PPOR with seperate Air BnB unit/studio/granny flat

Hey propertychatters

Is anyone doing this on the forum? Living in a PPOR with a separate unit/studio/granny flat that's being rented out as a short term holiday rental?

If so - I'd love to hear about your experience so far. The pros/cons, etc.

Cheers

Jamie

 

Are you looking to buy one Jamie?

 

No, but I've stayed in one in Fitzroy Melbourne and had contemplated doing the same at my place. Not sure what effect it will have on the CGT side of things if I was doing it at my own home though. If my home went up 600k during the year in capital gain but I made say 20-30k income with a very casual airbnb rental in the yard (assume there's a cost to the build of the studio out the back of 45k), the question is, would I lose a stack of money because of that effort?

 

Proportional Land Tax and Proportional CGT I believe.

 

Hi Jamie,

I'm doing this at the moment, I have a bungalow at the rear of my property(west brunswick) which is listed on AirBnb.
Happy to answer any questions you might have.
cheers

 

I have one at the moment. It is currently an IP and the tenant runs the self contained flat as an airbnb.

It appears to be going really well with great reviews - even for a suburb in Tuggeranong

When we move back I am considering keeping the flat as an airbnb but too wondering about the cgt and land tax implications.

 

I'm currently staying in that set up in Melbourne. Wins for both the owner and their guests

 

Jamie, I have exactly that arrangement and have been doing it for 5 years. It is a self contained flat at the top of a building connected to our house. The ground floor of the building is an art studio and there is some noise transference both ways during the daytime and some evenings, but at night when people are asleep we are in separate buildings. I think that is the key for both parties.
When guests come and go, they go through the studio and the shared courtyard, but that's it in terms of forced interaction. Of course, just about every person who has stayed has been keen to interact with us and many like hanging around the studio. As much as possible, I skew the guest selection to people we will get on with. So far so good - and it's been well over 100 of them.
I also have a 5 night minimum and lower rates for stays of one month of longer, so I don't have to do much.

A month ago, me and my girls were in the studio one evening. I was reading the newspaper and they were doing their homework around the big table. The guests upstairs put on one of my particularly daggy 1970s records. The girls said pleadingly, 'Dad?' I responded without looking up, '786'. They asked what I was talking about and I said, 'That's how many dollars I'm getting for letting them stay up there for 6 nights.'

Massive Warehouse Loft Apartment - Apartments for Rent in Marrickville

 

Wow, looks fantastic! I think you have inspired me to seriously consider our space. The self contained flat was decked out as an art studio by the previous owner. Nowhere near as nice as yours but has its own front entrance with no common areas with the house.

 

I think the key when setting up an Airbnb is to try and make it look a bit different from the competition. Many people try and make their place look a bit like a hotel. When I was looking for places to stay in Rome, Venice and Barcelona a couple of years ago, I looked specifically for places where there was no sign of anything from IKEA.

 

In Tuggers???? Wow - that's awesome.

Cheers

Jamie

 

Awesome - I may have to hit you up with questions.

Your place looks very cool!

The place I'm possibly purchasing has two large/separate spaces underneath the house. Both have their own bathroom. There's separate entrances to each. Neither has a kitchen - is this a deal breaker for most guests? I'd probably put some in but just not right away.

I might start with renting out one to begin with and see how it goes.

Cheers

Jamie

 

Awesome - I appreciate it

Cheers

Jamie

 

Provide a kettle, toaster, microwave and an appropriately sized fridge as a start... That will be fine! Advertise as soon as you have good photos, and make sure you have good internet available.

 

Lack of a full kitchen is more of a deal breaker if there are no local food options. I bet the bloke staying in my place at the moment will not use the kitchen at all, but there at least 40 cafes/restaurants within a 15 minute walk. Most people who stay tend to use the kitchen more for breakfast. The long term guests cook at night.
As Gockie said, a fridge, microwave, kettle and toaster would be enough for many people. Not for a family, but you may not want to attract families. Those small plug-in hotplates are pretty Good I have heard - might need a decent power circuit.

 

Awesome - I really appreciate the feedback @Depreciator and @Gockie

There's a strip of cafes/restaurants just 5 minutes away so that helps.

We'll probably only market towards singles/couples.

I like the 5 night minimum stay - less stuffing around.

I'm excited about giving this a go!

Cheers

Jamie

 

Cool stuff. For you I would perhaps try a lower minimum night policy to start with, and once you get a few reviews and good demand feel free to change your minimum night policy. But it's up to you.

 

We fenced the entire bungalow off from the main property so there is complete privacy and provide a keysafe for a seamless check-in. We have a two night minimum, however, my wife is a stay at home mum so preparation isn't a big deal - our cleaning fee is around $100.
We provide full kitchen utensils, microwave, coffee machine, washing machine, soaps, shampoo, bread, eggs, milk, Internet, and Netflix.
We've hardly made any effort to attract a specific audience only because we didn't really need to, our guests have ranged from couples in-between house moves, to backpackers, to interstate workers. A majority of our guests have stayed for at least 4 weeks.

The main question in most of our booking enquiries are in regards to car parking.

We don't allow instant booking only because we want to screen all guests, prior to check-in we send a welcome letter that re-states all our terms, useful information, and anything else worth calling out.

The first lesson we learnt was not to trust the AirBnB auto pricing, research the area and take a common sense approach on how much you charge. I've put the price up around 3 times and have been fully booked since listing the property (July last year) - we've so far made around 17K.

Second lesson was to do with cancellations. For longer stays (over 4 weeks), the total booking amount is not refundable if the guest has already checked-in. However, you are free to refund an agreed amount - the guest will be charged the remaining amount then you have to manually refund via AirBnB. We (I) made the mistake of refunding a cancellation based on our cancellation policy (moderate) and lost around $1000.

As for tax or using income for borrowing power, my mortgage has advised the banks won't consider your income until you've had the property on the market for one year. My accountant treats tax deductions the same he would for a rental property.

And finally, AirBnB support are excellent. I've had to use them twice now and they've been very helpful.

 

Cheers. May I ask what is your nightly rate and rough location?

 

We're in Brunswick West.

Minimum nightly rate is $110, weekly discount is 19%, monthly is 28%.