City apartments: How to reduce vacancy in the summer months

City apartments located in the CBD and near universities are in popular demand among university and tertiary students.

Both local and international students find renting apartments an affordable accommodation option, with the added convenience of being close to university and retail shops. However, during the semester break from November to February, apartment owners can experience vacancy when the students finish the school term and either go back to their country or visit another place in NZ.

While some apartment owners accept this vacancy period as inevitable, other owners and property managers have found some ways to solve this problem. Here’s how:

Some owners or their property managers list their apartments on Booking.com and offer it for rent on a short term basis during the summer months. While the owner has to pay for the furnishings (double bed, desk, chairs and maybe a TV), the investment is well worth it.

Here’s the numbers:

On Booking.com, guests will pay between $100 and $130 per night to book a one-bedroom studio in the Auckland CBD.

Apartment pricing from booking.com

Assume the apartment is booked out 5 nights a week in summer, this comes up to rental income of between $500 and $650 per week.

Booking.com will charge a commission of 15% as an incentive to send you bookings. This leaves you with rental income of between $425 and $552.50 per week. If apartment cleaning costs you $75 per week, then you will still have between $350 and $477.50 per week.

In contrast, a one-bedroom studio in the Auckland CBD currently rents out for $395 per week.

What you need to consider

There will be upfront costs. You have to spend money on basic furnishings (double bed, desk, chairs and maybe a TV). For tax purposes, these furnishings are treated as chattels and you can claim depreciation expense on your annual tax returns.
You will have to organise the apartment cleaning and changing the bed sheets in between reservations. For property managers managing several apartments located close to each other, the logistics is generally manageable. Regarding cleaning bed sheets, you can negotiate a deal with laundromats to keep the cleaning costs down.

It is best advised to list on Booking.com a few months before November. This ensures your property has enough time to be properly marketed by Booking.com. On the Booking.com website, you can choose the dates that guests can book the property. In most cases, you will set it from mid-November to mid-February. This is assuming that during the year from Feb to mid-November, you will rent it to students. On the other hand, if there is sufficient demand for your apartments, then is nothing stopping you renting on Booking.com all year round.

How does the guest pay you?

Booking.com does not take payment and you have to organise that between yourself and the guest. You can require the guest to pay a deposit via bank transfer or paypal before the guest arrives.  You can require the remaining balance to be paid to you on arrival.

Some owners also require guests to pay a bond to cover the scenario where the guest damages the property or loses the keys.

More about listing on Booking.com

Booking.com is a website that allows you to book accommodation in more than 200 countries.

The website is available in more than 41 languages. The target market include tourists and business travellers.

It’s free to register to list your property. Booking.com only charges you a booking fee (commission) after the guest has stayed at your property.

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