Is Airbnb The Right Choice for My Investment Property?

Short term accommodation innovations like Airbnb have certainly changed the way we plan and book a holiday. They provide a compelling and often cost-effective alternative to hotels in many holiday hot spots.

If you’re thinking of buying an investment property to rent on Airbnb, it is wise to do your research before you jump in. We’ve put together a list of things to consider so you can make a more informed decision.

The Pros

The convenience of Airbnb is that anyone with an investment property or even just a room to spare can profit from hosting travellers. Holiday goers have the benefit of living like a resident in their holiday destination, all while you make a bit of extra cash!

The best part of this venture is that you are the agent. While you are tasked with doing the work that a real estate agent or property manager would normally do, you have a lot more control over advertising the property, maintaining lines of communication, coordinating bookings and payments and arranging cleaning and maintenance. This allows you the flexibility that you wouldn’t otherwise have, which means you can do things like adjust the rental price to respond to the market. In addition, it’s still your property, so you determine when it’s available for rent.

The cons

Making your investment property available for short-term rental means that you may have vacancies between tenant occupation, so you’ll need to budget effectively to prepare for off-peak times to better manage your cash flow.

You should also be aware that holiday accommodation is usually furnished, so you may have to spend some money before you make some. However, you should speak to your accountant about developing a depreciation schedule for items like furniture and whitegoods since their value decreases over time.

Traditional home and contents insurance is probably not going to be sufficient when you are hosting paying guests. Speak to an insurance broker to protect your property and contents while you’re renting it out. Airbnb’s Host Guarantee is not insurance, so it is critical that you read up on all of the terms and conditions to protect yourself.

When signing on with Airbnb, ensure that you are aware of all the terms and conditions and any obligations you may have to Airbnb and/or your prospective tenants. Make sure that your short-term rental arrangements are legal and check that you aren’t breaching any homeowners’ association or body corporate rules. You should also ensure that you comply with applicable zoning laws within your city.

Short-term rental markets can be volatile and laws change regularly, so it’s best to be on top of it. Get in touch with one of our Launch Finance brokers today for more information about buying an investment property.