Savvy property owners and investors are turning to creative strategies to make some extra cash. Sharing economy platform Airbnb is turning into a popular investment strategy, seen by landlords as a way to reap the rewards of higher rental yields, and by owner-occupiers as a way to gain some money to put towards bills and expenses.
However, there is plenty to consider before you rent out your property with Airbnb. We look at the potential advantages, and a few things you’ll need to bear in mind.
What are the benefits of renting out your property on Airbnb?
According to data from the 2017 Property ROI Index, if you rented out a standard 3-bedroom home in Sydney year-round with Airbnb, you’d gain back the value of the property in around 6-7 years. Comparatively, it would take 30 years to pay back the property’s value through ordinary renting.
In other words, renting through Airbnb could help you pay off your mortgage a lot sooner than leasing it the usual way.
However, unless your property is centrally located and incredibly popular, it’s unlikely you’ll have Airbnb guests occupying it year-round. You may also face restrictions imposed by your local council that limits how long you can rent your home out throughout a 12-month period.
What’s more likely is that Airbnb guests will provide some supplemental income you can put towards bills or to finance renovations. However, for smart property investors, Airbnb could potentially work as a strategy to increase rental yields.
What do you need to keep in mind before listing your property on Airbnb?
Ensure you do your due diligence before you advertise your property on Airbnb:
- Talk to your body corporate, as they aren’t always happy about Airbnb.
- Consult the ATO regarding record-keeping and property-related expenses you can claim deductions for. You won’t be liable for GST, but the ATO requires by law that you declare all income received from Airbnb guests.
- Contact your local council to find out what regulations are currently in place concerning sub-letting (if you are an owner-occupier).
- Ensure you have adequate insurance to cover your property should something go wrong. Airbnb offers a AUD$1,000,000 Host Guarantee, but it’s not a replacement for homeowners’ insurance. Although it’s an unlikely scenario, if an Airbnb guest does cause damage to your property, having the right insurance means you won’t be out of pocket.