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VIC Inner City Apartments And AirBNB

Discussion in 'Where to Buy' started by BigL, 1st Jul, 2015.

  1. BigL

    BigL Member

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    The Melbourne market is being saturated with new high rise apartments and after recent results for Melbourne appartments with 24% of sales for a loss when do people feel is the time to buy?
    It's obviously not going to be a CG buy but good for CF


    Also what are people's views on AirBnB. Having had a long look it seems like a decent money making option but requires a lot of effort.
     
  2. Gockie

    Gockie I'm an ISTP-A female, so I might be a bit quirky! Premium Member

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    I cant comment on the Melbourne inner city apartments but say there's a strong chance of oversupply.

    On your other question, I am airbnbing an apartment in Sydney, i've done it for 7 months now. You have to manage the checkins, checkouts, cleaning. But the nightly rate can be really good and I've had a really strong occupancy rate (~90%).

    Definitely a lot more work and there's lots of washing of sheets and frequent vacuuming. I toyed with the idea of renting a place soley to Airbnb but I just figured that while the money is good, I have a lot on my plate. But if I had a lot of free time, its definitely a way to earn a lot of extra income.
     
  3. BigL

    BigL Member

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    That's good to hear you've had a good experience with AirBNB. Especially like UR occupancy rate 90% :eek:. Id like to make my third purchase either an appartment to AirBNB or commercial prop. Need a couple GC properties first to set myself up for the long term but the CF would be great too.
     
  4. Gockie

    Gockie I'm an ISTP-A female, so I might be a bit quirky! Premium Member

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    With Airbnb you can get both CF and CG.
    Just be prepared you or someome needs to do a lot of work for all the checkins and outs. I think its worth having a higher min stay with a slightly lower nightly rate if you do whole apartment rentals. Bookings for multiple weeks are bliss!
     
  5. Gockie

    Gockie I'm an ISTP-A female, so I might be a bit quirky! Premium Member

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    Ps. Reason for 90% occupancy rate is that I don't do 1 night bookings, and rarely take 2 night bookings. Otherwise I'd fill in the 1 night gaps. But I can't be bothered for the extra work for a 1 night stay. Besides, you need to set aside time some of the time here and there for maintainence.
     
  6. BigL

    BigL Member

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    I did spend a lot of time researching AirBNB and came very close to buying an apartment but just didn't like it as first purchase for setting up my future investments. I was working off 60-70% occupancy rate and the numbers were very good so 90% is amazing in my books.

    Have you tried getting cleaners in after each booking or just not reliable enough?
     
  7. Gockie

    Gockie I'm an ISTP-A female, so I might be a bit quirky! Premium Member

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    I get cleaners when I can't do it, and maybe I should rely on them more.
    But I like doing it when I can cause I know the standard what I expect for everything, and I like having the control over the place. But yes, maybe I just have to let go a little more, even if the quality may suffer a little...
     
  8. Gockie

    Gockie I'm an ISTP-A female, so I might be a bit quirky! Premium Member

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    For me, I settled in early December, prime time of year for holiday makers! So basically it was fully booked from the get go. I used the website pictures used to sell the place on my Airbnb listing.

    I originally planned to list it as an Airbnb for only Dec to Feb because from the end of February, uni goes back. The property is near both UTS and Sydney Uni and I figured it could be easily rented out normally during the uni semester, peak student demand season. But the bookings were so strong, and I even got a 4 week booking late Jan to late Feb, so I kept it as an Airbnb property.
     
    Last edited: 1st Jul, 2015
  9. dublin_101

    dublin_101 Active Member

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    How are you meant to declare the income from AirBNB at Tax time? Or am i asking a silly question lol.
     
  10. Ausprop

    Ausprop Member

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    just the same as any other rent

    be careful not to fall foul of strata and council regs
     
  11. dublin_101

    dublin_101 Active Member

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    What are council regs?

    Also, does AirBNB require an ABN and or tax file number?
     
  12. Ausprop

    Ausprop Member

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    most councils don't allow it, need to check your zoning. And if that doesn't stop you the negative nellies on your body corporate will give it a shot
     
  13. smokyjoe

    smokyjoe Active Member

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    I have an apartment in Southbank (Melbourne) that is rented out as Short-Stay. Same principle as AirBnb, but it's managed by a company that I pay a commission to, and is advertised on sites like Stayz.com.au and booking.com.

    I believe we get a higher rental rate than we would on AirBnb (I love AirBnb for when I want to rent a place, but I won't put my own on there). However, we then pay commission and exit cleaning fee's, so it may all balance out and be a similar profit margin. We have a 5 night min (unless it's filling a gap) and have had one troublesome tenant in the 3 years we've been doing this.

    Most importantly, all the work is done for me. I don't do a thing except watch the money come in (which is good because I'm certainly not getting any CG in Southbank).
     
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  14. smokyjoe

    smokyjoe Active Member

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    One tip if you are looking to do this. I know some people have opinions on the quality of Central Equity apartments. Ignoring that, they are a good option if you're thinking about doing this as Central Equity run ShortStay.com. They market their apartments to foreign investors, then rent them off them for their short stay business. So Body Corp rules always allow for short stay. When the building gets a bit older (5 years or so) they move on to the next one, but the rules remain, the management company remains.

    The company that manages my apartment have apartments in many buildings. Some of them (namely Freshwater place) do their best to make it difficult to do short-term rentals, but all the Central Equity building managers couldn't care less.
     
  15. Gockie

    Gockie I'm an ISTP-A female, so I might be a bit quirky! Premium Member

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    Airbnb keeps all the info on your income from the site so you can use that for your taxes
    Nope, but they ask for a lot of verification on you such as passport/drivers license, phone number, email, facebook account etc.... if you can't give them enough proof of identity then they ask for a video upload... if you can't or won't do that then they won't allow you to use their site. And even as a guest, not host.
     
  16. Chabs

    Chabs Well-Known Member

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    I've wondered about the pros and cons of buying an apartment in a popular area (say inner city Sydney or eastern/beach suburbs) and then leasing it exclusively on airbnb.

    One of the biggest pros is that you can use it for your own mini-holidays if you make the adjustments to your calendar well in advance. The biggest con I can think of is finding somebody to manage the preparation before each new tenant comes in, unless you live reasonably close.

    What sort of returns do you get out of airbnb in popular areas, taking a 75% occupancy rate? I would assume it would need to be at least 5-7% to make up for the hassle of needing to clean and prepare as well as the increased frequency of repairs you might need with higher tenant turnover.
     
  17. Steven Ryan

    Steven Ryan Mortgage Broker Business Plus Member

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    I have a friend with a handful of places in the Sydney CBD who does well. Most are quite nice (executive style), and occupied over 90% of the year at great rates. Very strong cashflow and huge undertaking to manage. Her cleaners sometimes do "changeovers" (letting guests in) but she's handling enquiries, special requests, some laundry etc which takes a lot of time.

    I wouldn't personally be comfortable buying in the Melb CBD for this strategy due to lower tourist demand and oversupply issues, but it could be a good cash cow. I just like capital growth more.
     
  18. Steven Ryan

    Steven Ryan Mortgage Broker Business Plus Member

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    I have a friend with a handful of places in the Sydney CBD who does well. Most are quite nice (executive style), and occupied over 90% of the year at great rates. Very strong cashflow and huge undertaking to manage. Her cleaners sometimes do "changeovers" (letting guests in) but she's handling enquiries, special requests, some laundry etc which takes a lot of time.

    I wouldn't personally be comfortable buying in the Melb CBD for this strategy due to lower tourist demand and oversupply issues, but it could be a good cash cow. I just like capital growth more.
     
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  19. smokyjoe

    smokyjoe Active Member

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    Sorry if it seems like I'm hijacking an AirBnb thread when I don't use AirBnb, but the model and situation is very similar with what I do.

    We had a similar idea, but when we consider the potential income lost when reserving it for ourselves it just doesn't seem worth it. I'm better off staying in a hotel. It's rare that there is a gap beginning or ending on a weekend, so if we reserve it for a weekend (considering the 5 night minimum for rentals) we could be missing out on $>1000 for staying 1 or 2 nights. We're better off renting another place. Weeknights are a different story. If we wanted to go and stay there on a monday or tuesday we could do it several times a month.

    I have around an 80% occupancy. As rental income changes month to month it's hard to give an accurate yield (plus I'm a newbie and I just googled how to calculate it!), but I calculate roughly 13%. However, the percentage of costs we pay is astronomical. The 13% yield does not include the agents commission, but it does include repairs, cleaning, linen hire, advertising etc.

    I'll have a 3rd year for comparison when I do this years tax, but the previous 2 financial years have netted us $15 - $20k profit. The depreciation schedule brings this down to almost zero as far as the ATO is concerned. I wouldn't say this was a good investment strategy for me though, due to the non existent CG in Southbank. I bought it when I was a little naive, plus I know the owner of the company that manages it for me, so there was a personal connection.

    That's why I'm here on Property Chat; to try and learn from the gurus so that the next IP I buy (hopefully soon) generates some equity for me!
     
  20. Tekoz

    Tekoz Well-Known Member

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    If it is cash in hand, then yes declare it as normal with the total lump sump of money that you've received.

    it's a different story when you are leasing one of the room / granny flat in your home, no one knows it I guess it is safe not to declare anything, because it's your PPoR anyway.