Property investors – especially in strata buildings – should switch to holiday rentals instead of long-term tenancies if they want to maximise their profits, says the founder of a company that manages Airbnb-style properties on behalf of landlords.
This is huge news, if it’s true. And you might reasonably assume this is the closest to the truth that you’re likely to get. Airbnb has a Trump-like relationship with facts and figures but the people who depend on them for their business often tell it like it is.
According to MadeComfy co-founder Sabrina Bethunin, a report her company commissioned shows says that short term holiday letting rates are now on a par with hotel room rates.
That represents a terrific investment opportunity, especially for apartment owners, adding up to $1 billion dollars a year in direct revenue for Airbnb hosts (Ed. checks date to make sure it’s not April 1).
In case you haven’t heard of them before, Madecomfy provides a complete management service, from handing over keys to changing bed linen and cleaning the house or apartment.
This is for Airbnb and other internet letting hosts who don’t want to have to deal with their guests directly – an arms-length, never-meet-the-tourists arrangement that Airbnb calls ‘sharing’.
Back to the study, conducted for Madecomfy by ACIL Allen. Launching it, Ms Bethunin says the holiday rental market has doubled in Sydney, Melbourne in Brisbane in the past two years, as a result.
“The study showed conclusively that Australia’s demand for short-term accommodation options is only going to keep increasing,” says Ms Bethunin. “It shows that people considering renting properties on the short-term basis can see a much larger return on investment than those locking in long-term tenants.
‘Sydney’s short-term rental nightly rates are on par with the average nightly rates for hotels so the opportunity is there for smart owners to be getting a strong return on investment.”
Interviewed on ABC News Radio on Tuesday, March 6, she added: “The biggest rental is when you rent out a house but there is a considerably higher income when you rent out an apartment.”
Hang on, Madecomfy, are you sure? This is not the same message we are getting from Airbnb. But then, should we really be surprised?
Between their astroturf (fake grassroots) campaigns and their almost pathological reluctance to provide access to the actual figures of how much money their hosts are making and how they are making it – it’s almost impossible to get a true measure of how big an impact Airbnb is having on the housing market.
Academics do studies and Airbnb says they’re using inaccurate figures – but refuse to supply credible, verifiable alternatives.
Activists like Insideairbnb.com perform highly complex computer analyses of their rentals, based on Airbnb’s own website information, and, again they say the figures are inaccurate but won’t provide access to the ‘real’ figures to prove this.
Instead they ask us to trust them when they say, on the one hand that you can make shedloads of money letting your property on Airbnb but, on the other hand, it makes no impact on the housing market.
Of course this is a company that tells us it’s all about you renting a room in your house to a Cuban backpacker who is going to teach you how to salsa in exchange for you giving him bus timetables so he can get to Circular Quay and see the Opera House.
However, in fact, most of their business is whole apartments, at least 6000 of which in Sydney alone, according to a Sydney University study, have been taken out of the residential rental market as a result.
According to a Madecomfy press release, a study conducted over 2016 and 2017 found that short-term lets made up 11.8% of total tourist accommodation and represented more than 8.5 million international visitors coming to Australia each year, bringing $1 billion in revenue to the sector.
The majority of accommodation provided was in NSW, which supplied over 2.5 million nights of in 2016 alone. Victoria was followed closely at just over 2 million nights, and Queensland had at just over 1.2 million nights. The three Eastern states represented more than 80 percent of short-term letting activity.
Using this data, combined with their own figures, the study “Australia’s Short Term Rental Report” shows that short-term average weekly revenue far outperforms the residential average in all three state capitals.
It claims the weekly average residential let for both houses and apartments in Sydney was $550 while the short-term average income for apartments was $733 and houses brought in an in an average of $1211 per week.
In Melbourne, the average residential rent for houses was $420 and $400 for apartments, compared to the holiday letting average of $577 for apartments and $898 for houses. Brisbane saw average residential rents of $370 for apartments and $400 for houses, with a holiday letting average of $447 for apartments and $720 for houses.
“The study showed conclusively that Australia’s demand for short-term accommodation options is only going to keep increasing,” says Ms Bethunin. “It shows that people considering renting properties on the short-term basis can see a much larger return on investment than those locking in long-term tenants.”
And there you have it – we are a bit closer to the truth about Airbnb. While the global online holiday rental giant tries to make us feel guilty about denying old ladies the opportunity for companionship and a little extra income, the people who clean house, hand over the keys and fill in the damage reports (because the “host” is back in their own home counting their money) are telling it like it is.
If this report is in any way accurate, you can clearly make more money from letting your apartment on Airbnb than renting it out on the basis for which it was given planning permission and council zoning and why it was built – housing ordinary Australian families.
And if that doesn’t send a shudder right through Strataland and all the way to Macquarie St, we are all screwed.