For those who own property in Melbourne, you know how difficult it is to get on the market. With high sale prices and mortgages to pay, it’s natural that many Melbournians would be looking to see how they can make a bit of their money back. For this, there tend to be two specific viable options that come into play:
- Short-term rentals
- Long-term rentals
Although similar in name, these two can be incredibly different in terms of how they work in practice, and how much they can make you over the long haul. So if you’re considering going the Airbnb route, or you’re wondering if it might be time to put your property on the long-term market, we have a few things for you to consider before making a final decision.
Potential Australian Rental Income
Naturally, this is one that we need to check off first. According to various estimates from sites such as Hospitable and GrowHost, claims put the average Australian Airbnb rental income at anywhere from $3000 to $4500. Meanwhile, a Forbes piece from this year placed the average monthly long-term rental cost at approximately $2600. So, if we’re looking at broad numbers Airbnb rentals tend to come out on top. However, there are a few caveats that come into that on both sides.
Rental Fees
Naturally, there are going to be fees associated with both of these options, with Airbnb taking a portion of your income, and you needing to pay fees as a landlord for a long-term rental. So, when it comes to final numbers, both are going to come out lower.
Prime Real Estate
Once again this is going to be a relevant factor for both options, although one must consider that the ideal area for Airbnb may be different to the ideal area for a long-term tenant. Take, for example, a small apartment in the heart of Melbourne’s CBD. Looking at the long-term rentals for this area, average weekly rental prices are approximately $300-$350 per week. There has been a lot of discussion about the relative affordability of apartments in this space given that they are at the heart of the city, but there are factors to consider such as the lack of land, the small overall blueprint of apartments, not to mention factors like noise pollution making them less desirable for many couples and families.
Meanwhile, looking at Airbnb, we can see relatively similar apartments going for more than double that price. This is because, for tourists and those visiting the city, many of the issues associated with long-term renting in the area simply do not apply. This is especially compounded when you have an Airbnb property manager in Melbourne who can actively work to get you a better yield on your property.
Time of Year
For some areas, one reason that people will look for long-term rental options is consistency. Surfer’s Paradise, for example, will have more visitors in the Summer, followed by more of a lull in Winter, which will, in turn, impact the Airbnb market. That’s why it’s important to have good representation in an Airbnb manager, as having an expert on it will help you to navigate the market and ensure the best rental yield for each part of the year.
Occupancy
All of the above assumes that the traditional rental in question has a tenant. However, this isn’t always the case. Whilst Airbnb properties may have times in which there are fewer tenants, this is generally quite temporary and still allows for income. In cases where a long-term rental is left vacant, no money is being made back on the property, and that vacancy is often going to last a lot longer than that of an Airbnb.
Responsibilities of a Rental Owner
This is something that often gets glossed over for long-term rental management, but as a landlord, you have a lot of obligations to the tenants who are staying with you. Damage, wear and tear, and other issues can easily arise from the day-to-day use of a space, and if you have a tenant who has handled your property poorly, you may be incurring a lot more payments than you initially bargained for.
Airbnb, despite seeming like it would have similar issues, does offer some protections that the larger rental market does not. Airbnb allows you a reimbursement process for any damages caused to your property. Additionally, if anyone is found to be detrimental to property owners, they will be removed from the app, so chances are anyone who would be staying at your property will at least be someone who is still allowed to use Airbnb.
With that said, there is still a lot of work that goes into maintaining an Airbnb, such as housekeeping, house maintenance, photography and more that all go into keeping an Airbnb viable and profitable on the market. That’s why companies like Oasis Stay exist, providing Airbnb properties in Melbourne and beyond with a complete Airbnb experience.
Final Conclusions: Which is Better?
It’s always naturally going to be up to the individual, but there are some things that we can take from the above:
- On average, Airbnb properties in Australia broadly earn more than traditional rental properties.
- Traditional rental properties have more consistency than Airbnb properties throughout the seasons, but only if they have consistent tenants.
- Look at who your area and real estate appeals to, as different areas will be more profitable for each option.
Want to Learn More?
If you’re looking to get more out of your investment property, or even just want to earn some extra money at times when you’re not using the house, contact Oasis Stay today. As one of the leading Airbnb property management services in Melbourne, we support homeowners across Brunswick, Fitzroy, Chadstone, and beyond!