Websites like Airbnb offer homeowners a platform to provide travellers with short-term accommodation that's designed to feel like a home-away-from-home. Could your investment property be a potential cash cow?
Despite being founded ten years ago, Airbnb has really found its feet in recent years, offering up a bounty of aspirational design and quirky places to stay. Unlike the seemingly inauthentic experiences sterile hotel rooms provide, Airbnb has a distinct point of difference and seeks to offer travellers a local's experience of a destination.
The platform provides access to millions of unique accommodations, from apartments to castles and treehouses, available in 191 countries. You can even rent out the house from Australian cult film, The Castle, and enjoy the serenity of Bonnie Doon.
If you've been considering putting your investment property - or even a spare bedroom - up for short-term lets, there's a fair bit to consider before committing, but the juice could very well be worth the squeeze. Here's our advice on making sure your property is suitable for Airbnb.
Image source: Airbnb
Know what guests are looking for
Frank Valentic, director of Advantage Property, says that short-term rental properties, like those on Airbnb, should generally have modern or renovated fixtures in order to attract renters. The listings on Airbnb that catch your eye are mostly modern, and older properties have usually been renovated, restored or at least include modern furniture and contemporary accents.
Frank also suggests that most guests will be on the hunt for properties in desirable areas for short-term rentals, like those in a city's CBD or nearby lifestyle suburbs, or in holiday locations like Victoria's Mornington Peninsula. With this comes the expectation of access to nearby restaurants, cafes, supermarkets and - if the property is in an urban area - public transport.
Communication is key for Airbnb hosts and guests - ensuring your communication is prompt, friendly and helpful will help to secure the right kind of guests for your property, and help you achieve those five-star reviews. Working Wi-Fi in your property is also very important, particularly in urban areas where it's almost guaranteed that it will be provided.
Image source: Airbnb
Weigh up the returns with the risks
Sydney is the top-performing city in Australia's short-term rental market, which is now worth over $1 billion and supports over 40,000 full-time jobs, a new report from MadeComfy has found.
According to Airbnb, a listing in Sydney for four people has a monthly potential rental return of $3,008. The same will get you up to $2,227 in Brisbane and $2,823 in Melbourne. Frank says that for premium rental properties, like the ones you might see on The Block, short-term rentals on Airbnb will get you from 20% to 50% more per week than you'd get from standard long-term rentals. In Melbourne, a standard rental will get you a gross rental yield of 2% to 3%, while Airbnb could yield about 5% to 6%.
While these numbers might have you salivating, there are several outgoings and potential risks should you choose to head down the Airbnb road. Ongoing costs, like housekeeping, bed linen, water, electricity and Wi-Fi, do add up and should be built into the price of the rental. If you can't be flexible to meet a range of check-in and check-out times, you should consider getting a property manager to take care of this for you, which will incur an extra cost.
Potential wear and tear are also higher with a short-term rental property than they are in a long-term, because of the high turnover of people who are generally less likely to take care of their space if they're only staying for a night or two.
Frank believes that Airbnb can be more volatile than standard rentals, due to gaps between tenancies and shorter-term leases.
"I would recommend it as an advanced investment strategy and better for more experienced investors," Franks says. He advises first time home buyers or investors to steer clear of this risky investment strategy.
You may also run into potential problems if you're in an apartment building - contractual restrictions could include an Owner’s Corporation not allowing short-term rentals, Frank says. "You may also have issues with noise or parties that lead to complaints by neighbours," advises Frank.
Try and think of owning an Airbnb rental as a small business - are you prepared for the upkeep, time and money you'll have to invest in order to generate a profit? If you are ready to make this commitment, Airbnb could be a fantastic platform for facilitating short-term rentals.
Image source: Airbnb
Listing your property
While aesthetics are undeniably vital to a popular Airbnb listing, guests are ultimately looking for a property with a clear listing that gives a true representation of what they can expect from their stay.
Be transparent about any limitations - like if there's no parking or airconditioning, or has a noisy bar downstairs - and highlight the property's best assets with quality photos.
Airbnb offers a professional photography service to help add polish to your listing, make your place stand out and hopefully get more bookings.
Add as much helpful information about the rental as you can into the listing and use guests' constructive criticism to improve the property, and you'll likely be rewarded with five-star reviews and a high-occupancy rate.
In the new series of Selling Houses Australia - Wednesday 7 March, 8.30pm on Lifestyle - Shaynna and Charlie convert an old, derelict church into a holiday rental suitable for the Airbnb market.