The income potential of an Airbnb investment is the main reason attracting investing. You can make a lot of money with short term rentals more than you can make out of the local rental rates. Therefore, the returns on investment for the Airbnb is huge compared to the typical rental properties.
But is Airbnb investment a smart decision? Well, it can be if you invest smartly. There are several things that you need to put into consideration to ensure that you are putting your money in a sound Airbnb investment. Don’t just rush into signing a contract because you might end with a raw deal. Here are the key things that you need to consider:
1. The legality of the property
One of the crucial things that you need to consider is the legality of the Airbnb property in that city. Every region has its rules and laws that govern the real estate industry and more this form of investment. So, you need to understand how this kind of property is regulated and more so if it is operating legally. Get familiar with the taxes, regulations, and codes that apply in that jurisdiction. Check if the property has met all the legal requirements before investing. This will help you avoid getting into trouble in the future.
2. Target Market
Before you buy an Airbnb property, you need to consider the target market serious. Every property design best suits a certain type of guest. There are properties that are designed to handle one guest and others that can only handle a couple without children. In addition to that, there are properties that can handle a large family with children. So, it is important to know your target market before investing. You also need to know if the location perfectly fit that kind of clientele.
3. What Kind of Leases Do You Want?
One of the biggest selling points for the Airbnb property investment is the short-term rentals that fetch a lot of money. However, you have different types of leases you can pick for these properties. One of them are tourists who rent space on a short time lease (for a few days), and they leave. So, you can have over ten tourists tenting the same space in a month. The other option is the business travellers who could be in the city for a longer time. For these guests, you need a longer-term lease. Therefore, you need to decide between the two as both have their pros and cons.
4. Insurance Cover
Like any other property, you need to have Airbnb property insurance. However, there are regulations that guide on the kind insurance cover that you need for your property. So, you need to check what the Airbnb Host Guarantee Program is offering so that you supplement with the covers. In most cases, they usually offer $1 million in insurance cover against theft and damages. But this insurance does not cover valuables, expensive artwork, and jewellery. So, you need an insurance cover that provides coverage for these elements. Make sure that your cover is attracting guests to your property.
5. Time Commitment
If you want to put money in an Airbnb property investment, you must ensure that you have ample time to keep the project running. For these investments to be profitable, it requires a lot of time and effort. From marketing the property to answering queries from potential guests around the world, you definitely need a lot of time. So, before you start with Airbnb investment, check your schedules and see if you have enough time to manage the property. Otherwise, you will definitely have a problem managing it, and you might fail to get maximum profits.
6. Market Standards
You need to check the market standards before investing in an Airbnb property. Due to competition, the market is changing, and a lot of advancements have been adopted. So, when it comes to buying a property, you need to know the standards the property is providing. If you don’t check this feature, you might end up buying an investment that cannot compete in the market. That definitely means low returns on your Airbnb investment. So, check the market standards before inking the deal.
7. Check For Fierce Competition
If you are to invest in an Airbnb property that is to produce high returns on investment, then look out for fierce competition. If you are targeting to lease the property to tourists coming to enjoy beaches in that region, check who is offering the same product. How is their Airbnb property? How do they charge? These are some of the factors that help you to identify a fierce competition. If the competitor is too strong in that region, and you have no chances of beating them, then that would not be a smart investment.
8. Hidden Expenses
Always check for hidden expenses when buying an Airbnb property. There are many people who feel great when they sign a deal only to realise how costly it will be to get the investment up and running. However, there are several things that you need to consider to ensure that you don’t fall into the trap of hidden costs. Check if the cleaning has been done, landscaping, repairs of damaged parts and pool services amongst other costs that surprises some of the buyers.
9. Start Slow
Like any other investment venture, Airbnb property investment provides results after some time. So, you need to start slow as your rental creates a reputation in the market. The company has over 3 million listings, and thus you will be one among the many in your city. This market rental relies on reviews of the previous customers. So, you will take some time to build a reputation that will attract frequent guests.
Last but not least is the location of the property. Most guest looking for Airbnb rentals prefers properties near their spots of interests. For tourists, they will prefer a property that is near their spots of interest. Similarly, business guests will prefer a rental near their place of interest. So, choose an ideal location based on your target guests.
Are you interested in buying Airbnb property? Checkout BreezyBnB for all your Airbnb property in Australia. They will also help you get the most out of your investment.