A furnished vacation rental that has an attractive listing and eye-catching photos is a wise investment in the short-term property market in Australia. Right now is a good time to invest in this growing industry, although it may seem a little confusing when it comes to the management process and taking care of all of the needs of your BnB property.
There are few investment opportunities out there that are profitable, and many people realize that BnB investment is the new way to do real estate, particularly for:
- First-time investors
- Fly-In fly-out workers
- People who want an additional side income
When looking for a property, you should always look for a property in an area that has a lot of traffic and has lots of events. You should also find a place that has four bedrooms or more. Since people travel in large groups, they are often looking for a BnB to stay in to avoid spending a lot more money on multiple hotel rooms.
When looking for a property, you should always look for a property in an area that has a lot of traffic and offers lots of events. You should also find a place that has four bedrooms or more. Since people travel in large groups, they are often looking for a BnB to stay in to avoid spending a lot more money on multiple hotel rooms.
Tips When Making Your BnB Investment
You should also make sure your BnB has some style and flavour. People tend to stay in properties that have a unique style and offer something special. When people browse your photos, they will be more likely to choose your place to stay in because it looks cool.
Proximity is crucial. With a short term rental investment, it involves a little work that is hands-on such as maintenance and cleaning. These tasks are necessary so that the property is always up to your standards. If you are managing the property yourself, your investment should be in a place where you can reach it within a reasonable amount of time. If the investment is in a touristy area, it does not have to be in your exact community but should be able to reach it within an hour by driving.
The location should be all that you care about. You should consider a property where people are already going, and you want to capture a portion of it. For example, if there is a beach community that everyone goes to it outside of the city, you should invest in a property that is as close to the beach as possible.
Make Sure You Understand the Laws
The laws around BnB investing is something that you should understand and not be afraid of. If you know the law, you can adhere to it and always ensure that you are operating legally. When you are up to date on all of the laws of your BnB investment, you can avoid making any investment mistakes or risk losing everything. These failures often happen to investors who find out when it is too late that they are operating a BnB illegally.
For example, in New South Wales, local councils have the authority to determine whether an individual can rent out a property. If you are not in compliance with local council laws, action can be taken against you. Changes to the law also mean that you have to stay updated because some changes have gotten some apartment owners banned entirely from BnB property management, so it is essential to comply with all of the laws.
Know the Difference Between Sub-Leasing or License
A big issue among short term rentals is determining whether they are a sublease or a license. In Melbourne, a case occurred where a landlord leased an apartment to tenants who then listed the apartment on Airbnb without getting any permission from the landlord. Under a lease agreement, the property can only be allowed to be subleased when the landlord gives consent. In the Melbourne case, the Supreme Court of Victoria ruled that since “exclusive possession” is given to guests, this is considered a sublease that requires the landlord’s consent according to the lease agreement.
Must Pay Taxes on Your Investment
With the increasing use of Airbnb in Australia, as well as other sites, the Australian Tax Office (ATO) has addressed concerns about people who use BnB’s to avoid paying taxes such as the GST and Capital Gains Tax (CGT). All income that you receive from your BnB will become a part of your assessable income. However, you will be able to claim some tax deductions expenses incurred on the property, such as repairs, commercial cleaning and maintenance.
When making this kind of investment, you must maintain proper records of your income and declare it when you file your tax return. You may be liable for CGT when earning income from the property as a short term rental investment.
Insurance and Regulatory Issues
In Australia, the area of regulations when it comes to short-term rentals is not fully developed yet. To protect yourself and your investment, you should first advise your insurer that you plan to rent out your property to guests, and you will require public liability coverage.
Many people often overlook this step because they think that Airbnb Host Protection Insurance covers everything, which it does not. Airbnb Host Protection insurance only covers third-party claims of property damage or injuries of up to $1 million.
A supplementary liability coverage plan protects you from issues that may occur that are not covered under Airbnb Host Protection insurance such as:
- Food, health and safety regulations
- Fire or disability access regulations
Do Your Research
It is always a good idea to consult an attorney and speak with others who are also making successful BnB investments. You can also go on any search engine and type in “BnB laws + (your city)” and you will most likely get plenty of results giving information on the BnB laws in your city.
One of the Best Investments for First-Timers
If you are investing in real estate for the first time or new to the vacation rental market, you will be glad to know that short term stays continue to grow year after year, and they are probably one of the best investments in terms of cash flow. However, it is essential to have the right investment strategy to be successful as an investor.
Since the short term rental market in Australia has a 2.7% annual growth rate in revenues, these trending numbers show that BnB investing continue to be promising. These types of rental properties are becoming more and more appealing to travellers and vacationers in Australia because they offer several advantages to travellers versus renting in traditional hotels (especially for groups).
As a first-time buyer, short-term rental investment is solid because this type of investment model will continue to grow in popularity and attract more and more guests. It can become extremely popular in cities where these types of investments are not highly regulated. When you are investing in this type of property for the first time, it is important to make sure that you choose a prime location that will guarantee high occupancy rates during the entire year or most of the year.
For serious first-time investors, your goal should be to find the top-performing investment properties in Australia that provide the highest returns. The top trending locations include:
- Wagga Wagga
- Tamborine Mountain
Great Opportunity for Fly-In, Fly-Out Workers
Many workers in Australia, known as Fly In Fly Out (FIFO), are employed in remote areas where they are flown temporarily to the worksite. Most employers, particularly in the mining industry, prefer this option instead of permanently relocating employees and their families. Instead, the employees work on the remote site for many days or weeks and then fly back to their hometown for a designated time.
In Australia, many companies have sites that use portable buildings which only provide the necessary amenities. This lack of comfortable housing with facilities is where BnB investments come into play because the local communities where the FIFO workers are located prefer that their homes are used as short-term rental properties. Company towns and local communities want FIFO workers to purchase permanent homes in the areas where they work.
BnB investments offer a solution because they benefit the local economies where FIFO workers are located. Also, workers do not have to make long-term commitments, such as purchasing a home while working in remote areas. Rentals that offer facilities such as swimming pools, fitness equipment, gyms, tennis courts, and other amenities help to attract and retain skilled employees.
BNB Investing Can Be a Reliable Side Income
If you do a quick search online, you will find that many companies and speakers are offering BnB systems and formulas for amassing wealth and living the life of their dreams. Are these advertisements real? Can they deliver on what they say they offer? Are they too good to be true?
With any investment, there is an inherent risk. It is essential to follow the tips previously mentioned about choosing the right properties and having the proper investment strategy. Many advertisers do offer proven systems that can help you start building a portfolio of BnB properties to start earning a side income. There have now been countless stories of people who not only earn a side income from BnB investments but rely on it as a sole income.
When determining whether these courses and speakers can deliver on what they offer takes time and research. Just like any other investment, you want to do a thorough investigation of any so-called proven system and find concrete evidence that it does what it says it can do. You should try to imagine the outcome before you even get started.
The good news is that BNB investments can be a lucrative side income because you can manage a few listings in just a short amount of time. For serious investors, they even go as far as have the process automated by outsourcing tasks such as interacting with guests and cleaning the property.
Examples of Positive Revenues
If you spend enough time online, you may eventually come across ads or articles highlighting people who earn $5000-$10000 a month or more by merely listing their BnB online. To fully understand whether positive revenues are possible with this investment model, it is a good idea to do an operating cost breakdown.
A simple whiteboard or notepad will be sufficient to breakdown your operating costs as follows:
- Expected gross revenues from room rentals
- Trash/cleaning service
How to Determine Your Projected BnB Profit
If you total all of your expenses and subtract all of your expenses, you can determine your net profit. Here is an example:
- Gross revenues $2500
- Rent – $1000
- Internet – $50
- Cleaning service – $450
- Total = $2500 – ($1000+$50+$450) = $1000
There can be additional expenses and costs, so you can adjust this formula as needed to get a rough idea of your expected monthly net profits.
Countless Success Stories Earning Extra Cash
Many people have been featured on publications such as CNBC, Inc.com, and countless others, which describe how several entrepreneurs took the opportunity as homeowners to make some extra cash. They did this by renting out a spare room or even their entire home and increased their income tremendously into the six-figure range. However, it is essential to be realistic and do not expect to become a millionaire overnight.
According to data published by Airbnb, most hosts make an average of $6000 a year, although many others earn much more. You can find countless stores online of people in Australia and many other countries that simply fixed up a room took a few photos, listed it online, and started making money within less than 24 hours.
As an investor, you have to keep in mind that for every success story, there may also be failures, and you should take the time to learn from those errors. It is essential to do your homework and determine whether the BnB investment you are interested in has a likely-to-high potential to succeed. If you do the math and work out all the fine details, you too can also become a BnB success and earn the side income you are looking for.
Bnb property management includes:
- Accepting new reservations
- Restocking goods
- Checking in guests
- Among other necessary tasks
One of the reasons why many people fail when attempting this investment is because when the bookings start rolling in, they are not prepared to handle the aspects of property management. As an investor, you have to ask yourself, “How much time do I have per day, week, and month to my investment?”
Like most people, you should want to earn as much money as possible without dedicating all or too much of your time to the investment. To maximize your return on investment, property management experts are a useful resource.
Property management experts help create what successful entrepreneurs call an investment that is on “autopilot” where you can make a BnB investment without ever having to worry about interacting with the guests or their needs. All of the required tasks that are needed to manage a BnB property successfully are also handled in a very professional way that guides you to ensure that you see an increase in occupancy of your property and, ultimately, a more significant return on your investment.
Outsourcing allows you to manage your BnB property from any location, and there are numerous benefits of using a property manager. Their services will provide all you need for your BnB listing whether it is:
- Guest support
- Listing creation
- Professional photography
- Multi-platform advertising
Millions of Australians are already using the services of property management companies for letting their properties. Choosing this type of service is an excellent choice for those who want a passive income without all the headaches and work required when managing a BnB investment on your own.
If you feel you’re ready to get your BnB investment off to the best possible start, contact Your SuperHost today, we’re the experts in short-stay rentals and property management.