Thinking of renting out your investment property and considering Airbnb over a traditional rental? Here are some things you need to consider.
To airbnb or not to airbnb?
The travel accommodation website Airbnb has gained immense popularity over the past 1-2 years, however does it make sense to buy to an investment property to rent solely through Airbnb? A few of our Buyers have asked us this recently so here is what we told them.
Airbnb is about location and proximity to the CBD. A property in the CBD and neighbouring suburbs will do well on Airbnb. Travellers generally want to stay within walking distance or a short commute to the city.
A property whether in city or any distance from the city can always be a traditional rental depending on the price.
Airbnb generally attracts a price premium on a rental income, but only in certain areas. Do your research on prices for both Airbnb and rental returns in your area for similar properties. The Airbnb price can also vary according to the time of the year.
Rental income is steady and consistent.
Supply and Demand
The number of listings on Airbnb has increased year on year and again you must do your research. What type of listings are in your suburb and surrounding suburbs? How many are available tomorrow, next week, next month? Make sure you check to get an idea of the vacancy rates and number of listings.
The number of visitors to Melbourne is also seasonal, travellers visit in the warmer months and to stay competitive during the cooler month’s prices must be adjusted.
A traditional rental will usually obtain a higher price in warmer months than in winter. Know your demographics in the suburb you are thinking of buying in to ensure your property style is desirable.
Airbnb is an alternative to a traditional rental for an investment property but the key here is to do your research to see if the return really is worth the extra time and effort.
Airbnb requires cleaning and laundry to be done after every guest. Don’t underestimate how long this takes if you are doing it yourself. If you don’t have time then you need to factor this into your costs.
All properties require general maintenance.
It takes time to communicate with guests and answer questions, manage bookings and multiple enquiries and ensure that you have the right guests staying at your property with Airbnb. You could have a new guest every 1-2 days and all that takes up time.
A rental property has a property manager and tenants stay a minimum of 12 months.
Airbnb is a great alternative to a traditional rental with potentially higher yields but the key here is to do your research. Is the Airbnb income, taking into account vacancy rates and cleaning costs, higher than a regular stable rental income? Is it worth the extra time and effort?
The Property Garden are Buyers Advocates and Feng Shui consultants and have over 19 years’ experience in the real estate industry. And yes we do have access to off-market properties. We take a holistic approach to assisting our buyers buy property in Melbourne, Australia.