8 reasons to buy an AirBnB (And just like that…)
And just like that... No, I'm no Carrie Bradshaw mourning the loss of Mr Big in the latest Sex in the City season, but buying an AirBnB seemed to be a huge change to our life style.
We had been toying with the idea of buying an investment property, or a holiday home, or moving regionally outside Sydney in Australia long before Covid hit. Covid probably gave us the time to think about it and “seize the day”.
Once we picked a region, we took probably 5 weeks to find the home and it all seemed to fall in place. We took the plunge, and I'm here to tell you we are SO GLAD we did it. We can't believe it took us so long.
If you are sitting on the fence, here are 8 ways to know if you are ready to take the plunge and buy a short term rental investment.
- You are looking for a way to minimise your tax. An AirBnB is a business investment with a tax advantage (well at least in Australia). You can claim interest on your investment loan as a cost. Like all tax considerations, there is a lot more devil in the detail than that, but its a major concession factor, and one of the main ones for us.
- You are happy with income return first and foremost, and capital return second. Without getting too technical, AirBnBs work so well because you take a residential property and turn it into a tourist property where the rents are higher than what you would get as a residential property. People with money pay you to stay there for a short period of time. When you go to sell, you are selling a residential property, not a tourist property and those high rents aren’t included in the end value.
- You have enough wealth or alternative income to buy a property where you get income sporadically. In the first 18 months of owning our first AirBnB, we had 3 months of Covid isolaion and 4 weeks of regional flooding over different periods. Income is not guaranteed or regular to say the least.
- You are looking for something to complement your current lifestyle. In slight contradiction to the above comment, owning a short term rental accommodation is also a way of life, and not just about the numbers. If you are looking to self manage and enjoy the property yourselves on occasion, even better. Don't simply buy a place because your friends have told you that a particular suburb is the next big thing; that is just a property investment looking for capital growth. An airBnB is a holiday lifestyle and tourism investment. The investment is too large to just sell quickly when you get bored or realize you don't have enough time to sell the place as a story for each guest, as opposed to having someone live there permanently in a residential home.
- You like to stay in short term rental scene yourself. If you are a hotel only or camping only person, or looking for a hands off investment; an AirBnB can work, but it will be a huge learning curve for you to make your property guest worthy. And you may not enjoy having 'strangers' in your rental.
- Home and or garden maintenance is not a problem for you. I'm sure there are lots of properties out there that work as short term rental investments that the owners very rarely see; but lets face it, if you can give it the extra attention before there is a problem, your property will cost you a lot less and will be a lot more attractive to guests when it has that personal touch. Short term rentals are more intensively used than standard residential investments. We personally are there at least once a fortnight (we are hands on managers), and we go and do maintenance every 2 months. This includes pruning bushes, and tending to a veggie garden. We enjoy it. There are managers out there that will take care of everything, but be prepared to pay more than 20% of your income to them (on top of short term rental websites fees af about 18%) and then there are pest inspectors, linen companies, lawn guys, fire inspector guys....
- You enjoy the history or attractions of an area you would like to purchase in. There needs to be a reason for guests to stay in your rental. For example, you may like to ski, so buy in an area thats lesser known but great for kids to learn, or if you are surfer, feel confident in purchasing near a good break. You then need to tell people about it. otherwise you wont get the rent or the volume of guests you need. If you really have no interest in tourist attractions; you may as well consider buying shares.
- You enjoy other people. Brothers weddings. Mothers 60ths. Groups canceling because their mums wont let them on the freeway if its raining. People texting looking for bandaids because they broke your wine glass and cut their toe. Kids jumping on couches and picking your prize flowers. Airbnbs can bring a diverse range of people your way, and we enjoy having those people stay. We sre ok if the break a glass or tread mud through the hallway. If you aren’t really easygoing, you may find hosting difficult.
So, do you think you would suit an Airbnb lifestyle investment? Then you may want to use our property ranking matrix to help rationalize your search.