As rental vacancy rates across Sydney and Melbourne have risen in the last 12 months, the prospect of earning higher returns in the short-term rental market using platforms such as Airbnb has become increasingly attractive for investors looking to take advantage of lower borrowing costs.
In this article, we take a look at five key areas you should consider when identifying a suitable investment property for a short-term rental property investment.
1. Property location
As with conventional tenancies, location is one of the top factors that will determine your property's success as a short-term rental. You should have a clear idea of which type of guest would be attracted to stay in your property, why they are visiting and what is bringing them to the area.
The best short-stay hotspots include properties that are in close proximity to:
• The CBD and commercial hubs to attract business travellers and guests requiring accommodation for work trips.
• Coastal areas and the beach which are popular with wide groups of travellers from domestic and international tourists, families, solo travellers and couples, especially during the peak spring and summer seasons.
• Tourist hubs and cultural precincts, which can be particularly popular with visitors during major events, for example, Mardi Gras in Sydney or sports grand finals.
• Transport hubs with easy access to other regions and the city centre.
• Airports in the largest capital cities, to offer convenient access for international travellers requiring a short stay before or after long flights.
2. Unique accommodation experiences
Many guests on platforms such as Airbnb are increasingly attracted to unique and interesting accommodation experiences they would not be able to find in a standard hotel or serviced apartment.
Properties with unique styles and features such as Hamptons style home with a large outdoor pool can be attractive to guests seeking unique accommodation options (photo: supplied by MadeComfy)
Some examples of unique property features that can be highly sought after and attract significant nightly rate premiums include:
• Rooftop views over a city or neighbourhood
• Outdoor showers, or bathtubs
• Attractive garden or outdoor courtyard areas
• Properties with heritage and historical appeal.
• Unique architecture, interior design and building styles
Unique property characteristics do well on Airbnb because they can be highlighted in your property's marketing, such as featured listing photos. They also become a focal point for your guest's reviews and ratings.
3. Additional facilities
Some strata units have common facilities which can be highly desirable for short-stay guests, such as swimming pools, sauna rooms, gyms or even tennis courts. When looking to purchase a strata unit with common facilities, again consider the type of traveller your listing is likely to attract based on its location, and the extent to which they would find such facilities a value-add for stay.
Included facilities can be attractive value-adds to certain types of short-stay guests for strata apartments (photo: supplied by MadeComfy)
For example, a large apartment with three or more bedrooms that would suit a travelling family on holiday would have less use for a gym, versus a smaller unit or studio that would suit a solo or business traveller.
4. Ease of management
A short-term rental property requires much more direct management than a conventional tenancy. If you plan to manage the cleaning and guest communication of the property yourself, it is generally best to purchase an investment in an area that you can easily access and respond to issues. Getting to your property to deal with maintenance or check-in problems can be time consuming and costly if you are located in another city, for example.
However if you do live far away from an otherwise excellent short-term rental property opportunity, it's possible to hire a professional Airbnb management company that can clean and manage your guests on your behalf.
Consider a property's accessibility for less mobile travellers such as seniors, or families that may be travelling with a toddler or small child. Properties with steep staircases can be difficult to access for these types of travellers, and limit the number of bookings you receive. Travellers looking for more extended stays are also likely to have a lot of luggage, and carrying this up a long flight of stairs can be a major inconvenience.
Disclaimer: while due care is taken, the viewpoints expressed by contributors and/or paid content do not necessarily reflect the opinions of Your Investment Property.
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