One of the most attractive things about rental real estate for landlords is the idea of passive income. You purchase a property (or properties), perhaps fix it up and furnish it, and then rent it out indefinitely to a long-term tenant. The only time you have to actually do something as an owner is if the tenant leaves or some problem comes up. And, even then, if you have a property management company managing the property, then you may not ever have to lift a finger. It’s a hassle-free investment.
Airbnb, as implied by the name, is more like running a “bed and breakfast.” Put another way, you’re in the hospitality game, and you’re not just simply a passive investor.
Someone has to check guests in and ensure they’re comfortable, make sure the place is cleaned between guests, and replenish and refresh bathroom and kitchen supplies. Sometimes guests can arrive late at night as well. When that happens, or if they can’t find the home, or simply need suggestions for a good local restaurant or sight to see, they will rightfully expect someone to be available to assist.
There is, of course, a little more hand-holding involved in the comparison, no matter how much you try to automate the process. This, however, isn’t as much of as an issue as one would think.
In 2019, many landlords are beginning to find that managing their property has become more stressful than initially anticipated. When you take a step back and look, the most pressing issues landlords come up against is late payment of rent, according to a survey of 1000 independent landlords
To get past these issues, an increasing number of landlords and homeowners are choosing to rent out their properties on Airbnb. A study undertaken by Germany’s Süddeutsche Zeitung (SZ) newspaper looking at 37,000 Airbnb listings in the country’s ten largest cities found that 1,290 landlords are offering multiple apartments on Airbnb. However, maintaining high occupancy rates for an Airbnb property all year round isn’t always as easy as it looks. And, if we’re honest, isn’t entirely feasible.
With all that in mind, here are 5 things to consider before making an Airbnb property investment.
Be Aware Of Local Laws And Regulations
Before you purchase a property for Airbnb rental, you must make sure you are aware of the law surrounding it. There are many cities and countries across the globe where short-let rentals are against the law or at the very least extremely regulated, such as in the American city of Santa Monica or far east in Singapore.
Authorities in other cities enforce restrictions on the number of days you can lease out property on Airbnb. These limits can vary notably depending on the city, from sixty days a year in Amsterdam to ninety days a year in London. When you’re thinking about your returns, it is worth taking into account the impact of these restrictions and making sure you are on the right side of the law.
Location, Location, Location!
If it is your first time investing in short-term lease property, one of the main things to be aware of is the location. The most profitable and popular neighbourhoods for long-term occupations may not be the same for shorter lets. It’s important to take note of the rental potential of an Airbnb investment property before investing in it. This Airbnb property calculator lets you work out how much you could earn in your chosen location.
Tis’ The Season
The rates you can charge may (and most certainly will) adjust, especially from season to season. Peak holiday months such as June or July (in the northern hemisphere) create high demand. Occupancy can be expected to tail off in January, following the Christmas season. Take into account these variations by keeping up-to-date with the events in your local area as well as the high seasons. Alter the price of your listing(s) accordingly.
Furnish It Properly
Standard rental properties usually stay empty (or mostly empty), without furniture, until a tenant moves in. Each tenant has differing tastes and will want to decorate their home in their own style. An Airbnb is different, however, in that you have to furnish and decorate the place for your guests long before welcoming your first one. Choosing a style that will emphasize the best features of the property, appeal to the largest number of potential guests, and stay within your furniture budget are three important keys to success with Airbnb.
Be Aware Of Hidden Costs
One of the things many first-time short-term rental investors do not account for is property expenses. The cleaning, utilities, damages, and maintenance of the property’s exterior are just a few of them. Never rush into committing to an Airbnb investment property without assessing all of the costs that come with it. Having early financial planning is essential to avoid unexpected and often nasty surprises later on.
Do you think short-term rentals are a detached investment? Then think again. With a constant stream of ever-changing guests, they’re high-intensity and highly demanding lets. You have to check the guests in, be available all day and night for any urgent issues, and respond promptly and correctly to any questions and feedback.
Before investing in your Airbnb investment property, you need to ensure that you have planned how you are going to manage it.
If you haven’t got the time, property management services in your area, a house sitter or a trusted friend may need to be called in to help.
If you’ve got both the funds and the time, investing in an Airbnb investment property may very well be worth it with the increasing popularity and use of Airbnb. The onus is on you to ensure it’s looked after, as happy guests are key to return investment. Don’t forget out to check out our post on Airbnb tax tips as well.
Need someone to manage your Airbnb investment property? Breezybnb has years of experience managing properties for Airbnb hosts. Check out our Property Management FAQ and see how we can help. Got more questions? Send us a message, we’d love to chat!