Investing in property is one of the best ways to build your wealth and make your money work harder for you. Not only do investment apartments increase in value over time, but rental income streams can also mean your new apartment more than pays for its own upkeep.
If you choose to invest in an apartment there’s also another option available to you: Airbnb and holiday hosting sites.
Airbnb allows you to list the apartment online and rent it out for short stays, more like a hotel than a rental apartment, and the potential returns are worth investigating. Making an investment work as an Airbnb requires some special planning, so we’re going to cover the things you need to think about when buying an apartment to host online.
It’s all about Location, Location, Location
You guessed it, and that adage goes double here.
Any investment property will only be as good as its location, but if you are planning to rent your apartment to travellers and holiday goers then it needs to be close to the action. Destinations like Brisbane city or Southbank are obvious choices, but there are plenty of attractions south of the river that will appeal to your guests.
When you are working out your budget and researching suburbs, don’t forget to take a look at Airbnb itself and see what the local market looks like. If you end up buying in suburbs like Newstead or West End then competition is likely to be stiff and your profit margin may shrink alongside that.
The Profitability of Airbnb vs Renting
As much as an apartment near the airport could bring in huge profits come holiday season, hosting on Airbnb is often a less reliable source of income than a steady tenant.
Whether this is true for you will depend on your specific circumstances, so it’s something each of us needs to carefully consider before making a purchase. Perform research on Airbnb to see what prices the apartments in a suburb are commanding, and compare that to vacancy data and your overhead expenses to see whether there is a profit to be made. In 2020, Airbnb’s in Brisbane had an occupancy rate of 22.4% at the same time as rental properties had a 98% occupancy rate, so you will need to weigh your costs carefully to make sure Airbnb is the right choice for you.
Provide Everything Your Guests Need
As the host of an Airbnb, you will have to provide all the furnishings and amenities your guests will need. The experience is more like a hotel, so expect to supply kitchen appliances and cookware, as well as things like dinnerware, linen and decor.
Your apartment will also need to be fitted out to match the price point and the area. Remember that the apartment is still an investment, and getting the best return from Airbnb will mean catering to your audience. Check out the competition in the area and see how they’re arranging their apartments if you need some inspiration. At a minimum, you’ll want to provide nice furnishings and a few touches of home – like decorations, wall art and pantry basics – so that your guests are comfortable and satisfied with the stay.
Map Out Your Entire Budget
Because hosting an Airbnb apartment will come with extra expenses, it’s important to get a proper handle on your budget for the project.
Choosing a location that’s suitable for Airbnb hosting may also mean you end up looking at apartments that cost more upfront, or at properties that need serious renovation work. Whatever the case, allow for those expenses, as well as the costs of furnishing the apartment, and keep an eye on the rates you will be able to charge when it’s finished. Don’t forget to factor Brisbane’s occupancy rates into your budget and plan your pricing accordingly.
It’s also a smart idea to build redundancy into your budget. Don’t rely on the apartment to meet the average occupancy rate all the time, and don’t forget that the increased turnover of tenants will also increase the cost of apartment upkeep.
Check With Your Body Corporate
Short-term rental arrangements have an impact on the other apartments in your building. Depending on where you live, your body corporate may have created rules that restrict or prevent the use of apartments through services like Airbnb. Speak to the body corporate of a building before you make any investment decisions and find out what you will or won’t be allowed to use your apartment for.
Looking for an investment property? Contact Amazing Apartments today!
If you’re looking for an apartment to invest in, Amazing Apartments would love to help. We’re apartment specialists and we’d be happy to discuss your options and explore our fantastic property listings. Whether you are looking for an investment or an apartment to move into yourself, our experienced team can help you sell your current apartment and find one for the next stage of your life. Get in touch with us today!