Updated: Jun 17, 2020
The Ready Set Short Term Rental Fund is now live and accepting applications!
Before the Covid situation worldwide, the short term rental industry has grown dramatically over the past decade on the back of platforms like Airbnb, Booking.com, Expedia & HomeAway/Stayz. Some property owners have switched their investment properties to short term rentals and enjoyed significantly higher returns.
Property Investors could ride this wave of growth by going out and purchasing an investment property and listing on sharing economy sites, but there is a lot of work screening, messaging & meeting guests, arranging cleaners and the like; and the success of this strategy depends a lot on securing the right property. Then there is the Coronavirus now, bringing uncertainty. However, a crisis has two sides: Problem and Opportunity. The current problem due to the crisis is obvious, but what is the opportunity? By no doubt investing in property when the prices are going down is the best time.
REAL ESTATE CONSIDERED SAFER ASSET
What has happened in the last several months is not unprecedented – the Global Financial crisis was not too much long ago. This time around, the fear of the uncertain end to the outbreak and what impact it will have is what is driving the markets down. When the stock market crashes, investors often see property as a safer place for their money.
Property is not just a safe place to live in. The fact that everyone needs a roof over their heads makes this asset underpin our entire economy. Banks, real estate agencies, developers and the government all have interest in keeping property prices stable.
The new Ready Set Short Term Rental Fund gives an opportunity for investors to participate in both the property market and the sharing economy with professional managers taking care of the acquisition & ongoing management. With a low minimum investment, investors can take a share in a property without necessarily committing sufficient funds to purchase an entire property themselves. As the fund grows, there is also a diversification benefit in owning a portion of multiple properties rather than all of a single property.
ALL EMERGENCIES EVENTUALLY END - WITH SOME PEOPLE BETTER OFF
In order to get the most out of the current market environment, why not use the doom and gloom stories of the media to invest when the purchase price is lower? The fact that the investment is a longer term play makes property the best asset to protect yourself and invest in a time of economic uncertainty.
In times of crisis, such as the current COVID-19 situation, banks don’t lend money easily and as a result, less people are able to buy properties and they rent. This is why it is wise to consider investment not when the market is up, but when such opportunities arise. On top of that, there is the short term rental opportunity.
SHORT STAY RENTAL INDUSTRY GREW 47% IN 2019 FY
With the rise of AirBnb and other similar websites, short term rental arrangements in the last decade have taken Australia by storm. Short term rentals generate more than $3 billion in revenue to the economy and over 125,000 homes are being leased on a short term basis. Despite the current emergency situation, this trend will continue when restrictions are eased.
Growth in the use of shared accommodation is outpacing its traditional rivals, despite new hotel developments. It has become a widely accepted way to have a more memorable, authentic and often cheaper experience instead of a hotel, thanks to technology which allows for easier online access to property listings. It has also become a way for many people to increase their income from their property.
SHORT TERM RENTALS DURING THE COVID-19 PANDEMIC
Let`s have a look also at the short term rentals during these uncertain times. Surprisingly, the slump in short term rentals was not as bad as in the hotel industry. People still needed temporary accommodation for number of various reasons. Some were blocked in Australia due to flights restrictions; others had a major leak in their home and had to relocate for a month and so on. Short term rentals also remained open while many hotels chose to close due to higher operational costs and requirements.
In Ready Set Apartments, our management took immediate measures to cope with the situation and decrease any risks as well as financial losses. So even in this environment, with timely actions our business model turned to be resilient.
SHORT TERM RENTAL PROPERTY EARNINGS HIGHER THAN LONG-TERM
Turning a property into working investment seems a simple way to generate extra income, but the success ultimately depends on various factors. Many owners of short stay property have earnt more money than their counterparts letting property for the long term.
According to The Telegraph, short term rentals can bring in around 30% higher profits than long-term lets. But the potential is greater than even that. Some reports have indicated that the same property could even triple the monthly rental income if leased as short term rental. It seems that the secret lays in choosing the best locations and the right configurations.
THE READY SET SHORT TERM RENTAL FUND INVESTS IN INNER CITY AND HOLIDAY PROPERTIES TO USE AS SHORT TERM RENTALS
This is how it works: when people invest, the funds are pooled together with other investors’ money. This larger pool of money is used to buy property on behalf of all investors. Properties are listed on websites like Airbnb Booking.com & Expedia and at the end of each quarter, the higher rental income (less maintenance fees&costs) is distributed. If there are property price increases, investors also benefit. Compare it with buying shares – you get fraction of properties that can grant you rental yield and capital gain.
There are many investment funds, and many companies offering short term stays, but only Ready Set Short Term Rental Fund in Australia has both under one roof.
READY SET APARTMENTS AND THEIR PARTNERS TAKE CARE OF THE MANAGEMENT OF APARTMENTS, AND THE RETURNS (NET OF COSTS & FEES) ARE PAID OUT TO INVESTORS PERIODICALLY
Ready Set Apartments is part of Ready Set group of companies, providing short term property management for more than two years, using unique pricing model to maximise profits. The experience and analytics gathered play a great deal in targeting the best properties on the market that could generate the highest revenue for the short term rental business model. By the end of 2019, the team was managing over 75 properties in Melbourne CBD and the surrounding suburbs, focusing on properties in popular areas that are in high demand and offer higher than average rental yields. Ready Set Apartments has now over 1,000 5-star ratings for its listed properties.
The same company will manage the fund properties. In practice, having an experienced property manager deal with the short term lease, means the property is monitored and maintained more often, sometimes on a daily basis, considering that the properties are owned within the same group. Ready Set Apartments manages all aspects of short term rentals, including maintaining listings on relevant websites, arranging repairs, undertaking periodic inspections, arranging maintenance. This ensures that the properties are in good condition and helps detect and solve problems quicker, unlike long-term leases.
THE FUND IS OPEN TO WHOLESALE & RETAIL INVESTORS, AT LOW ENTRY COST. INVESTORS CAN INVEST THROUGH SUPER OR DIRECTLY
For most people, a large proportion of personal investments have historically been in term deposits and cash, because of their widespread perception as being safe and reliable. This is now changing, as more people seek advice on how to obtain a satisfactory income in a low-interest era. For those who would like to get involved in the short term rental property investment, but couldn`t afford to invest much or would rather start with smaller scale investments, Ready Set Short Term Rental Fund makes it easy to start with the low minimum of $10,000 – much lower than traditional property investing, as well as enjoy the sharing economy income stream.
If you have already seized the opportunity to invest in property, but are interested in the potential for higher returns together with the diversification benefit of owning a fraction of multiple properties, Ready Set Short Term Rental Fund offers a solution, that will save the time and hassle from scouting for the right property, maintenance and dealing with agencies and clients.
MOST INVESTORS WILL BE INTERESTED IN THE OPPORTUNITY TO EXPOSURE TO THE RETURNS OF SHORT TERM RENTALS, WITH THE RELATIVE SAFETY OF AN UNDERLYING ASSET THAT IS RESIDENTIAL PROPERTY
The amount of income distributions that investors receive depends on the current level of hotel market rates, while the potential for capital gains depends on the property market development. Those do not always correlate – hotel market is largely driven by tourism and business travel, while property market depends largely on different factors, for example interest rates, proximity to schools etc.
By investing in the Fund, an investor may achieve a better investment outcome in case of fall of the property market prices, due to the primarily income-oriented structure of the fund and the type and location of the purchased properties.
THE LOW MINIMUM INVESTMENT ALSO ALLOWS SMALLER INVESTORS TO GET ON TO THE PROPERTY LADDER WHILST THEY SAVE FOR A HOME
Many people have fallen in a property price trap while trying to save for a home. Putting money in the bank was actually making it harder to buy a property, because of interest rates being lower than property price increases. At the end of the day, accumulated savings seem to buy less, not more.
Ready Set Short Term Rental Fund has the objective to overcome this. The fund recommends investment period of five years or greater, and targets higher income return and the potential for capital growth to overcome the property trap.
For those of you that would like to get involved in the short term rental property investment, but haven’t done this before or couldn`t afford to invest much, or just would rather start with smaller scale investments, Ready Set Short Term Rental Fund is exactly what you are looking for.