We interviewed 3 local hosts to get their take on what it’s like to run an Airbnb. We overviewed the pros and cons of short-term rentals, and asked the question everyone wants to know – how much money can you make through Airbnb compared to long-term rentals?
By Alexandra Olsen
Think of bed and breakfast 20 years ago and you might conjure images of homely establishments run by retirees who were fond of a yarn and handy with a frypan. Fast forward to 2012 when Airbnb hit Australian soil, progressively overhauling both the travel and property investment landscapes.
Speaking as Head of Travel & Event Management (aka, mother) – my family loves an Airbnb. We live on the Tweed Coast these days, but with family back in Sydney, we do the 900 km trek twice yearly, always stopping overnight to break up the trip (essential for sanity with our young brood). And it’s only through short-term rentals like Airbnb that we’re able to do this comfortably – both for the price, and the actual comfort.
Compared to traditional accommodation options pre the short-term rental boom (hotels, motels and caravan parks) – Airbnb gives much more value, choice, and space.
‘Short-term rentals are getting popular, and it’s not just because they’re adopting more hotel amenities and features. If you’ve looked for a reasonably-priced hotel, then you know why’ – Forbes Magazine.
If we chose a motel for our stopover, our family of 5 would be sharing a single room, most likely clad with floral blue doonas (do you know the exact ones?), patchy brown carpet that’s seen a few things, and timber-laminate-everything (take my money, now!).
But through Airbnb, we’ve stayed in beach bungalows, farm stays, and a Gold Coast mansion with 4 families over Christmas. Throw in fully equipped kitchens, large living areas, and sometimes – backyard, pool, and a tier of homemade scones on arrival (if you book the right place).
‘Airbnb has emerged as a strong competitor in the travel industry around the world as travellers look for cheaper and more bespoke alternatives to staying in hotels’ – Property Update.
Yes, you’ll discover some quirks with Airbnbs that you wouldn’t find at the Four Seasons, but for the convenience and price, there are amazing options to be found. Not to mention, beyond our frequently travelled Pacific Motorway, there are so many unique places to explore, from hinterland treehouses to underground homes in the outback.
INTERVIEW WITH THE HOSTS: WHAT’S IT LIKE TO RUN AN AIRBNB?
Airbnb’s entry into the travel market has inspired budding hoteliers to refurbish shacks into Shang-gri-las, turning investment properties into successful businesses.
Property author Michael Yardney comments, ‘…for property owners, Airbnb can offer the potential of a lucrative money-spinner’.
The NSW Tweed Coast – the beachside community set between the Gold Coast and Byron Bay (where we call home and base our business) perpetuates a slower-paced lifestyle where creativity and hospitality naturally brew. It’s no surprise, then, that the Tweed Coast boasts a burgeoning hub of trendy Airbnbs, making it one of the areas where Airbnbs have real potential to thrive.
But the question remains, if you’re investing in property to boost your income, how do short-term rentals such as Airbnb stack up financially compared to long-term rentals?
We’ll get into the financial aspect later, but first, we interviewed 3 local Airbnb’ers to learn what it’s like to run a short-term rental.
AIRBNB HOST #1: Dani and Ryan Tiene – The Tide, Pottsville, NSW
We spoke with Dani Tiene, who co-owns and operates The Tide, a 1-bedroom apartment connected to the family home in Pottsville. Dani’s first Airbnb was Caba Sands at Cabarita Beach, and she is also in the process of renovating a property in Jindabyne NSW. The house-turned-ski-lodge will serve as the base for Turn N Burn snowboard and ski camps, owned and operated by Dani’s husband, Ryan Tiene. Due for completion in 2025, the 5-bedroom property will be let through Airbnb in between camps.
TCHL: How long have you been an Airbnb host?
Dani: I’ve been hosting for six years and hoping to host forever! I love it and enjoy the flexibility of it all – it works with our lifestyle.
TCHL: The Tide is your second Airbnb; is there anything that you learned from that experience that helped you the second time around?
Dani: I’ve come a long way since our first Airbnb. Although we did get great reviews, it was a rocky start and a huge learning curve for me in terms of fine-tuning the cleaning, organising, tweaking house rules and making sure communication was on point. It was just little things like making sure the tomato sauce lids were perfectly wiped, haha! You can get the random picky guest who notices the smallest mistake. We would also get the odd few groups that decided to throw big parties, which was stressful. We’ve definitely upped the house rules in the new place. But we learnt, and it was a success. Our first Airbnb literally saved us through Covid. The Airbnb was connected to our house, and we’d also give the option of letting out our whole house. So we’d check out on a Friday arvo, head to a caravan park and be back on Sunday at checkout. We sold that property then bought and renovated our home in Pottsville, and it was great to build with Airbnb in mind.
TCHL: Your Airbnb is attached to your property; how do you find that set up, as a host, and family?
Dani: Yes, the Airbnb is attached and we also let out the main house over Christmas and holidays. It’s a great set up for me; I’m right there, so I can pop a movie on for the kids, head over and get it cleaned in a couple of hours. If a guest needs any extra towels or has any questions I can help them right away.
TCHL: How did you go about the design of your property insofar as choosing what inclusions would make for a great guest experience?
Dani: We just kept the granny flat really simple! For the main house we created a lock system in the wardrobes so we can move everything quickly over to one side, as well as lockable draws and things like that – which our first property didn’t have. At our first Airbnb we would have to move all of our clothes into the garage – it was a process! It can be hard with kids, but we try to keep the house clutter-free so when it comes time to let out the place, it’s not so overwhelming.
TCHL: Are there any ongoing challenges you have as a host that you’re willing to share?!
Dani: It’s honestly not challenging… you just have to stay on top of your organising. Our guests have been a pleasure and I love sharing our home with them. 99% of guests leave the house and granny spotless. Actually… one thing would be that my household washing usually gets put on the back burner, haha!
TCHL: What do you love most about Airbnb’ing?
Dani: I love the flexibility of it all. I love that I can go on work trips with my husband as a family, and that the Airbnb helps pay for our flights or whatever else. It’s hard for me to find a 9-5 job right now with the nature of my husband’s job and having young kids. The Airbnb is right here and I don’t need to travel to work. It’s great!
TCHL: What advice would you have for others who are thinking about getting into Airbnb?
Dani: It’s a great way to pay for the holiday you’ve always wanted to go on, or a way to help pay the mortgage. As far as tips for hosting go… make sure you have the linen prepared ahead of time, because that can slow you down. And make sure your check-in instructions are clear. I usually send another message straight to our guests’ mobiles just to make sure the check-in is seamless. Clear communication before, during and after is important – guests really do appreciate that.
TCHL: Besides Airbnb’ing, did you contemplate any other use of your space, for example, renting out the space to long-term tenants, and if so, what made you choose Airbnb?
Dani: We thought about renting out the granny flat, but I can make more money being a host, and I really enjoy it. Also, if we want the space for our extended family who live interstate, or we want to Airbnb the main house, we can block out the dates and do so.
TCHL: Is there anything else you’d like to share?
Dani: I think that’s about it! If you’re thinking of starting out on Airbnb feel free to reach out on Instagram @the_tide_pottsville!
You can also check out the design and build process of Dani and Ryan’s current Snowy Mountains project @tab_house_reno.
Airbnb Host #2: Craig and Eden Hill – Caba Cottage, Cabarita Beach, NSW
Craig and Eden Hill currently run 3 Airbnb properties: Caba Cottage, Mr BlackGordon (Tasmania) and Senja Villa (Bali).
TCHL: We love your place in Cabarita! How long have you been hosting on Airbnb?
Craig: We’ve been hosting our personal properties for the past seven years and launched Howzit Property Services about four years back – which is currently closed while we take some time out traveling. We also have a new villa in Bali, coming soon.
TCHL: Did you have any experience in hospitality before entering the Airbnb space?
Craig: My wife Eden and I have both come from the luxury super yacht industry, as well as spending extensive time working on a private island in the Seychelles.
TCHL: How did you approach the design of your properties?
Craig: We’ve always had a clear picture of what we want to achieve for the design of each property. I don’t believe there’s a one-size-fits-all when it comes to style or design. We try to find that one point of difference that each property has, and then create the space around it.
TCHL: What are your main priorities for your guests?
Craig: With regards to the guest experience, we prioritise cleanliness, and quick, clear and informative correspondence. We try not to get caught up in the big gift hampers and that type of thing.
TCHL: Did you experience any hurdles in the lead up to launching each property on Airbnb?
Craig: The biggest challenge would be managing the properties from a distance. It’s critical to find good management, or someone you can rely on to look after your property as if it were their own… that can be a challenge.
TCHL: Do you have any advice for anyone thinking about getting into the Airbnb’ing?
Craig: Go for it. It can be very rewarding and profitable. Just make sure to do your research on location and pricing of your asset, and make sure you don’t overcapitalise.
TCHL: Thanks Craig, you’re speaking our language!
Airbnb Host #3: Simone Millar – Property Manager, Cabarita Beach, NSW
You don’t have to own a property to earn an income through Airbnb, and Simone Millar is the perfect example of just that. Simone is self-employed and works as a host on behalf of Airbnb owners with properties in Cabarita Beach.
TCHL: How long have you been an Airbnb host, and which properties do you look after?
Simone: Four years hosting, four properties, soon to be six! Caba Coastal Oasis, Coast Road Cottage, Towners Ave Townhouse and Towers Beach Shack – all in Cabarita Beach.
TCHL: We understand you’re not the property owner – how does this work?
Simone: I’m self-employed, so others ‘choose me’ to be their host. I charge a commission per stay. It’s a great model for both of us. No stay, no pay – so it’s in my best interests to get bookings and earn both myself and the owners an income.
TCHL: Did you have any previous experience that helped with getting started as an Airbnb host?
Simone: I always had two or three jobs growing up and I developed a passion for genuinely helping people. I went on to help establish a local business Chamber on the Tweed Coast pre-Covid. I was a single full-time working mum living in a beach front rental in Cabarita Beach when my landlord decided to split the block and build a cottage. All of my connections and experiences gave me the confidence to start hosting the cottage on her behalf. She chose Airbnb so that her family still had the option to come and stay, as well as earn an income. A local real estate agent caught wind of what I was up to and started handing out my number, unbeknownst to me! My phone started ringing – the rest is history.
TCHL: Do you have any say in the design of each property, or inclusions for guests?
Simone: I’m just the host, but I do work closely with the owners to furnish their properties to a style they like, so that when they visit their own home they fall in love with it all over again! As for inclusions… I work with the owners to decide what they’d like to supply. They all have a different idea of what they’d like to offer. I like to leave nice touches such as brochures for local, off-the-beaten-track places, vouchers, discounts, and plenty of consumables to get their stay underway. I love it when tenants tell me they’re coming for a special occasion – makes my day to pop a little something in the home for them. First impressions last!
TCHL: Have you stayed in many Airbnbs yourself, and if so, is there anything you take from those experiences that shapes the way you host?
Simone: Yes! My family, friends and I LOVE camping, but it’s a known fact that if I camp, it generally rains, so Airbnb is my go-to for backups, or cute little weekends away. Each place I have stayed is so unique… I always get inspired to make a few minor adjustments.
TCHL: Did you encounter any notable challenges when starting out with Airbnb?
Simone: When I began, Airbnb was just starting to really build in our area. There were some government legislations brought in, but Airbnb, for me, is very user-friendly, and guided me through the process. Like any industry, things change, legislation is introduced, but putting aside a little time to upskill is no skin off my nose. Admittedly the trickiest part is keeping your listing ‘alive’ and competitive. Because there’s an oversupply, each property needs a unique reason for tenants to book. Also, learning my landlords’ expectations for their properties is a learning curve. Some prefer less stays/higher price; some prefer regular stays, and some are just happy to help when people are in need. I’ve hosted a lot of flood families, women in domestic violence situations, and people waiting for property settlements – that type of thing.
TCHL: What about ongoing challenges as a host? What are the hard bits?!
Simone: As a host, not owner, it’s being piggy in the middle! Owner, host and tenant all have different ideas about short-term holiday stays, and sometimes these will conflict. Problem solving and customer service are key here. We want to keep the tenant happy to save the good review, but we also need to respect the owner, their property, and their price point.
TCHL: What do you enjoy most about the job?
Simone: I love being able to take stress off someone’s shoulders. Finding the right accommodation can be tricky sometimes, whether it be for a holiday or short-term emergency. The gratitude felt from putting a roof over someone’s head is pretty darn cool.
TCHL: What advice would you have for others who are thinking about getting into Airbnb?
Simone: For property owners, I would say, if you aren’t wanting your property to stay in yourself, and income is important to you, you may want to consider a permanent rental for guaranteed income. Airbnb is great for those wanting access to their property for family. Admittedly, there are peaks and troughs, highs and lows, and you would need to be okay financially to weather the lows. The low period is generally a good time to get things done like deep cleans, air-con services, painting, updating furnishings, and those types of jobs.
TCHL: What about those who are considering hosting on behalf of owners, like yourself?
Simone: You can choose if you want to be a face-to-face host, or virtual. If you’re looking after a property that needs a lot of instruction/direction like a farm stay, or somewhere tricky to find, it might be good to offer face-to-face, however, a lot of guests like self check-in so they can have the day at their leisure and check-in when it suits them. They key is communication. Great communication with attention to detail, as well as fast responses will put you ahead of the pack.
TCHL: Would you ever consider having an Airbnb attached to your own home?!
Simone: Yes, in fact I’m just waiting on Lotto so I can buy property and do exactly that!
TCHL: Oh, good! Let us know when you need a home loan, haha!
SHORT-TERM RENTALS VS LONG-TERM RENTALS – WHAT’S THE BETTER INVESTMENT?
When you buy a property to rent out as an investment, you can go the traditional route of long-term leasing, where your tenants sign a lease for a minimum period of time, usually a year; or short-term leasing, aka Airbnb, and the like.
If you’re considering running a short-term rental there’s a lot to consider. The rental yield is probably near the top of your list.
According to Airbnb itself, ‘the average profit for a short-term rental property varies widely based on location, occupancy rates, and management costs. On average, a well-managed property can expect to earn 20% to 30% more than a long-term rental’.
Forbes Magazine explains, ‘…the short-term rental option typically provides a higher margin of profitability for the same investor. This is primarily due to the ability to set a higher average daily rate for your short-term rental than a long-term rental, sometimes in the same neighbourhood’.
Which Airbnbs perform well?
If you’re interested in Airbnb’ing you’ll want to do some deep research before buying. As Property Update says, ‘…a property’s suitability for Airbnb hinges on several factors, including location, amenities, and unique features. Properties located near tourist attractions, central business districts, and transport links tend to perform well on Airbnb because travellers often seek accommodation that minimises their commute and offers proximity to landmarks. But in terms of the most profitable, the best type of property for Airbnb is one that gives you the most income and a higher occupancy rate. And as with any investment, the location will do the majority of the heavy lifting.’
This is where buyers need to do their homework to determine the rental income potential, as well as upfront set-up costs, plus monthly and annual costs – including maintenance, cleaning, taxes, levies, and possibly a property manager. Forbes Magazine cautions, ‘You’ll want to ensure that your net operating income (revenue minus expenses) is sufficient to support your investment goals and pay you for the risk that you’re taking on, which largely, in this case, is no formal lease agreement in place.’
If you’re investing in property, you want to base your decision on long-term growth and profitability – not just something that will look cute on Insta. Property Update emphasises that buyers ‘must understand the various ins and outs as well as their rights and responsibilities because successful property investment is about the long-term result, not just the possibility of short-term rental returns’.
The pros and cons of Airbnb and short-term rental investments
The main pros of investing in an Airbnb / short-term rental are:
- Higher income (though not guaranteed)
- You can still use your own property
- You’re not locked into tenants
- Business ownership opportunities
Leasing out your investment property as a short-term rental means that you still have access to the property, should you wish to stay in it yourself. Through Airbnb, owners of holiday homes have found a way to generate income through their properties when they’re not in use. ‘Many people are enticed by investing in holiday homes, as they feel it’s a great way to invest in an asset while being able to enjoy it for regular holidays’ – Money Magazine.
Something else you might enjoy is not having to deal with bad tenants – which can be a real pain when said tenants are locked into a 12-month lease. As Property Update points out, ‘Unlike when an investor rents out their property via the traditional method for the long term, Airbnb investors aren’t reliant on one particular tenant, which is particularly helpful if they’re bad tenants’.
Running your property as a short-term rental is basically a business, unlike leasing your property as a long-term rental, which is usually overseen by a real estate agent. Airbnb, and the like, gives owners the opportunity to flex their skills in design, hospitality and marketing – the more you put into it, the more you’ll get out.
The cons of short-term rentals:
It’s not all 5-star ratings, throw rugs and food hampers; running a short-term rental can come with challenges that potential owners need to bear in mind.
According to Property Update, the main negatives include:
- Higher upfront costs
- Cash flow uncertainty
- Higher maintenance costs
- Higher running costs
Long-term tenants will show up with a removal van, but for short-term visitors you’ll need to provide all the creature comforts. Initially, you’ll have to pay upfront to furnish and decorate your short-term rental, as well as supplying all the basic necessities. And if you want to be competitive, you need to put in some effort, and dollars, to stand out.
Without long-term tenants, your property is liable to be vacant for periods of time, which can affect your month-to-month income. The Investors Agency says that buyers particularly need to consider the reliability of cashflow, as, compared to long-term rentals, income from short-term rentals can dip up and down.
Costs to maintain a short-term rental are higher compared to a long-term rental. Property Update explains, ‘Airbnb guests expect the property to be in excellent condition and fully maintained to hotel standards, which comes with additional property maintenance costs. Not only are maintenance costs higher but running costs are also higher. Owners will be responsible for utilities bills, rather than being able to outsource them to tenants, and insurance will also be higher’.
Buyers should be aware that States and Territories have introduced levies for short-term rental owners in a bid to combat the shortage on long-term rental properties in Australia. Before deciding on a short-term rental venture, all these considerations need to be factored in.
Of note, Byron Shire Council has recently introduced a 60-days per year restriction on short-term rentals where the host doesn’t also stay on the premises (termed ‘non-hosted short-term rental accommodation’). The restrictions are largely aimed at addressing an undersupply of housing across the area. Government policy at all levels has the potential to disrupt the viability of short-term rentals, which is important to be aware of before you make your investment decisions.
Running a short-term rental is time consuming (Enter: property managers)
Running an Airbnb can be time consuming, although this does depend on whether you outsource to a property manager and cleaner. If you self-manage the property, ‘expect to spend a significant amount of time doing property upkeep and prepping for the next visitor’ – Property Update.
Whilst some short-term rental property owners fully manage every aspect of their Airbnb properties, many owners do outsource to property managers. This model is especially useful if your investment can be lucrative as a short-term rental but you don’t have the time to personally manage it. Property managers are essential if your investment is in a different location to where you live.
Enlisting a property manager doesn’t necessarily need to hurt your income, either. MadeComfy is an Airbnb management company who claims they consistency deliver 20% to 40% higher returns to its property owners than equivalent Airbnb listings, through their ‘smart pricing policy and property management expertise’.
What’s the verdict on Airbnbs as an investment strategy?
At the end of the day, ‘Airbnbs require more initial cash input, higher maintenance and responsibilities, but can yield a higher profit margin than a conventional rental property’ – Property Update.
Key word: can – not will.
You can charge more per night for an Airbnb stay, but it’s the overall occupancy rate of the property that will determine whether your income will be superior with short-term or long-term tenants.
Investors need to be savvy about determining the likely occupancy rates where they intend to invest. Forbes advises, ‘be sure to perform your due diligence prior to buying a property that you have an intention of listing on a platform like Airbnb. The upfront work you put in before purchasing can save you time, money and headaches down the road’.
When asked for their perspective on Airbnb as an investment strategy, The Property Couch podcast hosts explained, ‘It is not a passive investment – the cleaning, the maintenance, the parties, the noise complaints – all of those things need to be considered’. The hosts, both expert property investors, emphasise making sure your investment itself is a sound one that will grow. They add, ‘It makes sense for some people. If I’ve got a holiday house that I’m not using, that’s going to add to cashflow.’ However, they caution against buying a property purely because it seems ‘Airbnb-worthy’. Their advice is to invest in property that has owner/occupier appeal, scarcity, and is ‘investment graded’ – and if it also stacks up as being suitable for an Airbnb – bonus.
The Property Couch co-hosts conclude, ‘If you’ve got the time to manage it, it could be a real opportunity for you’. However, ‘It’s not passive investing; it’s a job. You’ve got to oversee the property and oversee the caretaker (property managers, cleaners, and so on) on a more regular basis because of the transient number of people coming through the property.’
Making sound property investment decisions
As explained by The Professionals real estate agents, ‘The decision between short-term and long-term rental investments depends on your individual circumstances, financial goals, and preferences. You’ll need to factor in the pros and cons associated with upfront costs, cash flow, overall income, accessibility to the property, and time requirements’.
Property Update emphasises the need to think about your target market when you’re buying an investment property. ‘Is your area popular for tourists? Is demand seasonal? Is demand higher for short- or long-term rentals?’. If you live or invest in a popular tourist area then a short-term rental could give you higher returns than a long-term rental. However, ‘If the area you live in is in lower demand from holidaymakers and business people you might run the risk of having your property sit empty for a large portion of the year – in which case the stability that the conventional long-term rental offers would be more suited to you’.
The beauty of short-term rentals though, as we discovered through interviewing our local hosts, is that Airbnb does give you the option to let out a portion of your property, or to lease out a holiday home that would otherwise sit unused for large portions time. In that case, the income is almost a bonus, and not something you’re reliant on.
Our advice? If in doubt, take the advice of the experts, and choose investment properties that are geared for growth. That way, your investment will work as a long-term rental even if the Airbnb approach doesn’t pan out. Take your time to research locations, and go in with a detailed understanding of all costs and time requirements.
HOME LOANS FOR AIRBNB INVESTMENTS – WHAT YOU NEED TO KNOW
When you apply for a home loan to buy a property as an investment, the bank will look at the property’s potential rental income to determine how much they’re willing to lend you. Resident Tweed Coast Home Loans‘ mortgage broker, Lindsay Olsen, explains, ‘The estimate of rental return is always based on figures for long-term renting (even if your intent is to lease it out as a short-term rental); these figures are provided by a real estate agent or valuer’.
Once you’ve been leasing out a property as a short-term rental for 2 years and the property is bringing in a stronger rental return than if it had been on the long-term rental market, then you could refinance, meaning, replace your old mortgage with a new mortgage. The new mortgage will factor in your actual, higher, rental return. Your higher income would mean that you’d now be eligible to borrow more money from a lender, meaning that you could potentially invest in another property.
Investment loans can get complicated, so Lindsay advises, ‘If you’re thinking about investing in property, and particularly if you’re interested in how things will look for you if you intend to lease the property as a short-term rental, always seek out an investment-savvy real estate agent and mortgage broker who can help tailor your investments for long-term success’.
