Case Study: Builder Captures Lucrative Short-Term Rental in Declining Market
- A local builder completed a multi-unit luxury project including a number of stunning apartments on the slopes of Mosman.
- He had successfully sold half of the development prior to the marketing turning and sales stalled and market values declined rapidly.
- To exchange at this time would be unprofitable but the properties were empty.
- He now needed to make his investment work for him! The brief was that he wanted to lease it earning maximum rent while also providing him the opportunity to keep the property on the market (as a quiet pocket listing) and allow the downturn and pool of buyers to pass through and reinvigorate later.
- The property was brand new but on a major road making it particularly challenging to secure a long-term tenant. The owner did not immediately want to short term rent his new property for fear of damaging it. Property Providers explained all the reasons why people require temporary accommodation.
- The brief outlined that there was to be no advertising on the conventional long term channels (as he did not want buyers to see the history on property history searches as this could further reduce its value or enhance potential buyers negotiating position). As a result, we set to work sending the listing out to our relocation agency database, insurance companies and anyone renovating in the area requiring accommodation.
- The home was promoted in many social media marketing campaigns and even had a sign out the front for a short while. Lots of positive enquiry was received, however, no applications for a long term lease. At the same time we received a lot of enquiry of the short term channels. The photography of the property had included ‘virtual’ furniture which we often use in our larger properties to enhance the images. One very strong enquiry came through and we needed to change our strategy.
- After a discussion about the owner’s needs and to capitalise on the lucrative summer months, we recommended that we should also market the property furnished and for “extended stays and executive rentals” whilst simultaneously maintaining the long term leasing marketing. This meant an outlay to furnish and set the property up for short term stays. We set the minimum stay, much longer than typical short term properties and for this particular property, at a 1 month minimum. We quickly contacted our stylists to furnish the property to our executive standard and set about having new photography taken of the newly styled home. All this was done within a 2 week period.
- We rented the property at approximately 40% more than what it would as a traditional long-term lease. The result is that the business case for investors is stronger in the sense that it has proven to earn higher rent.
- The first booking self-funded all the furniture and styling ( providing an instant return on investment).
- There are a number of forward bookings in place now and the owner is successfully commercialising his investment.
- Our strategy has produced 3 different sets of photography for the owner to leverage in the sale market, keeping it fresh (ie. original images, digital/virtual rendering, and stylist furnishings for short-term rentals).
- The owner is actually able to use the property for himself and his family should the need arise.
- By leveraging short-term rentals he is able to stop and pivot back into selling the property at any time in between bookings as he is not bound by a fixed term tenancy (or lease).
- There is no history of rental on any of the property information or valuation sites (as per the original brief).
- Reduction of stress and anxiety and financial strain with a clear and flexible plan.
Property Providers are proud to be experts in short term rentals in Sydney. Our market is extended stays, facilitating the scenarios above and as a result our average stay is 26 nights and average booking value over $10,000.