Rentrepreneur - A new type of investing

Close to Sydney City. Tip. Beaches can be quite profitable too. Or anywhere that gets visitors wanting to be close... also if you are going to do it, start in peak season. I.e. Start now or ASAP.

 

Am thinking to rent out my place whilst I am going on holiday Dec-Jan. I came across a company on the Internet which basically will manage the airbnb listing for us. Still a bit scared to try it out though

 

Could work, but I'd want to ask a LOT of questions of that company.

You could even ask a local friend to manage it and they take a % of the takings. Win-win.

 

What percentage would be fair?

 

I'd say up to 25-30% for a short term favour with a trusted friend would make it a win-win. So if its say, $150 a night, then the friend gets ~$40 a night for managing it. You get $110. Do that for 50 days and the friend earns an easy $2,000, you get $5,500. Of course for peak season, maybe you'd be looking at close to $200 per night, depends on the property.
Note, I'd have the friend responsible for cleaning and stocking up on essentials etc.

 

What do you think would be fair for permanent ongoing management?

 

Well, I know somebody who has hers managed by a RE agent in the Blue Mountains, not sure what % she pays, but she pays quite a bit for the clean between guests. $170 per clean. But then again, I believe her nightly rate is ~$600 a night and its a full on house.

 

Hi DT. Came across this one on the Internet, try google beyondaroom

 

For all owners thinking of AirBnBing their PPOR......

1.) I guess it would be worth to check in our Home & Contents Insurance policy whether there are any clauses that prevent claims if the owner has sub-let to 'unknowns' / strangers and/or there is a theft, mishap, etc when the owner knowingly put strangers in his house...... I haven't read in detail my own one, but a must find out...?

Car Insurance policies clearly ask to list out the drivers for whom the policy would apply..... not sure if home and contents insurance providers care who all were present during the incident....

2.) AirBnBing your PPOR would be an income from PPOR, hence making it partially liable to CGT by the ATO.... It is a different story that ATO might never come to know about short-term rentals, but then again, there could be a listing on the website as a proof.... some risk if income not disclosed in tax returns.... But again, may be the 6-year rule could come out as a savior here, allowing renting without CGT at the end....

3.) I guess too many red-tape laws and approvals, but someone mentioned we need to take council approval or some other approval before listing our property for AirBnB/ motel kinda accomodation ....... don't know if I read correctly and whether anyone really follows that....

 

As far as theft goes most/all normal household insurance policies don't cover theft by invited guests. I'd imagine if the ABNB guest cleared out your place then the insurance wouldn't pay out. There may be specialised policies that exist to cover holiday rentals for this type of theft?

Some do, but most car insurance will cover any licensed driver and the excess will increase based on the risk of the driver eg their age.

 

But wouldn't Airbnb insurance cover you in this instance?

 

if you're in melbourne - CBD the easiet for the highest return and occupancy.

I was looking at a few listings and i saw this asian girl (maybe just fresh out of uni) with "superhost" status and she had 4 listings (4 X 1 bedders) at $150 per day and i looked at the availability and some were 90% fully booked till may 2016. if you assume $150 per day X 23 days per month = $3300 per month each (X 4 listings) = $13,800 per month X 12 (year) = $165,600 and if you add the cleaning fees ($18,000) that would be close to 182K per year gross profit. Not sure if she fully owns or just subletting though.

 

For arguments sake lets assume she rents each herself from an owner for $450 a week.
I would also say renting 23 nights a month could be a little conservative. Anyway, she'd make about $600 per week per unit. Multiply that by 52x4 and that makes $124,800. Which is a very high income... and to manage 4 with no full time job... easy peasy.

I just would not want to be caught though if I was renting them from someone else and was found out...

 

i've done airbnb in europe as a guest(and it seems pretty straightforward, drop off keys give a map, have an introduction, then take keys back, cleaning). i think on average it could be 2-3 hours max per day.
i don't think she's a full time worker (if someone puts their high school and uni there in profile), it means you obviously you either just graduated etc. Either way if she gets caught, worst case is she cancels the future hosting. And to get evicted too takes times too. so you have time for bail or notify the guests in advance.

 

Airbnb is not the only option. I have friends down here in Tassie who have turned short term rentals into a business. You can get off the shelf hotel management type software and then push Airbnb, stays, social etc bookings all into your centralised platform.

Now word of mouth etc constitutes a large part of their business and owning their own booking platform is paying dividends because of the control etc.

They now have mulitple properties with the same model and getting economies of scale.

They dont pay any one to manage any property. Just a cleaner plus things like electronic locks (that can be reset online) to de-centralise involvement.

Jacob

I can PM link to their site if you like so you can see how they setup the page etc.

 

@Ripehouse.com.au yes please can you PM me the link i'm interest to see what they have done.

 

Hi Gockie. If she has to rent $450 a week and lease it for $600 a week, I don't think the number is that impressive considering the effort & risk. You probably would need to own the unit for the numbers to stack up. Do you think 1BR or 2BR would be more popular for CBD?

 

No, its $150 a night so its a conservative $1050 per week rental as an Airbnb, which gives you the $600 a week profit. Which is a heck of an easy profit. Anything from a studio to a 2br place is fine.

 

That is assuming full occupation. Can we find occupation rate or something similar for airbnb? Been looking at the units available in Melbourne CBD. Most of the host has < 50 feedbacks, which could imply the occupancy rate is low?

 

Apologies, you are correct. But mine personally would be at about 90% capacity without much effort, so more like 28/31. I like to take stays of 5 nights or more, which might be why you see 50 feedbacks or so. Some guests stay for multiple weeks.

Also, as a bonus I charge more per night if over 2 guests stay & so I get more per night with the extra charges for extra guests.
And in the meantime...