Recent research conducted by a global index-based online real estate firm ‘Nested” claims that it’s possible to pay off your home loan quicker. https://nested.com/
They calculated how long it would take a property investor to regain the property value based on average rental income and Airbnb costs.
It researched seventy-five international cities that featured both Melbourne & Sydney.
Their data claims a in Melbourne an investor could regain the price of a three-bedroom home in just under 10 years using an Airbnb leasing method compared to 25 years renting with a traditional tenant. Sydney was presented a better outcome with a three-bedroom house being potentially paid off in just under seven years through Airbnb in comparison to taking twenty-six years renting the investment property renting on a traditional method.
Nested came to these results by calculating the average price of a three-bedroom home and the average rent it could command through confirmed sales and new listings in each capital city over the past 12 months, as well as data from the World Bank, HSBC Property ROI Index and local property websites.
To conclude the average Airbnb rents, it looked at all available properties with the same specifications on the platform over the past 12 months and assumed the property would be rented at an 80 per cent capacity.
This may sound too good to be true… Perhaps Airbnb hasn’t been around long enough to really provide us with enough long-term data to compare. Location will always have a large influence on income performance. It may be harder to lease a three-bedroom house 100kms from the city as it would be being 10kms. I anticipate that renting it traditionally or through an Airbnb would be heavily impacted by this factor.
Airbnb has certainly shown interesting signs in Australia. If leased, the income can be potentially higher, however it may have longer vacancy issues to a traditional tenant that’s agreed to lease the property for 12 months. Airbnb has shown some more flexibility as both landlords and occupiers/tenants have less contractual agreements where both the landlord can lease their home for a month while a tenant can stay without being forced to be their long term.
Both forms of lease have had wide media coverage of experiencing malicious damage. I think Airbnb may not be as well screened to review the person as well as a property manager would be reviewing a traditional tenant. The costs between the two rentals can also vary considerably.
I won’t say that Airbnb is better than renting, given the results above. I think there is a space for both means of leasing your investment property.
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Feb 2018
