Savvy investors know the financial benefit of an Airbnb property, as they can make more money from short-term rentals.
The appeal is obvious, but is it really a smart investment decision?
Airbnb is not for the faint of heart and really requires quite a bit of research before you take the plunge.
Here are some drawbacks noted from some of our RealRenta Landlords that have dabbled in Airbnb:
• Regulations around how long you can rent the property out for may be restrictive-check these with your local council/body corporate etc
• Body corporate restrictions may apply around noise etc
• You need to factor in costs like cleaning services
• Increased utility bills, landscaping, pool servicing and repairs
• Periods of vacancies can be unpredictable
• Declining property values drive down the asking price of your Airbnb property
• Airbnb service fee comes out of your rental income
• Insurance can be hard to acquire and expensive
• Risks of tenants injuring themselves in your property
• Competition is fierce and driven by online reviews so you may have to spend extra to please tenants
• Expenses like quality linen, bath accessories, professional photos and property staging
• You have to spend some time providing a concierge service and lists of local attractions/vendors etc
• Lower demand in winter months generally (location is factor)
• Reliable high speed internet is an expectation that your guests will have
Airbnb has all the risks of normal property investing as well as additional concerns such as regulatory and zoning risks, tax implications and property damage, so it pays to do your research and formulate a plan to mitigate the risks.
Wednesday, 14 November 2018