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The rise of the Airbnb business for investors

clock icon February 16, 2017
tag iconBuyers Agent

Since the arrival of short-term rental websites like Airbnb, there has been a lot of talk whether properties rented on a short-stay basis provide a better rental yield than those on a long-term lease.

Long-term renters who pay the same amount of money every month provide owners with a constant cash flow, but when you have a short-term rental the higher nightly rate can prove to be a more lucrative strategy.

This strategy, however, relies heavily on the location of the property and its proximity to beaches, shops and public transport. If the property ticks all the boxes, short-term renting can provide owners with returns up to 30% higher than a traditional long-term.

Successful Ways Buyers Agent Rob Stanley says he’s seen a significant increase of clients looking for investment properties for Airbnb purposes. “It’s become like buying a business that just happens to have a property attached to it,” he explained.

Rob’s client lists their Eastern suburbs property on Airbnb and booking.com all year round which brings in an average weekly return on $950 per week (after costs) versus the $700 per week through traditional renting.

“You’ve gone from buying a property which you hope is going to increase in value over time, to a business that’s generating a positive cash flow, which can be used to pay down the property itself,” he says.

But it’s not all sunshine and rainbows with short-term renting. It still requires a lot of legwork for owners to ensure the property is clean and guest enquiries are managed. But with the emergence of Kayla and Air Butler, short-term renting has never been so easy. The housekeeping and property management services (charging anywhere from 15-20%), ensures your property is cared for without lifting a finger. After a guest leaves, they will make your property look clean and fresh, provide fresh linen, towels and even miniature toiletry sets for the next visitor.

If you’re thinking of renting your investment property on Airbnb, ensure you check with building management as some strata buildings don’t allow short-term rentals under three months.

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