Buying an Airbnb Investment Property in Brisbane?
Have you ever considered buying an Airbnb investment property in Brisbane? Airbnb is a great option for home owners who want to supplement their income, and for investors keen to maximise their rental yields.
Airbnb has however created some challenges for state and local governments, body corporates and property managers. As a result there are several important points for investors to be aware of:
Council Approval
Brisbane City Council may require property owners to submit an application for either a home-based business; or a development application for short-term accommodation. (This will depend on whether you plan to rent out a bedroom in your own home, or the entire property). Council is likely to approve an application only if the property is located close to public transport, major social, cultural, tourist and leisure facilities, and where the impact on neighbouring residential dwellings is minimal.
Either through ignorance or inaction, many Brisbane investors who list their properties on Airbnb do not obtain council approval. Investors should be aware that penalties for unlawful, short-term rentals include hefty fines.
For more information regarding Brisbane City Council’s requirements for short term rentals: click here.
Insurance
Most home and contents, and public liability insurance policies do not cover short-term tenants or commercial activities. Speak to your insurer to find out what cover is most suitable.
Body corporate
In the case of units, the body corporate should be informed that a unit will be rented on a short-term basis. Some body corporates require all unit owners in the complex to agree to the arrangement.
Additional costs
Short term tenancies can be associated with some additional costs for investors including:
- an Airbnb service fee (3 -5% of the booking value)
- additional insurance cover
- water and electricity
- cleaning fees
- property management fees (typically 15-30% of the rental income)
- furniture and consumables
There will also be capital gains tax implications, and additional rates payable, when a principle place of residence is used for investment purposes.
Property Management
If you decide to manage the property yourself, you have to be available to meet and greet your guests and to clean the property after each stay. This requires flexibility and availability, often on weekends. There are businesses offering Airbnb property management. Their services include managing bookings, meeting and greeting guests, providing keys to the visitors and arranging cleaners.
Higher but irregular rental income
One of the reasons property owners turn to short-term rentals is the potential for higher rental income. In some cases property owners can earn more than twice what the properties would achieve if rented on a long term basis. Short term rental income is never guaranteed, and depending on location, can be seasonal.
Final Thoughts
A short-term rental investment property can be a good option for someone who wishes to supplement their income, is happy to accept a higher risk investment for better yields, or is looking for the flexibility of being able to stay at the property from time to time. Renting an investment property via Airbnb comes with certain responsibilities, but if set up correctly, short-term rentals can be a good investment.
Thinking about Buying an AirBnb investment property in Brisbane? Your Property Hound is an independent Brisbane Buyers Agent. We can help advise and mange the purchase of your Brisbane investment property. Feel free to contact us for additional information.
