Airbnb Tips

Hi all,

I'm considering adding one of our properties onto Airbnb however being a novice in this space, i'm keen to understand tips & tricks from more experienced operators.

What are do's and dont's that I should follow?

Thanks in advance
Al

 

Following this too @Gockie?

 

Eek, I haven’t Airbnb Ed for several years after we sold an IP but I’m listing my granny flat on Airbnb this week. There are not many Australian Airbnb host podcasts ( that I’ve found) but recently I’ve been listening to an American host with a podcast called “ no vacancy” . We listed our IP some years ago without knowing anything , it was mostly ok but towards the end we had some meth heads who did thousands and thousands of dollars damage, I’m trying to put it out of my mind.

 

I stopped at the beginning of the Covid lockdown Sydney.
My thoughts:
Airbnb guests are generally fine, but booking.com customers were not good - flaky.

If you are very booked up in advance, increase your rates. It’s nice to receive bookings overnight while you sleep.

Carpet isn’t ideal to have in a short term rental, tends to get dirty.
You might need to attend to more stove and washing machine issues etc than if it’s a long term tenancy.
You’ll need spare linen etc
You might find people sneak in pets even though you say no pets
You’ll have to sort out key handover somehow, and you may get the odd clueless guest who can’t follow instructions to get in.

Wifi is a must
Car space definitely desirable
Easy walk to local shops etc helpful…
You can get 2x the rent of normal but you have to manage it
If you go on holidays, you definitely need someone still managing your Airbnb property/ies. Consider if you get called up for jury duty, you are not allowed to have a phone on you all day long. Ditto if you go to a campground or cruise. Someone has to manage it.
So you need someone trustworthy to assist.

So, the extra rent is great, but you do have to work for it.

 

Thanks Gockie!

 

I have owned and operated 3 apartments in Canberra on airbnb for the past 2 years - have had around 450+ sets of guests. Here are some conclusions:

- you must have a property in a good location within a city that has a high and regular amount of tourists and workers in order to get occupancy rates consistently up above 80% which is where you need to be. A well located property in a large city is what i would be targeting.
- figures work if you are doing the management, changeovers (linen and cleaning of property), some basic maintenance and repairs and can be around for unexpected things (appliance breakdowns, guest requests, lost keys etc)
- figures rarely work (meaning no better off or just marginally better off than a long term rental) if you are outsourcing management (17% approx), changeover of guests (approx 2 per week @ $200 change, includes linen cleaning and cleaning of apartment). If you have 80 changes per year ($16,000) plus lose 17% in management fees (lets say about 14k if grossing 80K) - that totals 30k and all your profit is gone

Also take into account these costs:
- 12-15k set up costs to fully equip and furnish a 2 bed apartment (includes beds and linen)
- you need to re-stock the apartment with supplies constantly (soaps, shampoo, body wash, toilet paper, bin bags, tissues etc etc) - about $1,500 per annum
- some linen/towels will get stained and you will have to throw out (around $300-400 worth per annum)
- interest rates rising affect your profit margin unless you have no mortgage
- repairs of appliances need to be done immediately which often costs more than normal - everything in the property must be functional
- free unlimited wifi is a must - $900/annum
- you pay for water usage and electricity - around $1700/annum
- as furnishings get old or worn out they need to be replaced - as does the linen!
- you need a good property, a good cleaner and a good manager to maintain good reviews and therefore a high occupancy rate. Guests are tough with reviews and ratings (sometimes unfairly) and if things are not up to scratch then they will rate you down.

Do the figures carefully. Research on airbnb (by pretending you are going on holiday in the area) to see how much you would realistically get per night/week. Look at how much competition you will have. Add up ALL the costs. How much time do you have to put into it and do you work nearby - can you leave work if need to, how flexible is this? Who will operate property during holidays when you are out of the city?

The positive is out of all my sets of guests booked through airbnb i have only had a few bad guests and no damage done and no theft (they were just noisy or dirty).

From my observations, the turnover of airbnb properties is quite high. There are not that many properties that have 200 or more reviews (more than about 3 years on airbnb) in my area because owners realise the figures just don't add up and many get placed back in the long term rental market pool. In order to justify the 12-15k set up costs, you would want to keep it on the short term market for a few years.

 

Does it make a difference renting only on 1 week or 1 mth min?
Are they mainly work guests or tourists?
Is it unrealistic to use Abnb to cover expenses while keeping the property for some personal use?

 

- If you rent it out for a month min you will get less but there is definitely a market for this. During Covid lockdown in Canberra i rented my places out for 2-4 weeks at a time and was getting about $1000/week as opposed to about $1400-1500/week in normal times
- a lot of places on Airbnb offer a discount of about 10% for 7 night stays
- I think using Airbnb to cover expenses in between personal use is a great idea and many places in Canberra are managed this way. There are lots of owners who live on the South Coast NSW and have an apartment in Canberra that they use occasionally to see friends and family.
- my places see a miix of tourists and workers. Probably a 70/30 split tourist/worker.

 

I’ve had my first enquiry!!!!!! They are seeking somewhere very quiet which isn’t me, so I told them that although quiet internally it is a pretty noisy environment, they’re going to get back to me today!

 

I have operated Abb both in Australia and elsewhere. I have found the longer term Abb, one month followed by monthly renewal, has a market. Sometimes guests started off with me using Abb then continue directly using a lodger's agreement. The beauty is these guests often are uncertain about how long they will be staying but need to leave without a lot of contractual obligations like a normal tenancy agreement. Also, they are singles or couples who travel with a luggage case and needed something ready to live. If you can price your property below a professional serviced apartment, there is definitely a market, given @Todd's criteria. Outside Australia you might need to get a licence if you are operating Abb but OK if you are renting it a month or longer.

 

I’ve got my first booking!!!! After not much interest I reverted to smart pricing and have a 19 night booking for overseas travellers in February/March , I’m hoping to fill up January and the week in December, I hope I wasn’t over confident about demand.

 

I know I guy who does this and he said the critical factor is the cleaners and management of, so it's essentially a cleaning business that uses real estate as the vehicle to create wealth.

 

That’s me! The cleaner and the manager! I am working.4 next year and am determined to not do more than that.

 

Ya laughing all the way to the bank then!

 

Geez I hope so! I used all my super to buy a local IP that my friend is moving in to and I’m skint.

 

Having a friend in a SMSF property may pose some issues eg Is there a lease ? And you cant be the cleaner and the fund trustee without a issue.
TR 2010/1 indicates it could become a contribution issue or even a prohibited matter. Wise to address this with auditor early so its compliant

 

Ten years and counting for me on Airbnb. Full all the time.
But my space is a bit different - big warehouse space attached to my house. It's also in a part of Sydney that has become pretty popular - Marrickville.
I like the constant flow of people and like being able to block out dates when friends come to town or when we have big parties and dinners.
Cleaning is easy because it's next door.
My rates are pretty low deliberately - it means I get often interesting guests who are not demanding. Some of them have stayed in touch and come back to stay again. A few old guests will be at Christmas lunch in the studio under the Airbnb pad.
I usually do a minimum of one week, too.
I also precondition people. When they make an enquiry, I tell them it's a big space in an old building and it gets hot and cold depending on the season. If somebody books for someone else - often family - I make a point of having an email chat with the intended guest. I've avoided a few disasters that way. People have said, 'I'm booking this for my mum. She'll love it.' I have an email chat with mum and we have both come to the conclusion that she would not love it and would rather stay somewhere more conventional.
I used to go to a lot more effort in the early days. One thing I would do with people my age is ask them what song/album they remembered from their youth. I would have that on the turntable when they arrived. Sometimes it meant going to a second hand record store and looking for it, but that wasn't a chore.
As others have said, cleaning and management are a killer if you need to pay someone to do that. I had a couple of local flats on Airbnb for a while and it wasn't worth the hassle.
Scott

 

Paul, my IP isn’t in a SMSF, I took my super once I was eligible and bought a nearby property, the bank would only loan me a ridiculous amount of money so I made a cash offer and it was accepted! It needs a LOT of work but my handy friend who is renting it has just retired and is happy to pay a reduced rent and work on it. I spend lots of time working there too.
On an Airbnb note I have my second lot of guests in, a very late booking as they got moved on from another Airbnb with their three tiny dogs, they said it was a misunderstanding as the owner thought there was one dog. I did not particularly want to accept pets but my elderly kelpie died a couple of months ago so I bit the bullet and accepted them. Two out of two guests have had dogs, for this demographic, they are their children. They are prepared to pay to bring them and realistically, boarding fees are so xxxy it is a reasonable option. I have a three night booking later in the month and the 19 night one so I was pretty relieved to be honest.

 

Some amazing tips here. Very many thanks!

 

Linen: certainly a never ending headache. I buy thick commercial/hotel quality white sheet sets online and have established a good bleaching system that gets the beach to white except for the worst stains. These are less than $100/set and a different seller to the one I use has then for $59 atm: In2Linen Hotel Quality 100% Cotton Sheet Range ALL SIZES

Maybe because I have longer stays than you, I've only gone through one set in a year.