Airbnb has become a verb in recent years; similar to how we 'google' something, we often say we will 'Airbnb' a stay somewhere. With this rise in popularity, many investors consider buying properties for this purpose - but there are pitfalls. Read this article to find out how to make your Airbnb a success.
There has been a considerable increase recently in properties turned into serviced accommodation, meaning an entire property that is let on a night-by-night basis rather than a longer-term lease. This is primarily because of the higher income revenue a property can generate when let out in this way and websites such as Booking.com and Airbnb that make the process simple and affordable. But it isn't as simple as putting images of the property onto a website and raking in the cash.
Before embarking on this new venture, there is much to plan and understand if you're considering this method.
Buy the right property: You need to consider whether the property is suitable for serviced accommodation. Are you looking at a rural countryside cottage for stay-cationers or a stylish apartment for business-trippers? Whatever the purpose, consider whether the property will suit that audience and perhaps research online at other properties in that area and what price is achieved per night stay.
Rental ready?: When renting out a property for serviced accommodation, the idea is that someone could turn up with just their clothes and stay there. Of course, unlike a hotel, it's on a self-catering basis, but you must ensure that you provide everything else: utensils, crockery, linen, etc. You might be able to charge more per night if you offer other appliances such as dishwashers, hairdryers or an iron. Fully furnishing and equipping a property for Serviced accommodation is a huge undertaking, so allocate these costs into your budget.
Advertising: The advertising fees for your property are not free and will need to be added to your figures. There are many booking websites to find guests to come and stay, but each will have a booking fee, and the prices for each site will vary. Try to set the scene for the holiday with staging prompts and have professional photographs taken so that your property is appealing to as many guests as possible.
Management: The property must be cleaned, and all linen must be changed whenever someone stays. This could mean that you are doing a total change a few times every week, and it might be best to employ a cleaning team. There will also be inevitable maintenance to deal with, touching up paint, cleaning carpets, fixing things that get broken or damaged, and things like window cleaning, gardening and changing lightbulbs to keep on top of. The expectation of standards is very high, and you will be penalised with negative online reviews if you do not keep the property clean and maintained.
Outgoings and budget: You are essentially running a second property, so all the bills and utilities you have at home will have again. Gas, electricity, TV licence, broadband and probably some TV streaming options such as Netflix or Sky. These costs can soon add up, and you can't exactly tell a guest to make sure they turn the lights off when they leave a room or control the central heating thermostat like you can at home.
Taxes: You should seek advice from a tax specialist to establish how owning a serviced accommodation property could affect your personal tax liabilities.
Bonus Tips -
- Have a manual for the property to tell guests how everything works, like the Wi-Fi codes and the central heating. Even taxi company numbers and takeaways in the area. This will reduce the amount of messages that you get from your guests.
- Have a manual for the cleaning/maintenance team, too - step by step checklist to make sure that the property is presented exactly as you want it for each new guest. This can be right down to resetting the Netflix users so that the new guests can't get on the old guest's profiles.
- Use simple crockery, cups and glasses, and always have a stash of spares so that if there is a breakage, you are not frantically rushing around trying to find a shop that sells similar mugs to replace one. If you buy all your glasses from somewhere like Ikea, you can replace one or two rather than the whole set.
Running a property for rental is relatively cheap - you have annual certificates, monthly management fees and maintenance throughout the year. In contrast, running a property for serviced accommodation is like running a small hotel.
Yes, indeed, the revenue generated from one property can far exceed the figures if you rent the property out on a typical tenancy agreement, but don't be fooled; there is much to consider and lots of outgoings each month to take into account.
If you are considering buying a property for investment, consider whether you will have time, energy, and initial capital investment available to set it up for serviced accommodation, or would you prefer a more hands-off investment and place your property in the careful hands of professional property managers. Less money each month, yes, but significantly less work to do on your part too.
If you are interested in renting out a property, contact our team of property lettings experts for more information about how we can help.