Guide to buying a property in Dolphin Beach for short term rental
Considering buying a property in Cape Town for both investment and personal use? Let the team at Signature Residence SA guide you by answering all unanswered questions you might have before investing in South Africa.
We understand the challenges associated with planning a trip to Cape Town, especially if you are planning frequent visits. That said, after a couple of visits to Cape Town, you have a good idea where you want to stay, what works and what not. So why not buy a property with unlimited personal access, let your asset appreciate and then generate a good income from it by renting it out as short-term rental whilst you are back home. With properties starting at 135 000 Euro, located right on the beach, you simply cannot go wrong investing.
What to consider
I’ll start with a few short term rental tips when deciding on buying accommodation in Cape Town. Then we will discuss if you should invest in a short term rental property in Cape Town. Two common objections – Whatever property you invest in, we’ll talk about how the impact of your rental’s success depends on your attitude or rather how or ho your rental philosophy can make or break the investment.
Pointers to consider
The average Joe is doing poorly on short term rentals: All you need is to exceed old Joe. And it’s not that difficult. But to win big time, you have to distinguish yourself from the rest. Ask questions like: Is the design distinguishable from the rest? How will this place look on a photo? Keep this idea in mind when you search before you decide to buy in and around Cape Town.
View: You’ll be getting lower rates if you do not have ocean or mountain views. But if you have views then tick the box. Views play a big role in what can be charged per night and remains one of the number one requirements guest look for in a rental.
Sunshine: Patio, balcony or garden? If you can show bleak European holidaymakers two or four sun loungers in the sun and a braai you are stacking up a winner.
Pool: Very few Cape Town rental accommodation has a pool. Two places, exactly the same, next to each other, one with a pool and one without – The one with a pool will make double what the other one without a pool will do. The pool is a winner!
Parking: Not always easy in Cape Town but having a secure parking bay takes away the objections from those wanting security. Secure gated parking is even better!
Access: Lift or stairs: If you are on the 2nd or 3rd floor and access the apartment via stairs you have just sliced the pie smaller as the unfit population will not take it.
Think interior when you buy: Modern, minimalistic, with all the bells and whistles. But that may be limited. It can be any design but if it lacks uniqueness or remarkability it will not do well. It must be pretty. Very pretty. Outdated will mostly fail.
Location: If you can afford Camps Bay or Clifton go for it. If not, Green Point, Sea Point, CBD, Blouberg, and Southern Peninsula suburbs like Simonstown, Noordhoek, Kalk Bay, and others. Southern Suburbs and similar non-coastal suburbs can be considered but be aware as demand is not the same, lower demand, lower rates.
On the beach: For obvious reasons, people pay a hefty premium to stay on the beach. Especially in Blouberstrand between November and March. Blouberg beach or rather Kite Beach is a world renowned beach for kite surfing, so if you can find a property in Blouberg with first prize being Dolphin Beach, then be sure to expect great returns on you investment.
Bedrooms: The more the merrier but not at all costs. Two bedrooms are great, but three is a bonus. This is the sweet spot.
Bachelor or studio: It can work. But people prefer to stay in a one-bedroom before choosing a bachelor. If all the other ingredients work then this is not a camel backbreaker. Two bedrooms do however remain the most occupied.
Bathrooms: Obviously ensuite will always make more than shared bathrooms. Let’s say you have 4 couples – who will stay in the ensuite bedroom and who will share bathrooms? I know we are nit-picking but flexibility is the game. If not you are eliminating potential bookings.
Bedroom Sizes: I realise this is not always possible as you may not be building your rental property from scratch – Equal-sized rooms are the best. An ego doesn’t like to stay in the small room while John has the master suite. For a family, the smaller egos don’t have a choice. But a party of couples, a different story.
Business and holiday-makers: During popular seasons you’ll pay to stay in coastal suburbs. But what about winter? Problem! Lets consider the CBD, Tamboerskloof or Oranjezicht etc.- If you can identify the ideal property you’ll not only get seasonal guests but travel-working-guests and business travelers.
Should I invest in short term rental property in Cape Town?
Online, London estate agent, Nested, created the 2017 Property ROI Index to compare Airbnb city investment potential. They use a three-bedroom property as the norm. And then calculated how long it would take for an investor in each city to recoup the property value using Airbnb and the traditional rental market.
“Cape Town was ranked in 12th position – With traditional long term rentals you will on average recoup your investment over 205 months or 17 years. However, with the new more modern short term or Air BnB rental model, you will recoup your total investment within 50 months or 4 years.”
There are commentators criticising the methodology used:
The survey uses a high 80% occupancy rate, which is out of the ordinary in many markets. We agree. Only few Cape Town Airbnb Winners will get to 80% occupancy.
High occupancy would be 50 to 60% as Cape Town’s winters tend to be tourism-dead. The average Airbnb-Joe runs at about 35%. Bad! So, if you are average Joe, forget about a 50 month recoup. At 30% occupancy, Old Joe will take 208 months with Airbnb. He can just as well go for long term rentals.
Although the Nested Property Index has its distractors it shows how popular Cape Town Airbnb is. And even if you only do 50% occupancy can still get your money back in half the time or less than if you tried long term rentals.
Find the right property: Being experienced professionals in the field of real estate, including buying, selling and renting Signature Residence SA is sure to find you just the right property. With access to so many properties, we will find the property that will suit your personal and investment needs.
Manage the purchase and transfer: Once we find you the property, we will manage the entire process. We will present the property to you, may it be in person or virtually. From starting negotiations with the seller to finalizing the sale, we will facilitate this process on your behalf until the property has been transferred into your name.
Prepare and assist: Once the property has been transferred into your name, we can prepare the property on your behalf. May it be renovations or even just arranging furniture for the property. We will prepare the property for you, or if you prefer to get involved personally, we can discuss and plan together with one of our professionals at our office.