While summer provided good returns for those who let out their properties on platforms like Airbnb, attempting to do so in the long term is not a smart property investment strategy, according to a Melbourne-based real estate network partner.
After the summer holiday period ended, the start of autumn is a reminder for investors that trying to rely on short-term letting services all year long is missing out on cash flow, Melbourne-based real estate network Alexander partner Martin Sizer has said.
Speaking in the 2019 Autumn Brief, Mr Sizer said that council areas like the City of Yarra are seeing long-term rentals “easily” outstrip income made through the majority of short-term rentals.
“It’s critical for property investors to take the long view, comparing what they may generate from short-stay renting over 12 months with the income produced by a full-time tenant.”
With the peak Airbnb times of January to late February just passed, Mr Sizer also said that investors may be having a skewed view of short-term letting services, with Airbnb, for example, seeing high rents and low vacancy, but continuing to do so runs the risk of having a vacant property for months due to how the short-term letting market is reliant on seasons.
According to analysis website Inside Airbnb, as of publishing, properties rented out through Airbnb are occupied on an estimated 82 days of the year, or approximately 22.4 per cent of the year, with an estimated income per month of $916, or $10,992 per year.
This is less than half of what realestate.com.au reports as the median rent of the Melbourne area, which is $480 per week, or $24,960 per year.
“In the City of Yarra and similar areas, you are banking on the peak times of the year to drive the revenue,” he said.
“If you go a month or two without someone in your property, you must consider whether the financial return is worth it.
“The security of traditional property management is that you have regular income coming in and you know exactly what that income is going to be for the next 12 months. It is a more secure way to manage the investment.”
Anecdotally, Mr Sizer said that he has had “many” owners who did not realise how hands-on renting out short-term letted property would be.