We started offering the option of AirBnB rental to our clients after our Executive Chair, Evan Thornley, successfully moved a block of flats in St Kilda from traditional rental to AirBnB and saw a 50% increase in net cash flow. So now we always appraise a property for our clients for both traditional and AirBnB rental to see which option is most attractive.
But first, dispelling some myths about AirBnB …
Firstly, most people assume that small apartments near the city are the prime opportunity for AirBnB. Indeed most properties on AirBnB fit this description. And that’s precisely why we don’t see this as the big opportunity! Why? Because:
- there is an over-supply of these properties relative to demand;
- prices are therefore lower and rarely out-perform traditional rental; and
- because cheaply priced AirBnB’s are much more likely to be rented by people with dubious party intentions than quality expensive properties.
So our focus is actually on larger properties – 2 bedrooms or more – and preferably houses or townhouses without body corporate restrictions. The guests for these properties are usually family and group travellers – often quite wealthy folks – the same sort of people who own them! Because there are few options for these travellers and the family or group travel experience is so much better when you can cook and eat together and have your own space. These properties attract a significant premium on AirBnB and can way out-perform traditional rental. And these types of guests often book for longer periods, further in advance, making occupancy management easier, vetting to ensure they are good citizens less urgent and no-one books and pays for a property for a week or two if their real intention is a one-night party.
So, location still matters a lot as to whether your property might prosper under AirBnB, but again these locations can be more diverse than you think. There are many family and business travellers looking for good accommodation in the suburbs as well as the inner city – near their family, friends, work or other key locations like hospitals.
Secondly, many people are concerned that their properties will have increased wear and tear and damage from being listed on Airbnb, but our experience is quite the contrary. Unlike in a conventional long-term lease where your property is inspected every 6 months, our Airbnb Housekeeping team are cleaning and inspecting the property after every single stay, including photographing the property and reporting any issues from the previous stay. Any deliberate damage is then recovered from the guest – as opposed to a long-term tenancy whereby we are often chasing the tenant for damages months after the event. In nearly all cases, properties listed on Airbnb are maintained at a much higher standard than a conventional tenancy.
For additional peace of mind, we have partnered with our preferred insurance provider, EBM, to offer an extensive landlord insurance specifically for properties listed on Airbnb.
Thirdly, many clients are rightly concerned about the type of guests that may be using their property. Despite recent media reports, our experience with these types of issues is very rare. LongView’s policy is that all guests must provide a government certified ID and, in most cases, we only accept a guest that has at least one prior review.
LongView has now begun offering AirBnB management to our clients as a full service offering with higher Guaranteed Rent than traditional rent can maintain. And we pay for and manage all the furnishings and fit out. For example, we recently offered a client who’s 2 bed 2 bath apartment in Malvern that was renting for $440 p.w. a Guarantee Rent contract for $500 p.w. for the next 3 years and then furnished the property and now manage it through AirBnB.
If you would like to have us appraise your property for AirBnB and talk you through the risks and concerns you might have as well as offer you higher Guaranteed Rent than you can get now (if the property is suitable for AirBnB) then please call Tim Beasley on 0401 834 474 or email tim.beasley@longview.com.au
