Converting a long term letting property to short term lettings is a proposition that many landlords are considering right now. In most cases, a property successfully let short term (by the day or week) will return a substantially higher yield than an identical one on a six or 12 month AST.
Here are some important points you need to consider before entering the short term lets market:
Is there a demand for short term lettings in that area?
Do people want to rent a house/flat by the day or week. Not every area has demand for, for example, daily lets.
And remember – a few areas are already becoming oversupplied with short terms lets.
What sort of guest will you target, if any? For example, business travellers, contract workers or the holiday market?
What rent will your property command?
Check existing daily/weekend rental properties in that area? Check not only what they charge, but try to get a handle on what their occupancy levels are.
Also check local hotel rates as these can offer a guide to what you might be able to charge as, in many cases, you’ll be in competition with them for guests.
What permissions will you need?
Check the conditions of your mortgage. If a leasehold property, are there any restrictions which prohibit you from offering short term lettings? Do your property deeds contain any restrictive covenants.
What extra will you need to provide?
Short term lettings usually provide more than long term lettings. For example all furniture, all appliances including a TV, kitchen equipment, towels and linens too. You will probably need to provide wi-fi and maybe even cable/satellite TV.
Fixtures and services provided will need to be appropriate to the sort of guest you are targeting and the rent you charge. For example, high end business customers will be prepared to pay more expect a high standard of accommodation.
Consider the extra running costs
Unlike with a long term rental you’ll need to pay the utility bills, Council Tax, service charges (if applicable), cleaning and gardening costs. Wear and tear also tends to be greater with short term lettings. You will probably need to replace furnishings and redecorate more often.
What about changeovers?
Who will check guests in and out? Or will you offer a self check in facility? And what about changeover cleaning?
How an where will you find guests …. and what will it cost?
Obvious options include AirBNB and Booking.com, but there are other sites which you can use too. For example, holiday accommodation sites and those which offer shared accommodation. Check what they will charge you for promoting your property, and for taking bookings.
You might also consider finding guests through other methods, such as your own website – which will save fees and commissions – but this will need time and money spent on marketing.
Who will deal with any problems, queries, breakdowns etc.?
Will you use a hosting agency, employ someone (perhaps part time) or handle it yourself?
In return for a greater yield there are bound to be more snags and pitfalls than when you let your property to a single tenant for a full year.