Ahh the glamour of Airbnb, and the appeal to investors lately has meant that I’ve gone from hearing it in client meetings rarely 5 years ago, to weekly these days.
BUT – it’s really important that you think about all aspects of being an investor not just how instagramable your property may be in the future!
Here are the major things I’d think any investor would want to consider in terms of considering renting a property out via Airbnb.
- Banks will not consider projected Airbnb income. Banks are awesome at a lot of things, projecting Airbnb income in the future though isn’t one. So any future projections need to be long term.
- Most banks will want to see at least 12 months short term rental income to count it (some will want to see 2 years or even 2 full tax returns!)
- Banks will take a (large) percentage off your Airbnb income to cover expenses.
- The reason banks will take a large percentage off the income is that the expenses with Airbnb are high! Most rookie investors don’t take all expenses into consideration when looking at this form of income either. Don’t forget: Airbnb service fees, rental manager service fees (if you also have someone who manages your bookings), cleaning costs, cleaning supplies, furnishings, linen, toiletries, electricity, internet, streaming services, council fees for licensing.
- And there’s all the usual property expenses such as land tax, rates, insurance, maintenance (allow for more insistent maintenance costs as well as a guest for 2 nights is less likely to be as patient as a long term tenant!)
- General wear and tear on your property is likely to be higher given people with suitcases coming and going more often.
So is it all bad news? Well no! Some people with Airbnb properties out earn those with traditional rentals handsomely, but not without a plan and a good handle on their real costs not just the income coming in.
Extra resources:
If you want to run a world class AirBNB consider learning from amazing Sarah via zoom or in person – the owner of https://www.captainsrest.com over at https://www.thehostingmasterclass.com
Kirsty