Property investors and landlords evaluating whether to Airbnb an investment property or room in a primary residence to make more money than a long term rental agreement with tenants have many considerations to take into account.
Flexibility Vs Freedom to Travel Elsewhere
Airbnb seems almost too good to be true, with some properties earning the equivalent of their monthly rental in a 1 week Airbnb booking. The flexibility offered is also appealing – with landlords being able to choose to use the space as they wish, whenever they want; when friends or family come to visit, or when they want to do repairs or renovations, the apartment can simply be blocked out on the Airbnb calendar for the preferred dates. No doubt, this is a benefit yet that doesn’t make short term rentals on platforms like Airbnb and Stayz a good long term investment.
Not All Insurance Companies Insure Airbnb Properties
Several of the largest insurance companies in Australia do not offer insurance for properties being used for Airbnb. AAMI, for instance, do not offer landlord insurance for properties which Airbnb which can inconvenience landlords who are considering switching from rental tenancy to short term Airbnb. While some insurance companies specialise in Airbnb type platforms, property investors should be aware of the higher premiums some insurance companies charge for house and contents insurance for online platforms offering lodging and primary homestays.
Strata Management Oppose Airbnb in Apartment Blocks
Given the noise that a constant stream of short term guests can bring, strata management of apartment complexes have increasingly set stricter guidelines for property owners. Buyers of investment properties should observe strata guidelines prior to bidding on any apartments.
Airbnb falls short as a Property Investment Strategy
As an investment strategy, sadly Airbnb falls short. Though there may be the perception of a constant stream of guests, there will always be lulls and if you have regular mortgage payments to cover you may find yourself falling short more often than not.
Council Restrictions on Airbnb
Some regional areas have experienced significant noise issues from parties, disruption and destruction caused by short-stay tenants in Airbnb properties. Residents have called for specific holiday codes of conduct from local councils, including party bans, limitations on numbers of vehicles per property and a 10 pm to 8 am curfew on outdoor spaces and visitors. These are further restrictions that can impact your ongoing rental yield for your property.
Remember, Airbnb does offer responsible hosting guidelines on their website, however, in summary, they basically tell you to do your research elsewhere – evidence no doubt of the ever-changing landscape on these issues from state to state.
Cleaning, Maintenance & Repair Costs
When you have a long-term residential tenancy lease in place, your property manager will take care of your one set of tenants, who make it their home more than guests staying for just a few days at a time. Repairs or maintenance requests are managed within normal parameters, rather than reactively because your guests need the attention within the short duration of their stay.
The wear and tear on your investment property is also increased from Airbnb rentals due to a higher volume of traffic through your property. If your property is part of an apartment building, you (or worse, your guests) will inevitably deal with potentially hostile neighbours or disgruntled body corporate members at some point too.
Airbnb Host Vs Professional Property Manager
Becoming an Airbnb host is certainly an option for those with a suitable property and the desire to boost their personal income. It is important to understand you are committed to basically running a small hotel – from time spent attending to guest requires, to constantly washing sheets and towels and replacing damaged or stolen items. There are tax considerations that should not be forgotten because you would be increasing your income as well as changing how the tax office views your property. You’ll need to keep comprehensive records of your Airbnb income and expenses and understand how capital gains tax may come into play for you when you decide to sell your home.
In addition to the legalities of using Airbnb, there are also practical elements that should not be overlooked. Though the income earned on your investment might be significantly more than a rental tenancy agreement, the investment in time and maintenance required to run an Airbnb property is also considerably higher, plus, you can’t be sure you’ll achieve high enough levels of year-round occupancy to exceed the income produced by normal long-term renting.
In summary, the complications involved with being an Airbnb host fair outweigh the advantages. The value of a traditional rental property that is well managed by your agent offers a peace of mind that cannot be replaced.