How to transition your Airbnb to a long-term rental

03 June 2020

COVID-19 has been felt by everyone across the globe in one way or another. Everyone, from members of the community to entire industries, has experienced a hit. In New Zealand, our  team of five million have pulled together to fight against the health, social and economic impacts of coronavirus. As borders are closed to international tourism, and with domestic tourism in early stages of recovery still, New Zealand’s tourism industry has been hugely affected. Activities, travel and accommodation all are suffering due to COVID-19. 

A part of the tourism industry feeling COVID-19s effects in the pocket are Airbnb property owners. The short-term stay online booking market has been transformative for tourism, enabling travellers to enjoy the comforts of a home while abroad. Airbnb offers regular income to property investors, especially in popular tourist spots. With tourism shrunk down, properties have been left without bookings or returns for their owners. This is why many are pivoting to more traditional long-term tenancies, away from the short-term model. 

With many of these Airbnb operators entering the rental market for the first time ever or in a long time, there are bound to be questions about how to transition from a short-term booking property to long-term rental. Let’s explore some key steps you should consider as you make the change.

 

Ensure your property meets regulations

On 1 July 2019, the Healthy Homes Standards came into effect. These regulations have been introduced by the government to ensure homes in New Zealand are up to acceptable standards for the occupants’ health. The legislation includes heat, insulation and ventilation. Before you rent your ex-Airbnb, take some time to get familiarised with the standards and make arrangements to get a statement of compliance. Having this sorted before starting a tenancy is a legal requirement and will give you peace of mind.

For more information about the Healthy Home Standards, head over to our Knowledge Centre where we cover this in detail.

Fix what needs fixing

A tiny drip or squeaky floorboard might be a minor inconvenience for Airbnb customers staying a night or two, but that will quickly become a major frustration for those living in the home long term. Go through the home and surrounding property and make a list of all the issues you can find. Turn on taps, switch on lights, lock fences - do a bit of a stress test of the property. Once you’ve written your list, you can sort these out into quick fix jobs and things that may need a tradesperson to address.

Short-term stay properties see a variety of people come through, each with different levels of care for the home. This is to be expected, but it’s cause to really scan all parts of the home for damage - if your new rental customer finds it, they will be coming to you or a property manager to remedy it. Fixing things in a vacant home is much easier without navigating furniture or schedules.

Learn your obligations

As a rental property owner, you have obligations in New Zealand in terms of how you maintain the property, rent the property, communicate with rental customers and address issues. This can be quite different to an Airbnb - while they have rules too, they’re not as complex as a tenancy. A common part of rental properties that new rental property owners get caught on is the rules around visiting a tenanted property. You can’t just turn up unannounced, even for what might seem like positive reasons like checking the rental customers are okay. 

Along with the Healthy Homes Standards outlined earlier, you’ll also need to make sure any maintenance is carried out immediately. The rental customer is responsible for raising any damage or issues with you straight away. The best tenancies are where both rental customer and property owner respect and understand their obligations.

Insurance

This is a good time to check your house insurance on the property - what does it cover? Does your insurance protect rental customers and any damage to property or surrounding properties? This step before tenanting is absolutely critical - failure to insure a property and liability can become a legal and financial nightmare. You also have an obligation to provide insurance information to your rental customer in their tenancy agreement. Speak to your insurance company and/or broker to make sure your Airbnb is ready to become a long-term rental.

Set your rent

After a long period of running per/night rates via Airbnb, understanding what to charge under a weekly, fortnightly or monthly rent model can take some considerable time thinking about. To get you started, here’s some key factors:

  • Market research: what do surrounding properties in the area of a similar size and condition demand in rent? Does your property offer modern features, outdoors spaces or views that could impact this? Using other rental property listings to build a picture of the market will help you build a range.
  • Get a rental appraisal: One of the fastest ways to understand the rental yield of your property is to speak to an expert. Quinovic has been doing free rental appraisals since 1988 and we have our fingers on the market’s pulse. This way you’ll get a figure accurate to what other rental property owners are getting for a similar property. This can help rent a house faster than a rent that is unrealistic.
  • What’s your budget or time horizon?: Your property may be part of a longer term investment or sales strategy. If that’s the case, you’ll have some idea of what returns you need to get from the property by a certain date. Work backwards from here to know what sort of acceptable rent range you can work in. 

Choose your type of tenancy

You’ve got the option of a periodic or fixed term tenancy:

  • Periodic Tenancy: this means that your tenancy agreement is open with no fixed end date. If the tenancy is to end, the rental customer or property owner needs to give notice consistent with the terms set out in the Residential Tenancies Act (RTA).
  • Fixed Term Tenancy: the end date of the fixed term is agreed in the contract. Once the end of that fixed term passes, tenancy automatically becomes a period tenancy. If the property owner or rental customer doesn’t want this to happen, notice needs to be provided between 90 and 21 days of the end date of the fixed term. Take special note of the provisions set out in Schedule 5 Provisions relating to outbreak of COVID-19 of the RTA.

Understanding the difference between tenancies can help you decide what works best for you post-Airbnb.

Set the house rules

This part may be a bit more straightforward coming from short-term stays, where rules will have been laid out in your listing. You’ll want to establish whether you’re open to pets, and if so which ones. Opening up to cats and small dogs can broaden the appeal of the home out to more prospective rental customers, but you need to assess what (if any) damage pets may cause your property beforehand.

Again, when it comes to how many occupants you are prepared to have as part of the tenancy, you can get some idea of this from your guidelines as an Airbnb. Getting the right balance between enough people to attract rental customers and not overloading the home risking safety or damage is key here. If you’re unsure, go back online and browse listings for properties of a similar size - or call a property manager for advice.

Market your property

Going out to market your property is a bit different than for short-term for travellers. First, you’ll be advertising domestically - property manager website, TradeMe and other Real Estate websites. The features you’ll highlight will talk more to long-term rental customers. So rather than its proximity to tourist spots, the marketing should talk about the family-friendly area, walking distance to schools and local shopping areas. 

Take clear, bright photos that represent the home accurately. You should make sure the surrounding property section is shown, not just the inside.

Find rental customers

While Airbnb guests come with reviews on the platform, rental customers don’t. Choosing the right person for your property is not always an easy process. You want to be fair but find someone who’ll respect the home as their own (which it is during the tenancy) and be reliable on communication and rent payments. To learn more about finding the right people for your property, head over to our full guide

Part of securing a rental customer for your property includes background checks like talking to referees and doing credit checks. Referees can be a mixture of previous property owners, employers, tenancy tribunal adjudications  and personal references. This can help build a picture of your potential rental customer, so you have as much information as possible to make a decision.

Talk to a property management professional

As you can tell, moving from Airbnb to a proper rental property isn’t a 5 minute exercise. If you’d prefer to have someone take care of maintenance, finding a rental customer, organising rent, lining up the tenancy agreement and handling communication on an ongoing basis, a property manager is exactly what you need. Many rental property owners go for this option when they start adding up the total cost of doing it themselves.

Transitioning from Airbnb to rental? Let's chat!

Quinovic have property managers across the country with extensive experience managing your rental. You can arrange a free appraisal, or get in touch with your local Quinovic office to discuss your options further.

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