reductions in rent, what steps should real estate professionals be taking to navigate and thrive in this strong renter’s market?
Barry Liddle (Ozway Realty): Considering there are many aged properties in Sydney that haven’t been taken care of, coupled with the oversupply coming in, this is an area that really needs attention right now. Landlords and owners need to decide if they want to sell those properties or invest some money in repairs and renovations to be suitable for the short-term. Another thing to consider is to have conversations with landlords about the price differences for long-term or short-term stays to know where they need to invest more of their attention towards attracting guests.