Guide to Buying an Airbnb Investment
Airbnb has become one of the biggest players in Australia’s holiday accommodation industry. It exists in more than 65,000 cities across 190+ countries all over the world. If you have a property or even a room to spare, you can make some money from this travel market segment.
The concept is not new as Airbnb has been around for more than a decade now. Odds are you have stayed at a short-term rental like Airbnb properties, making you one of the 200+ million guests worldwide. Airbnb can be anything from a simple family home to an apartment to a villa.
It is not surprising that many Australians want to join those who own an Airbnb. However, not everyone has an extra room or a house available for short-term renting. If you are among them, you may be interested in buying an investment property to list it on Airbnb and perhaps other accommodation portals.
Considerations Before Buying an Airbnb Investment
Airbnb does offer many benefits. You can make more money compared to many short-term rentals, which is why it is viewed as a smart investment.
However, like other purchases, you need to be wise in choosing what you plan to buy. Not all Airbnb properties can help you reach your earnings goal. There are a few considerations to decide on before you spend your money on any property:
1. Go Where the Tourists Go
Location will always be one of the most important factors in the hospitality industry. The success of the property investment lies heavily on where it is situated. If you are planning to buy, you should think about the “where.” Consider the areas where tourists normally flock.
Some of the top cities where Airbnb prospers are:
- Melbourne: This multicultural city is an exciting place for tourists with its wonderful museums, cathedrals, and modern art offerings. Plus, it has a wealth of famous sporting events year-round.
- Sydney: This city is arguably the most famous in Australia. It is easy to see why it is popular because of its numerous tourist spots; including the Sydney Opera House, Blue Mountains, and Sydney Harbour.
- Perth: As the capital of Western Australia, Perth has many things to offer. Perth is also a favourite of many tourists because of its hotspots, such as Rottnest Island and Perth Zoo. It is no wonder that it has some of the highest Airbnb bookings over the last few years.
- Cairns: This city is popular for its pleasant climate, which is just one of the reasons that travellers visit frequently. Plus, it has great access to the Great Barrier Reef.
BnB Hosts has properties in many locations, including in Adelaide, Hobart, Canberra, and the cities listed above.
2. Check Out the Locations With Great Property Values
Aside from places where tourists often go to, you should also consider the areas where properties are thriving. Many cities have affordable prices when it comes to real estate. Positive growth is observed when it comes to tourism and infrastructure – two of the factors that affect Airbnb investments.
Among the areas that you may want to look into are:
- Brisbane: This city has been dubbed as one of the hottest in Australian real estate. Sydney and Melbourne are still at the top, but many people are checking out Brisbane since the two mentioned cities are already oversaturated. Aside from its attractions and helpful facilities, Brisbane also has warm winters that visitors from colder regions love.
- Gold Coast: The area measures about 57 kilometres, offering lush hinterland that surrounds a stunning coastline. If you want to invest in a property, the Gold Coast is one of the best options you have. The population has grown quickly in this area.
- Sunshine Coast: Another coastal city in the country, the Sunshine Coast once struggled in the real estate scene for several years. However, experts now believe it has fully recovered. It therefore means that it could be the right time to buy a property in this area because it can give huge rewards in the coming years. The Sunshine Coast welcomes more than three million visitors each year with its appealing sights, such as Sea Life and Australia Zoo.
Of course, you should also check out other cities that have soaring real estate markets, including Sydney, Perth, and Adelaide.
3. Buy a Unique Form of Accommodation
The fierce competition between Airbnb properties in the country gave way to unique accommodation options. You can find tree houses, caves, campervans (pictured below) and even castles. Some of them, however, may not be very practical.
There are unique factors that you can look for in a property that you wish to buy. Some properties can easily command attention from potential renters, unlike a bland, traditional home. It does not mean though that you should not stick with the conventional.
You can still enjoy plenty of bookings with the following tips:
- Go for a unique design, colour, or feature to help make your property stand out.
- Offer views of mountains or the harbour, the city where your property is located, and easy access to parks.
- Provide a private rooftop, which is becoming increasingly popular among tourists.
- Have a private outdoor area for entertaining guests.
You can always find inspiration from the top-rated properties in Sydney or any other city in the country. You will instantly that the properties have a cool or particular style. They are easily identifiable, making the guests even more interested in giving their reviews.
You can already tell that properties with many great reviews earn more bookings. However, since you are new to Airbnb and you do not have a property or space for rent yet, strive to purchase a place that people would want to post on social media – for the right reasons, of course.
4. Check the Airbnb Regulations
The tremendous growth of this industry over the last decade has spawned a few regulations that local authorities have created. Airbnb has already set certain hosting standards, along with Australia’s rules. For one, you should think about the national taxes, which include your earnings as a host to be a taxable income.
Additionally, there are contractual permits and agreements, such as leases, regulations imposed by the building owner and other community rules. Make sure you know about them before you even think about buying a space or an entire property.
The last thing you want as an Airbnb investor is to break the law and worry about penalties. Just like with anything else, including other renting businesses, you could face legal problems if you do not follow the local and national rules.
5. Choose the Best Type of Property for You
It can be difficult to find the property that you should invest in. However, you can make it easier by limiting your options to just one or two property types. The nature of the real estate market in the area you prefer will give you an idea as to which investment to go for.
If you go to a city centre and it is flooded with travellers who intend to stay for business purposes, it may be best to go for a small apartment. Make sure, however, that the construction or the building owner allows short-term rentals.
Many Australians who try their luck in Airbnb want to purchase a property near a beach or mountain. These options may be great for couples and families on a vacation. If your target clients are these groups of people, you may want to stick to a single-family home over an apartment.
The property type is important because it will determine how the potential guests will respond to it. The property you choose will help push the rent up, along with the occupancy rate. That is if you have selected the right type correctly.
6. Have a Budget
The property value can make what you purchase the best or worst investment you have done. It may be tempting to go for the apartment or house that you think will help you earn the most without going over your budget. It may be good for your income goals but you are at risk of defaulting on your mortgage payments.
You certainly do not want to end up with a foreclosed property because you could not pay for your mortgage. Instead, choose a property that you can comfortably afford. You may have to make some adjustments with your lifestyle, but it is not always advisable.
To avoid any problems, set up a budget carefully and consider your regular sources of income and expenses. Calculate your savings as well, so you have all the necessary numbers in front of you. Then, set a maximum price that you know you can afford and make sure you stick to it.
What Should You Do Next?
Once you have found the property you wish to purchase, your work does not end there. You still have to beautify the property. It makes sense to hire a professional cleaning service at this point. While it adds to your expenses, it will pay off in the long run.
Are you interested in joining the millions of people earning through Airbnb? Contact BnB Hosts today to learn more.