Renting out your spare room – pros and cons

Room to rent

 

Your spare room could earn you cash, but do you really want your home to become a guesthouse? Make sure you are aware of the potential pitfalls when renting out your spare room or it could end up costing you.  Weigh up the impact it will have on your daily life before signing up.

Andrew Winter weighs up the pros and cons of renting out your spare room in his article published at news.com.au/finance/real-estate…

 

I AM sure being the tech savvy type you are fully aware of the growth of the online private short stay/holiday accommodation market.

It has only been in the last decade or so that this cottage industry has had a chance to become more akin to a corporate giant in its own right.

If you had a spare room, maybe a granny flat void of a granny, a separate house in your garden, or a weekender you didn’t use all the time, to attract those lucrative holiday dollars was a real challenge.

The good old-fashioned local letting agent who had a holiday home division was the first port of call, along with leaving leaflets at tourist attractions or information centres, plus small ads in magazines, local publications and the paper.

To maintain a presence in the market place was very tricky and took considerable time, effort and costs. That maintaining a presence was key to any chance of success.

Now with the likes of such online giants as Trip Advisor, Airbnb, Stayz and others it is possible to have your accommodation online available to the booking public across the world everyday of the year, whether it’s the spare room or the spare mansion.

You should research each carefully before signing up and make sure you know the costs, payment terms, charges and all related conditions. You only have to do an online search to see all of these companies have their complainants; it would be impossible not to, due to the scale of the market.

Subject to all the fees being clearly disclosed, as the client, you have the choice to list with them or not. You must also acknowledge if you fail to clean to anything other than hotel standard or forget to allow the early check in you had promised.

My concern is that this huge explosion of online demand can be so tempting to tap into, if you have some extra accommodation surely you could pop down to Target and get some new bedding, an extra kettle, a couple of fluffy towels, fold the end of the toilet roll into a triangle and off you go. And with nightly rates of say just $80 for a room you could undercut the professionals; and make a fortune with as little as eight or 10 nights a month. Maybe, but honestly it is quite unlikely — here are a few of my points of caution:

• You need to be close to the city/public transport/airports, even large stadiums or concert venues, etc. Average suburbia will be in far less demand.

• Can you split this letting space from your home, not only for your privacy but for the guests too? Complete strangers sitting around your kitchen table eating their Quinoa salad and sipping a glass of Chardonnay, with the room full of laughter and vibrant conversation could be the case the first few lets, but then — oh dear! Not to mention the romantic getaway guests; do you really want to hear the sounds of romance through the night?

• Secure your valuables and personal information. Request ID at checking in time.

• Expect the single/two night requests, remember you have to clean the rooms, change beds, meet and greet then do it all again.

• Check your insurance and smoke alarms and understand that letting rooms within your property boundary for commercial gain is a grey area. Check with Council what is safely permitted and follow all the rules. Otherwise the repercussions could be costly.

• Car parking/ access to public transport must be easy and uncomplicated.

• Total honesty about the accommodation offered is vital. Offering information about nearby amenities / transport, landmarks, etc. all helps, along with detailed pictures that represent the accommodation fairly.

• Treat every guest as a potential online review; always respond to complaints calmly and professionally, no matter how bizarre. Other potential customers will review your response to the review, as much as the original review.

• Any income made is taxable; if you fail to declare your earnings the proof will be online, so it’s an easy call for the tax man.

Finally, please use caution, be realistic as to your property’s actual suitability and expect problems. You’ll have to work hard, but it could be a great little business if you put the time and effort in.

 

Jason Thomson | Finance Broker and Mortgage Adviser | Smartline Cairns

 

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