I’m looking into investing in property and putting it on Airbnb but I don’t know where to start like location, how much income I would get, how to arrange for cleaning and key, the tax impact. If anyone out there with advice or guidance it would be much appreciated
Lots to consider. I want to do my research first before I start asking banks/ accountant/ lawyer. Anyone that currently has a place on Airbnb or stay it would be great if you can share your experience. @DrunkOnTheGoodLife - thank you for your advice!!
As Chewybacca suggests; the 'easiest' way to start is to rent a spare room in your property. You are there to check them in / out, there to do cleaning, attend to issues if need be, give them local tips etc but obviously your privacy and your guests are impacted. Best if your spare room that has an ensuite or at least separate bathroom to your own. I know a close friend who rents one of his room and he quite enjoys it, however my friend is always not home and the location of his property means his guests - often overseas tourists - are out 'exploring' and doing 'tourist' things and use the room more of a place to sleep at night - so they rarely bump into each other.
There will be complex tax implications - hence my suggestion of an accountant. Off the top of my head, you are looking at income from the rental, less any costs incurred for the 'airbnb'. You can proportion the costs of the 'rental' against your whole home for a variety of things; depreciation, rates, utilties etc. Be mindful about CGT as well especially if you are thinking of 'renting' for a longer period.
Now if you want to go the whole house method, hopefully you do not live too far or you have people close to the property who could help you check in guests / cleaning / attend to issues. Now, in terms of borrowing money for this - lenders are pretty fussy today so you need to have a decent amount of equity / savings. If this is your first investment property, I would suggest you skip the airbnb method and just rent it out on a 6-12 month lease - as getting a regular income can be the most important consideration especially if you are just starting out. Sure AirBNB rates can be quite attractive but once you deduct their fees and factor in the periods you have the property vacant, things might not look too good.
As I said, there are sooo many things to think about but typing it here won't do it much justice.
If possible, I would suggest you rent out a room, part of house, or entire house, at property you currently have (assuming you own current Residence, otherwise would need permission from owner I think).
My most recent airbnb experience, I think the man had somewhere nearby to stay, whenever his property was rented out for the night. Added a nice feel of 'home' to the place. He listed 3 bedroom property as 2 bedrooms, his personal bedroom being off limits.
If you have partner or family nearby with room for you to stay, maybe could go there when current property has bookings.
1 of the main reasons for doing a trial at current Residence, is because Once your investment airbnb is listed, no going back, if something goes wrong and have some really negative scores and feedbacks, probably cannot just make new account, because address is on record
If anything goes wrong with your trialling airbnb at current property to work things out and get your airbnb skills as a host up, then it probably isn't particularly difficult to make new account (at new investment property) .
The feedback comments and ratings on airbnb are very important IMO. If I am staying somewhere far from home, and have flights and commitments to match my stay, I am going to choose the superhost with all 5 star feedbacks. I am going to view the stay as a guaranteed type thing, and rest assured that they will be a good host. The person with 3 stars , or no feedback, I am going to be wary they might cancel at last minute, not have key ready when I arrive, place not as described, any number of problems I am going to be concerned may occur, where if I book with the host with lots 5 star feedbacks, I see it as legitimate as a hotel (with better customer service than hotel).
Look into requirements to become a 'superhost' . I will often filter my search to only superhosts. Too many stories of people being screwed over by airbnb hosts and left having just arrived from airport and having nowhere to stay.
Once your investment airbnb is listed, no going back, if something goes wrong and have some really negative scores and feedbacks, probably cannot just make new account, because address is on record.
I wonder what airbnb does to those hosts with negative scores and feedback? I've stayed with a superhost, expecting close to hotel standards but the place was just so filthy - it had a ball of hair and debris in the kitchen sink!
The ensuite bathroom is quite important.
At the airbnbs I've stayed at, no two set of guests ever want to share a bathroom.
Your biggest threat is changing legislation. Lots of councils are considering changes to clamp down on Airbnb.
Thank you all for your advice!!
Some general thoughts on themes amongst lenders when it comes to using AirBNB income for mortgage servicing:
1. They'll typically ignore estimates to do with AirBNB income, however, if you can evidence 2 years of it in your tax returns some will take between 50-70% of it (as compared to the industry average of 80% for most other classes of investment property income).
2. Many cheap lenders (such as mutual banks) won't use your AirBNB income regardless of how long you can demonstrate the returns. They'll simply rely upon the rental estimate from a certified valuer in a for purposes of credit valuation.
3. Any combination of reliance on AirBNB income along with factors such as high density apartment block, high density post code, mixed use apartment block or 90%+LVR can make the processing of getting mortgage finance very challenging (and/or potentially expensive).
Hope this helps.
I'd also look into the implications for insurance. Yr operating a business and inviting ppl in so things like theft/damage aren't covered
If you were looking at NSW, you will need to keep an eye out on the new legislation revolving around holiday letting which will also impact Airbnb. E.g. The Owners Corporation will be able to pass by-laws banning holiday letting in the building. Restrictions to limit lettings to no more than 180 days etc.
Investment in property will continue to be sound, as long as you apply reasonable judgement, but during this period of legislative changes and election etc. I wouldnt go out deliberately looking for a property solely for the purpose of airbnb in mind.
I could help BUT I could not give a proper or informed response here, at least not in the limited space that anyone could write.
There are so many books/websites and much more about residential investment so trying to summarise all that in a few paragraphs, I won't bother.
Best bet, speak to your broker regarding what you can borrow for investment in light of stricter lending practices, speak to your accountant regarding your tax obligations for what you propose to do, and speak to your lawyer in relation to the property transaction as well as protecting you legally and moving forward.
Then factor in what your 'investment' goals are to see IF airBNB works in your situation.