With Airbnb continuing to expand its reach, this is a timely question. To illustrate this point, a work colleague recently counted 15 lockboxes in a single apartment block in inner eastern Sydney.

With this in mind, it becomes crucial to thoroughly evaluate the potential obstacles associated with acquiring an investment property in a block primarily dominated by temporary accommodation bookings.

That said, gathering accurate information about the neighbouring units can be challenging when there are many short-term rentals. However, some methods might help you glean the number of temporary accommodation rentals in the block.

• Conduct an Airbnb search: By searching for nearby rentals on Airbnb, you can get an idea of the number of temporary accommodation apartments in the block – and nearby for that matter.
• Check the strata policy: Reviewing the strata policy regarding short-term rentals can provide insights into the overall regulations and restrictions.
• Consult the agent or vendor:Reach out to the real estate agent or vendor to enquire about the rental composition of the block.

Frequent turnover of tenants

In a block dominated by short-term rentals, the turnover of holiday tenants can be high. This constant influx of temporary visitors can disrupt the sense of community and security that is more common in apartment blocks with permanent residents.

Likewise, noise can be a concern. With a revolving door of temporary tenants, issues related to noise and safety can arise. Short-term tenants may have more time for late-night parties that create disturbances, and potential security risks within the building, especially if the holidaymakers open the doors of the apartments to other outsiders.

Temporary tenants may have a different level of responsibility and care than permanent residents. This factor increases the likelihood of damage to common areas or amenities such as gyms, pools, and shared spaces. Wear and tear on these facilities can be accelerated, leading to higher maintenance costs for all landlords. 

Strata policy considerations

If there is no existing strata policy regarding short-term rentals, attending strata meetings or joining the strata management committee to advocate for a policy change may help. 

Nevertheless, achieving any amendment to the strata bylaws is a gradual process and not assured. This is particularly true in cases where the majority of apartment block owners benefit significantly from renting out their investment properties for short-term purposes. Additionally, any efforts to lobby for strata bylaws changes may lead to conflicts and strained relationships among owners.

Impact on investment returns 

Factors such as noise, safety concerns, and increased wear and tear associated with short-term rentals can deter potential long-term tenants from renting your property. As a result, landlords may experience a higher turnover of renters and more extended vacancy periods, ultimately affecting their cash flow and long-term returns on investment.

Consequently, potential investors must engage in thorough research, understand the general strata policies comprehensively, and meticulously evaluate the possible hurdles before committing to such a purchase. By doing so, investors can ensure they are well-informed when deciding whether to proceed with the acquisition or explore alternative investment opportunities offering stable rental income through long-term tenant accommodation.

Contact your local Raine & Horne Property Manager today to explore the benefits of owning a long-term rental property.