Benefits of a Short Term Rental - Renting Guide
There are lots of reasons why you want a short term rental
Last updated: 1 February 2023
When the unexpected happens – your own home experiences unexpected damage which makes it unliveable for a period – a short-term rental can be a lifeline that fills a necessary gap.
What you’ll learn:
- The best kind of lease to choose for a short-term rental
- How to secure a short-term rental
- The start up costs of a short-term rental
- Having a clear time frame of how long you might need your rental
So where do you start and what can you expect? A search on Trade Me Property rental properties using the keyword short-term, throws up 127 results in all of Auckland. The short-term rental market is a specialist property market which tends to operate separately from the longer-term rental properties. Most landlords prefer to lease their properties for a year minimum, but in extraordinary circumstances, like late January of 2023 after unexpected and damaging flooding in Auckland, property rental specialists said property owners might be open to shorter leases because of the extreme need.
“We’re fielding a large number of inquiries already from families who’ve been displaced and I know they’re looking at needing temporary homes for up to six months at first indication from their insurers,” says Catherine Goodwin, Managing Director of property firm, Goodwins.
Often in these cases, short-term renters want to be as close to their childrens’ schools as possible, she adds.
In an emergency situation, more landlords will look at short-term rentals to help
In the situation where over 10,000 Auckland homeowners were putting in insurance claims after property damage, the hands-on MD was putting out communications to landlords around the world and to current tenants, to see if she could add more rental properties to the usual portfolio to help the strong demand.
“We’re working with other agents because you need to work together in a situation like this. If other agents have vacancies in their buildings, Goodwins could work collaboratively with them," she says.
Some long-term properties might become short-term in the current situation but that’s only going to apply to fully furnished homes, she explains. The beauty of short-term rental properties is a number of them are furnished which is very welcome when your own furniture is in storage or is damaged beyond repair. The bulk of longer term rental homes are unfurnished.
Thanks to higher Government rental standards, people won’t be able to rent out-of-town baches easily, because most of those beach houses don’t meet healthy homes standards, warns Catherine.
Think carefully before signing on the dotted line
The decision to move from your damaged home to a short-term rental should be treated with great caution, says the Goodwins MD. People are ill-advised to enter into any form of rental agreement without full clarity of what their insurance cover is.
When looking at short-term rentals, and fixing the damage to your house, don’t rush into anything immediately, says Crockers’ CEO Helen O’Sullivan. It will take assessors a few weeks to see if you can stay in your home or have to find another place to live.
Some people will think it’s easy to grab a short-term rental and just give notice when they don’t need it anymore, but it’s not quite as straightforward as that, says Helen.
Property management company, Crockers has a big city portfolio in Auckland CBD, which will be able to accommodate some people coming out of damaged homes, but three to four bedroom apartments are harder to find, she says.
Short-term rentals in suburban markets aren’t popular with landlords who prefer longer leases, warns the Crockers CEO.
“In suburban markets, you may find you’ve got to sign up for a minimum of six months, because three to five months isn’t seen as that long,” says Helen.
She suspects people will need at least that to fix their homes in some cases. If the water that’s come into is contaminated, then all of the gib has to be replaced, she says.
There’s some flexibility though, and it’s all about communication, she adds. Kiwi landlords are very happy to help when they know there’s a real need, says the Crockers CEO. “During Covid lockdowns our landlords were generous, and I’m sure you’ll find it’ll be the same again now,” she says.
Crocker expects landlords to be generous and offer a little flexibility during these tough times.
Periodic tenancies might work best if renovating
If you’re having work done on the house and you don’t know how long it’s going to take, a periodic lease may be the best idea when securing a rental, says Zac Snelling, head of Ray White NZ Property Management. There are two main classifications of tenancy, a short fixed-term tenancy, which is 90 days or less, then there’s the standard fixed-term lease of above 90 days. These fixed-term leases are either a periodic tenancy which has no end date or a fixed-term tenancy where the lease is taken for a set amount of time, and the tenant can’t give notice to end it early.
With a periodic lease, the tenant gives 28 days notice that they’re leaving. The landlord on the other hand gives either 63 or 90 days notice depending on the reason for ending the lease, says the Ray White property management head.
Zac’s top tip to people looking for a short-term tenancy after damage to their home is to be very clear about their time frame, what renovation plans they have, and how long they’re likely to take.
“The best thing is to give a landlord and property manager a clear outline, for example we need off street parking, we have pets, we just need six months while we’re renovating’,” he says.
Meanwhile, for those who haven’t rented in a number of years, the initial outlay is something to prepare for financially. The head of Ray White Property Management gives a reminder that you’ll need to find an initial week’s rent in advance and up to four weeks’ worth of rent as a bond, both payable before the tenancy begins.
You should also do due diligence when looking at the lease document which should include a Healthy Homes statement. Also, ask some questions like, what happens if the water cylinder bursts, how would that be handled. If people don’t know, then, a word of caution, slow down and consider whether this is the best property for you, advises Zac.
The benefit of furnished short-term rentals
A company well set up for displaced homeowners, is Amy Rennell’s www.furnishedrentals.co.nz, which specialises in short-term furnished rentals in Auckland.
In late January 2023, she was taking 10 calls every hour from anxious residents looking for short-term accommodation. She has 60 properties across all of Auckland in a number of school zones, and some of those had themselves been flooded in the emergency so re-homing tenants was her first priority.
Her portfolio of largely family homes are fully furnished, the beds made up with linen and you don’t even have to bring a teaspoon, she says.
“The rates, which are nightly, include the power, the wifi, meaning you don’t need to muck around with setting up utilities,” says Amy. A lot of her properties are pet-friendly which is important to her and to a lot of families, she knows.
Her landlords, meanwhile, are very flexible, if building work runs over, that’s accommodated. “We work really hard with guests and owners to make it work,” says Amy. At the moment, she’s asking current tenants if they could move out any earlier than planned with such strong demand.
The property manager stresses she doesn’t take instant bookings, tenants come to her first so she can vet them. “Generally, the families I’m dealing with are lovely and in great need,” she adds.
Companies like Furnished Rentals are well placed to help people that have lost everything to the floods.
At times, it pays to think outside the box
It pays to think laterally when it comes to finding a short-term rental. Kay Glendining, CEO of Ray White Mission Bay’s One Team Rentals says sometimes, properties for sale will be converted to rentals.
“If they’re sitting empty and not selling, they’re being converted to rent. We’re getting a lot of that,” she says.
If you have good relationships with local agents, it might be an idea to see if that’s a possibility with homes they’re selling.
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