When it comes to investing in property, just like with other investments, it comes in all different shapes and sizes. After all, everybody is different. In terms of real estate, particularly in Darwin though, everything tends to boil down to two main categories; long-term rental and listing on AirBnb.
Like any investment, both AirBnb listings and long-term rentals have associated advantages and disadvantages. However, knowing which option is the best for you can be a difficult task. The key to choosing the best option for you depends on who your ideal tenant is, your ideal turnover rate and how the length of lease can affect this.
While the decision to invest in either the AirBnb market or long-term rentals will vary from person to person, generally, the slower-growing investments tend to be seen as the safer option when compared to individual securities that may carry a high risk/high reward.
To help you decide on the best option for you, throughout this article, we’ll go over the pros and cons to both long-term rentals and AirBnb listed properties.
What is an AirBnb listing?
AirBnb is an online website and world leader in travel rental properties. AirBnb listings are categorised into three room types; shared rooms, private rooms and entire homes/apartments.
What are the benefits of listing your property on AirBnb?
Greater earning potential
When compared to long-term leasing, hosting short stays in AirBnb allows you to earn more money each month. Using AirBnb, you can price your property per night and increase this price when demand in the area is higher (for example during weekends, holidays or when local events are being held).
Flexibility
The flexibility of AirBnb listing tends to be a major drawcard for property owners who can pick and choose hosting dates. This means that you have control over when you let your property on Airbnb, so that you can use the property yourself sometimes or you can take a break from hosting if you’re unable to welcome guests.
What are the cons of listing on Airbnb?
While there are advantages to listing your property on AirBnb, there are also some drawbacks:
Fluctuating Demand
Unlike long-term leasing, where a tenant signs a contract to rent your property for a fixed period, AirBnb comes with no guarantee of continuous income.
While the popularity of AirBnb listed properties rise during the dry season in Darwin, returns for AirBnb’s are low during the wet season. As a property owner, this means that you need to budget for when there is low or no income being generated.
Maintenance Cost and Fees
With a higher turnover of guests comes a potentially greater possibility of damage to your property. From wobbly faucets to chipped paint, short-term leases are likely to sustain more damage (and require more maintenance) than long-term leased properties.
Additionally, AirBnb also comes with a host service fee which you have to pay. In the Northern Territory, this is usually around 15 – 30% of the total booking cost, however, it does vary depending on different factors.
Furniture Cost
Given the nature of AirBnb and its users, you do need to furnish your property and provide amenities. In order to compete with other local AirBnb’s, you’ll want to furnish your property with furniture and kitchenware that your ideal client may require throughout their stay, as well as include additions like soap, shampoo, conditioner and cleaning supplies.
Not Everyone is the Perfect Guest
With AirBnb, you’re not able to screen guests as in-depth as you would a potential long-term tenant. With AirBnb, the platform has a two-way review process, where people review the properties they stay in, and hosts can review their guests. This information is visible on guests and hosts profiles, and is the only information you can use to vet guests before committing to host them.
Due to the features two-way nature, most guests on AirBnb tend to be considerate, polite and clean. However, this isn’t guaranteed and sometimes reckless behaviour and damage does happen.
What is a long-term lease?
A long-term lease is any lease that extends beyond six months. Typically, twelve-month leases are the most-recognised standard between landlords and tenants. While a long-term lease doesn’t give you the flexibility of a short-term lease, it does offer plenty of other benefits.
What are the benefits of a long-term lease?
Consistent revenue
When tenants lock in to a long-term lease contract, they agree to pay consistent rent for the time outlined in the agreement. This means that as a landlord, you will have a more dependable source of income for an extended period.
Lower maintenance costs
With a lower turnover generally comes less maintenance, which means less time spent on repairs and more money in your pocket.
What are the cons of a long-term lease?
Lower rent prices
As long-term leases tend to be the standard in the rental world, your prices must reflect competitively with other rentals in your area.
AirBnb listing Vs. long-term lease – which is the best for me?
Neither a long-term lease or AirBnb listing is necessarily better than the other. It is really contingent on your needs and preferences. However, given the disparity in demand when comparing wet season to dry season, we do tend to recommend that Darwin-based property owners look to prioritise long-term leases over airbnb listings.
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