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Airbnb Vs. Traditional Rentals: Where should you put your money?
Caroline Gillies • Oct 05, 2023
Airbnb vs. Traditional Rentals: Where Should You Put Your Money?
Investing in real estate can be a smart way to make your money work for you and secure your financial future. These days, there's a trendy twist to this classic investment strategy – Airbnb rentals. But how does Airbnb stack up against good old traditional rentals, and what does it mean for your ability to secure loans for future investments? Let's dive into it!
Airbnb:
The Good Stuff:
- Show Me the Money: With Airbnb, you can potentially rake in 2-3 times more money compared to traditional rentals. This is especially true if your place is in a touristy spot.
- Flexibility Rules: Airbnb lets you call the shots. List your property when you want, for as long as you want. You can even block it for renovations, maintenance, or those last-minute personal getaways.
The Not-So-Good Stuff:
- Hands-On Gig: Be ready to roll up your sleeves because Airbnb is a more hands-on gig. You'll need to arrange cleaning, restocking, and deal with those unexpected "Oops, I locked myself out" moments.
- Rollercoaster Occupancy: Airbnb's occupancy rates can feel like a rollercoaster ride. It depends on things like where your place is, the time of year, and what's happening in the market. Be prepared for the occasional dry spell and budget for it.
Quick Tips for Airbnb Hosts:
- Use apps to price your pad competitively.
- Two words: key lockboxes. One for check-ins and another for lockout emergencies.
- If you're not up for the hustle, more real estate agencies are now offering management of Airbnbs.
- Check local council rules before diving in; they can be strict about short-term rentals.
Traditional Rental Property:
The Good Stuff:
- Money on Lock: Traditional rentals offer financial stability. With leases usually running for 6-12 months, you know when the rent's coming and how much.
- Easy Breezy Maintenance: No need to deck out your place like an Airbnb. Traditional rentals are less time-consuming, and property managers can handle the nitty-gritty tenant stuff.
The Not-So-Good Stuff:
- Poor cashflow: Traditional rentals might not fill your pockets as fast. And with current interest rates and expenses, your cash flow could be in the red.
- Rent Price Red Tape: New laws mean you can only up the rent once a year for existing tenants. That means slower income growth.
Quick Tips for Traditional Landlords:
- Pick a property manager based on their skills, not just the price.
- Bedrooms are the Most Valuable Players in rental properties. More bedrooms usually mean more rent.
The Money Talk:
From a bank's point of view, both Airbnb and traditional rental income can count. But they do it differently.
- Rental Income: Banks usually look at rental income from the purchase date but play it safe by shaving off as much as 30% for expenses and vacancies. Some banks will consider only 10% for these expenses but one of our mortgage brokers will find the right bank for you.
- Airbnb Income: Airbnb money is treated like a business. You must show two years of tax returns to prove it's the real deal. Once you've got those, your borrowing power goes up. During those first two years, though, banks treat it as vacant and use the rental appraisal for your loan.
So, whether you are team Airbnb or team traditional rental, just remember to chat it out with your trusted advisors– accountant, mortgage broker, and real estate agent. They'll help you make the best moves for your money. As always, any questions drop us a line!
This article was kindly supplied by Plex Finance www.plexfinancegroup.com.au
In a world that often feels chaotic and uncertain, it's easy to get caught up in the hustle and bustle of life, forgetting to pause and appreciate the simple joys that surround us. But amidst the challenges and hardships, there is always a glimmer of light waiting to shine through the darkness. Today, let's embark on a journey to explore the uplifting and positive aspects of life, reminding ourselves of the beauty that exists in every moment. Gratitude: A Key to Happiness Gratitude is a powerful tool that can transform even the most mundane of days into something extraordinary. Take a moment each day to reflect on the things you're grateful for, whether it's the warmth of the sun on your face, the laughter of loved ones, or the beauty of nature. By shifting your focus to the blessings in your life, you'll find that joy naturally follows. Embracing Imperfection Life is messy, unpredictable, and imperfect – and that's what makes it beautiful. Instead of striving for perfection, embrace the flaws and quirks that make you unique. Celebrate your successes, no matter how small, and learn from your mistakes with grace and humility. Remember, it's okay to stumble along the way – it's all part of the journey. Finding Joy in the Little Things Happiness doesn't always come from grand gestures or monumental achievements. Often, it's the little things that bring the most joy – a kind word from a stranger, a hug from a friend, or a quiet moment spent watching the sunset. Pay attention to the small moments of beauty and wonder that pepper your day, and you'll find that happiness is never far away. Spreading Kindness and Love In a world that can sometimes feel cold and indifferent, kindness is like a ray of sunshine breaking through the clouds. Make it a priority to spread love and positivity wherever you go, whether it's through a simple act of kindness or a heartfelt compliment. By lifting others up, you'll find that you lift yourself up in the process. Cultivating Inner Peace True happiness comes from within, rooted in a sense of peace and contentment that transcends external circumstances. Take time each day to nourish your mind, body, and spirit – whether through meditation, mindfulness, or simply taking a walk in nature. Cultivate a sense of inner peace that will sustain you through life's ups and downs, allowing you to navigate challenges with grace and resilience. Embrace the Journey Life is a journey filled with twists and turns, highs and lows, but it's also a journey filled with beauty, wonder, and endless possibilities. By embracing the bright side of life, finding joy in everyday moments, and spreading love and kindness wherever we go, we can create a world that is a little brighter, a little kinder, and a little more beautiful for us all. So let's embark on this journey together, with open hearts and open minds, ready to embrace all that life has to offer.
Boosting Your Superannuation: Seven Powerful Strategies
When it comes to being a Director of a company, there are administrative requirements that must be complied with, including keeping ASIC in the loop. We all hate paying unnecessary fees, and ASIC loves to charge fees. To avoid late fees, ASIC must be told about any changes to company details, including your business or residential address, within 28 days. If your company's information changes, please let us know so we can notify ASIC on your behalf. Example: Jarryd gets a late fee Jarryd recently moved his company to a new storefront. In the rush of changing to his new principal place of business, he forgot to update his address details with ASIC. A month later, Jarryd logged into his online account to change his address to reflect the address of his new principal place of business. Because it was outside the 28 day timeframe, the company was charged a $93 late fee. If he had waited longer and lodged the change of address more than a month late, the company would have been charged a $387 late fee. To avoid fees in the future, Jarryd realises it's important to update his details as soon as they change. In summary, be like Jarryd and realise the importance of advising Clear Vision Accountancy Group of any changes. Example supplied by ASIC
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