Would you AirBnB your IP ?

I was getting enquiries from Medical interns from England, they have to stay somewhere for 3 months.

 

I have a friend who has a 2,1,1 unit in an old six pack block that he AirBnB's. It's a bit scruffy on the outside but nicely renovated inside. I'm amazed at what he gets - equal or greater than a cheap hotel. It's walking distance to racecourses so he get's punters who can stumble home and not worry about a cab, or out of town industry folk wanting to be close. Like you, it's booked well in advance.

I suspect the glory days of massive rents for AirBnB won't last much longer as more and more LLs take up the option and drive down prices.

 

My friend who has one near a hospital get's the same sort of enquiries. Also from senior medical staff who are permanently relocating and want somewhere for a few months while they work out where they're going to live permanently.

My initial thoughts on ones near hospitals was that there would be a lot of demand for very short stays at late notice. It seems a lot of medical care is planned weeks and months in advance.

 

Yes, I also get people who are moving to Aus and book the first months accomodation with me while they work out where they are going to stay. Twice now people have moved from my flash Airbnb pad at home into one of my local flats, so Airbnb has become a feeder for permanent rentals.

 

I'm also getting guests who are moving to Sydney and staying at my place till they find somewhere permanent to live. That was the case for my last guests at Darlington... They were Sydney Uni Masters of Accounting students from China moving to Sydney to study. I also seem to get quite a few bookings for people having their parents coming over for 2 weeks to a month for the birth of their grandchild.

 

I had a run of American parents last year. Three sets of them. Their daughter/son came to Sydney for a holiday which became a longer holiday and then became a new life. So the parents came out for several weeks to see what was doing.
One of the mums was a bit glum when I ran into her one day. I said, 'Sarah isn't going back to Iowa, is she'. The mum shook her head and said, 'No. And now that I have seen Sydney I get it.'

 

About a month ago a friend asked me to help him set up his apartment to be AirBnb ready and how much I made and issues i encountered:

The apartment is just outside Sydney CBD. It is 2 bedroom, 2 Bathroom 1 garage. (kitchen is a bit dated and bathrooms can use a renovation. It is spacious and quiet. We recently stopped AirBnB and the only reason we stopped is because my wife is pregnant and it was getting a bit too much. She needed a break. The apartment was previously rented out for $770, although furnished it can go for $810.

Numbers (January to May):
Income (after airbnb fees) = 32,851
Expenses:
Loss of long term rent = 16200 ( 5 months) Mortgage repayment on this loan is nearly 15k for the 5 months.
strata = 2350 (470 per month)
Utilities = 600
Consumables = 525 This includes Fruit (seasonal, $2-$3), Wine (bought in bulk $3 per bottle, graysonline), chocolates (we get lindtt, so that means 4 lindtt balls $2-$3), toilet paper ($10 for 24 rolls). We tryed to keep consumables under $15 per turnover.
Cleaning (laundry) - we were charged $30 for 2 beds and 5- 6 towels. We were lucky here this is really cheap.
Cleaning (cleaner) = 2100 - We paid her $30 her hour and a bottle of wine (so total $33) She was really good and can do full clean and changeover in 2-3 hours. Most others pay $20-$25 for their cleaners.
Total Expenses = 6876

Profit = 10,026 (for 5 months) or 2000 per month.

Occupancy = 89% - 133 days out of 150. On 6 occasions we had to refuse a booking because my wife needed a break. She would also take time to go and welcome every guest. Show them the place and facilities (pool, gym etc). It helped that during that time we lived in our other apartment in CBD, so it was a 5-10 min drive to get to AirBnb apartment.

We had 5 star reviews for everything from every guest except one who gave us 1 star because we didn't have Aircon. Although we had 4 fans in there. You will get people like this at times - its all part of the fun.

Lesson learned:
1. make sure you have a good reliable cleaner. Clean apartment is #1 thing!
2. No matter what you do you won't make everyone happy and they will give negative or neutral review
3. Profit can be better, but we had to decline 6 other groups of people which would bring occupancy closer to 95%
4. we didn’t charge a lot, we should have charged more (extra $20 per night).
5. we charged at beginning around $60 for cleaning, then we increased it to $110. People were willing to pay even more.
6. Time, one thing that not many people factors in. Even though we had a cleaner, wife would still to the finishing touches. Guests do notice these little touches and they really like them
7. I worked out that you would need around 11-13 days occupancy of the month to break even, based on our per night rate. If we incrased this it would bring it down to 10-12 days. Everything after that is profit.
8. We had garage and it was free to use, we could have charged for this.
9. we welcomed every guest.
10. It takes around 15 hours per month for my wife to manage everything and around 5 hours of my time.. At the beginning it was taking a lot more time as we were still learning ins and outs.
11. Average stay is 4.5 days.
12. Checkin and check out can be automated with smart locks. We will do this going forward.

Overall I think its good, it would be best to have around 4-5 places so that they can replace average salary of 80k.
Once person can comfortably manage, 4-5 properties and it would be best if they are living in the same area.
One most annoying thing - even though checkin is at 2pm and check out at 11am. Not everyone follows that rule. We had few groups arrive at different times and even late at night 11:30pm. Then they want to store their luggage somewhere. Once we had family of 4 stay wit us (2 adults, 2 kids, we said no problem to store their luggage, assuming 4-5 bags). They had 6 large travel bags, 4 carry on bags and a large cello bag! We had to store this in the garage as they arrived early in the morning even when there was already a guest in there.

We met some amaizing people below are some examples.
1. Like a guy that works on setting stage lighting and pyrotechnics for Beyonce, Jay-Z, Lady Gaga, Katy Parry. (he had some interesting stories)
2. Couple from China who used AirBnb for first time (not a word of English, bu thank you google translate). Their daughter who lives in china made a booking for them. Before they left they tried to make the besds and everything else in the apartment as it was before. They left a very expensive tea for us to drink.
3. Gay couple who went to I think 10 -15 Madona concerts wherever she was touring.(they both worked for American Airline so tickets were really cheap for them.
4. Danish couple we are still in touch with and plan on staying with them when we go and visit.

Hope this can help others trying AirBnB!!
Before we did any of this we checked with building management and strata if they would be ok with it. They were ok with it as long as we didn't have more than 4 people occupying the residence and strictly no parties.

 

Wish we'd spoken to you a couple of months ago. This is great!

 

This is an interesting one.... I can talk with the odd colleague and they will say "what's Airbnb?"
So there is still a fairly substantial propertion of the population who dont know of and havent heard of it. Some people will give up and rent their places normally, if the nightly rates they want vs. Effort required doesnt stack up.
And some people really have properties that are not inviting at all, some listings you see are a huge turnoff. I don't think they'll be successful.
Finally Airbnb are pushing for the corporate/business market... it's viable....

 

I dont know how to edit posts.....

One more thing to add, when we started we assumed that AirBnb policy of $1,000,000 is like an insurance policy. Unfortunately once we read the fine print realised that its completely at the discretion of AirBnb if they want to pay or not. We realised towards the end of our experiment. So we thought there is no point in getting a policy since we were are stopping AirBnb now.

There are few providers that provide insurance at around $4 a night.

 

It's great that they are pushing for it... However their insurance policies are not good when it comes to business traveler. It's all peaches and roses until they get sued. In Australian its minimal impact, however in the great litigious USA it can be costly.

Company I work for currently has over 190,000 employees worldwide and they strictly prohibit AirBnb bookings at this time, due to safety and insurance issues. If you do book it's at your own risk and cost.

On the other hand the likes of Google are embracing it... maybe because they have a stake in AirBnb!

 

Thanks for the comprehensive info.

Is there anything about the location (apart from being inner Sydney) that is attractive? eg things, I and others have mentioned.

This really helps to get good ratings, recommendations and repeat business. The friend who has the AirBnB in Ascot said guests really appreciated that. eg - this restaurant is good, that one is crap, go there to buy a go card for 30% off public transport, you'll enjoy the ferry ride to the city etc.

That is one of the hardest things when running such a small scale operation. If you're running a 100 room hotel and a cleaner calls in sick you can just hand out some overtime or make the other cleaners work quicker. Not so easy when you only have 1 place.

You should always charge as much as the market will take.

This will save a lot, but will stop the personal touches.

I would only conisder AirBnB if I had an entire blcok or six close to each other.

 

I completely agree with you. This is ideal if you have all the units in the same building, or even better if you own the whole building! Nothing special besides being inner Sydney. It was close to public transport. We usually point out good places to visit and any other way that we can help them save money. We had an old Entertainment book that had a lot of vouchers and left it there for guests to use. They all loved this!

We will try next year in the suburbs (Northern Beaches, close to Manly) to see how it will work out. We think we will make less per month but nonetheless its still enough for a nice holiday. I have been following closely the occupancy rates and they seem to be around 75%.We will do this in our granny flat, which has separate entry and garage to the main house. This way wife can attend to the baby and welcoming guests at the same time.

You are right about cleaners. Having a good and reliable one is very important. Paying above market rate can always help. There was one occasion when she coudn't make the time we needed, so my mother in law stepped in.

 

As mentioned before we have a couple of short term rentals the wife is currently doing the profit and loss reports for the accountant tmrw she's been doing it for the past few hours not a happy wife

 

You guys have just given a great idea for me to do in the near future.

I have a CIP which might be in a good location for running AirBnb. It's along Toorak Rd, South Yarra, VIC. Tram line is just outside the door, train station is within 400 m, surrounded by cafes, restaurants, shops. Yarra river, botanical garden within walking distance, 2 km from CBD.

The site is doable for 8 apartments and 1 retail. I will use the top floor for my ppor and keep the other 7 for Airbnb, perhaps start with one first.

@Gockie and @Excalibur1, any suggestions?

 

Cash cow... I'm sure its a cash cow site in any case. And i'm sure you won't suffer in capital gains either.

I reckon start with 2 or 3. You might get larger groups wanting to stay near each other. Make sure you have someone you can trust for changeovers. Ps... can I have a free/cheap stay to try it out once you have set it up? I'll give you a great review and great helpful feedback.

 

Discount for PC members? ?

 

When it eventually happen, it will be my full time job. I don't mind being a cleaner for my own building .
For you @Gockie free stays for the first few days

 

yeh i have also been pondering the oversupply thought and yeh i agree, more supply will come but as will demand. was only yesterday i was telling my mum who is visting canberra with her friend to try it, she had already booked a hotel and wasnt aware of it.

like anything i guess, supply and demand .. given its not that hard to change back to a normal rental, i see the income staying at a reasonable premium to normal rentals so people will just swap it back if its not worth it.

 

PC members have contributed so much free information to someone like myself, I would not mind paying back some .

Perhaps free transport (fuel not included), and companion for interstate members looking for IP in Melbourne.