Should You Invest in an Airbnb Property?

Airbnb’s online platform has made it easier for people to get into the property rental business. Currently, there are millions of properties listed in more than 190 countries worldwide. In Australia, there are around 350,000 unique properties hosted on the platform, and this is equivalent to around 4% of the Australian housing stock.

Airbnb as an Investment

Most of the Airbnb listings in the country are in the states of New South Wales, Victoria, and Queensland. According to statistics, half of the listed properties on the platform are classified as houses while the rest are apartments.

 

Many are getting hooked into buying properties and converting them to holiday homes or rooms for rent.  In Sydney and Melbourne, it’s possible to earn an average of $2,900 a month with an occupancy rate of 65%. Aside from the considerable income, the convenience of listing on the Airbnb platform is also a major factor in the increase in Airbnb properties.

 

But before you buy a property and be an Airbnb host, you must understand the pros and cons of such a venture. As with any investment, there are benefits and risks in putting your money in Airbnb rentals.

 

The Pros

  • You name the price

As a host, you can set the price for renting your house or room. You can decide how much you’ll charge for overnight, week-long, or month-long stays.

 

To attract more customers, hosts usually give discounts to guests who will stay more than a week on the property compared to those who need it only for a day or two.

 

Weekends and holidays are when prices skyrocket. Consider listing a different price on days when the demand is high and when reservations are seldom made.

 

  • Free advertisement

You don’t have to pay Airbnb to have your property listed on the platform. Airbnb makes money by taking a portion of your rental income in exchange for using their service.

 

When advertising, be creative in describing your property. Fill your user profile with as much info as you can so that guests will know more about what type of host you are. Post attractive pictures that will make your potential guests want to rent your property right away before others get the reservation slot.

 

 

  • Flexibility on the type of property to rent

Whether you have a room, an apartment, a trailer van, a yacht, or a whole house, you can rent them all through the Airbnb platform. So long as it’s attractive, liveable, and in a good location, you can lure customers to make reservations.

 

The Cons

  • Unsure income

There’s a risk that you’ll only make cyclical income with your Airbnb property. Holidays and weekends are your biggest chances of getting a reservation. If the property is in an area where room demand is high, you may get reservations even during weekdays.

 

But generally, people rarely experience this and create a continuous income stream. The risk of having an unoccupied property for days or weeks is there, so you should have enough buffer to pay for maintenance costs.

 

  • Damage to property

Airbnb or not, property damage is one of the biggest headaches you’ll face; Airbnb just makes it harder to screen guests because reservations and transactions are done online.

 

Even if the guests are highly rated, accidents can still happen that may result in property damage. You may just spot the problem later when the guests have left the room.

 

Security deposits aren’t required in Airbnb properties. Although there are terms and conditions that guests must follow, this may not be able to completely cover the costs of damage. You must strongly consider getting property insurance.

 

  • Dispute with neighbours

Unless your property stands alone in an isolated island, you’ll also need to consider the welfare of your neighbours when renting your property through Airbnb. Not everyone will be okay with sharing common areas and facilities with strangers.

 

Always be mindful of your neighbours when renting a property. Devise a guideline for guests to follow. Give also your neighbours a heads up on what to expect from your Airbnb property.

 

  • Regulations

Make sure you comply with local regulations on renting property to avoid problems. Taxes and rules on holiday rentals may change from time to time though, so it’s your responsibility to keep updated with changes on legislation.

Conclusion

The convenience and profitability of renting a property through the Airbnb platform are the main reasons why many Australians are hooked into this business venture. If the property is in a good location, the chance of getting regular reservations are higher, thus producing a more stable income source.

But as with any business venture, there are risks associated with managing a property. Make sure the profits you’ll get from renting will outweigh the costs of maintaining the property.

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