In my previous life, before being a blogger and aspiring author, I was a Risk Specialist at a large corporate. Leaving the #9to5 to write and blog full-time would not have been possible without some rental income to keep my finances afloat.
If you are considering becoming a full-time author, then why not ponder moving somewhere exotic and cheap and rent out your city pad? Or if you can finance a second rental property, here are Cat and Keyboard’s
Top 10 Passive Author Income Tips.
#1 Choosing an investment destination
Rental yields differ from country to country. If property rental yields in your hometown are low, then why not consider buying abroad.?
I own residential properties in Johannesburg, where a property is surprisingly cheap but rentals are quite high. You could achieve a great return on investment if you could access some money from your North American/European home at low-interest rates and buy somewhere like Jo’burg where rentals are high.
#2 Holiday let versus residential letting
Furnishing a property and advertising it as a corporate let is more effort, but will earn you more income.I have holiday lets in Cape Town and have been amazed that it was quite easy to get high occupancy using Booking.com.
Try to do some research with the large corporates in your area, to get corporate lets in low season.
#3 House or apartment?
Your life will be far easier if you buy a condominium (or ‘complex’ in South African speak). Yes, you will have monthly condominium fees (levies) to pay, but all the external maintenance will be taken care of for you.
#4 What size?
I’ve had good luck with small two-bedroom apartments. Smaller apartments are cheaper to furnish and maintain, but having a second bedroom means that I don’t compete head-on with Hotel rooms.
For holiday letting having some outdoor space, be it a balcony or patio does help to book more visitors.
#5 Getting set-up for holiday letting
A clean uncluttered design will help make guests feel at ease and help with quicker cleaning turn-around times between visitors.
If you don’t live close by then you’ll need to find someone to do meet-and-greats for you. I’ve been lucky to find a lady who does both the cleaning for me and the meet-and-greats.
#6 Advertising and marketing
I advertise my holiday lets on Booking.com. They charge a 15% fee per booking. But, you’ll have to coordinate guest payments. I prefer to use only one platform, so that the booking calendar is automatically updated in one place and that I don’t end up with double-bookings.
You could also use AirBnB of course. And the fact that guests are rated by other Airbnb establishments helps you to choose who you would like to accept.
#7 Monthly expenses
You’ll have to be sure to budget for the following
- Home Loan Instalments
- Municipal Rates
- Condominium Fees (Levies)
- Meet-and-great fees
- Cleaning fees
- Wear and Tear (Depreciation) on Furniture
- Linen/Towel Purchases
- Advertising fees on Booking.com/AirBnB
- Bank Charges
#8 Maintenance and breakages
I’m careful to choose finishes and furnishings that are quite robust. Tile floors, granite counter tops and furniture that is easy to clean. But some breakages are bound to happen.
You could use a refundable deposit system. But this does take quite a bit of time and effort to implement. Or just set aside a sum each month to cover breakages.
#9 Managing payments
Electronic banking is my saviour! It is quick and easy to track guest payments and to make all other payments. If you find the admin is getting out of hand, then consider lengthening the minimum length of stay for each guest booking.
#10 Accounts and taxes
You’ll have to determine which of your expenses are deductible for tax purposes. Basically, anything is deductible that is necessary for the running of the “business”. But capital expenditure to the renovations of the property wouldn’t be deductible.
Your tax authority will have write-off periods for the depreciation on furniture and white goods. Remember to deduct these amounts for depreciation from your taxable income.