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  1. #1
    Join Date
    May 2007
    Location
    Hamilton
    Posts
    3,498

    Default Airbnb vs normal rental

    Airbnb versus Normal Rental



    Which is better?

    While there is no perfect answer, I came across this website through a property Facebook group, and thought I would do the full numbers on each. (Source: https://zodiak.co.nz/direct-comparison-of-my-apartment-before-and-after-airbnb/)


    Normal rental

    From website, rent was $485 but included power, so say $470. Apartment worth around $440,000.

    So based on 52 weeks , the Gross Yield is $5.55%.

    I have then tried to include all expenses and a fair allowance for things like repairs. I have used 4.5% interest on the full $440,000 value, and shown as interest only.

    The overall Cash Surplus is -$6,640, so before tax benefits, negative $128 per week!










    Airbnb

    So how much better is the Airbnb?

    From the website, their first year rent was $49,000!!! Over double the normal rent Ė WOW!

    It is an 11.14% Gross Yield. So from a glance, I would be expecting this property to now be cashflow positive.











    There is extra insurance, power, internet, cleaning and other costs. I have estimated these.

    Then there are the normal expenses. I have added the higher rates mentioned on the website.

    The overall Cash Surplus is -$1,836, so before tax benefits, negative $35 per week!












    So this Airbnb example is better than the normal rental, but still negative with full borrowings and interest only. It is around $5,000 better.


    I hope you found this interesting!
    More Profit from Property? TEACH ME MORE
    Ross Barnett - Coombe Smith Property Accountants
    Proud to give the best property advice for over 13 years.

  2. #2
    Join Date
    Sep 2004
    Location
    Hastings
    Posts
    14,284

    Default

    Quote Originally Posted by Rosco View Post
    Normal rental

    From website, rent was $485 but included power, so say $470. Apartment worth around $440,000.
    $15 a week for electricity I would see as far from normal.
    Try Radenbrea Studios for hand-made designer jewellery. Especially if you're looking for a great gift for your lady love.
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  3. #3
    Join Date
    May 2007
    Location
    Hamilton
    Posts
    3,498

    Default

    Hi Perry, that was there figure. Yes could be quite low, and I would never include power in a normal rental. Just asking for abuse!

    Ross
    More Profit from Property? TEACH ME MORE
    Ross Barnett - Coombe Smith Property Accountants
    Proud to give the best property advice for over 13 years.

  4. #4
    Join Date
    Sep 2004
    Location
    Hastings
    Posts
    14,284

    Default

    Yes, you're right about the inherent danger of including electricity in the rent.

    At best, $15 would be the daily charge only.
    Try Radenbrea Studios for hand-made designer jewellery. Especially if you're looking for a great gift for your lady love.
    Want a great looking concrete swimming pool in Hawke's Bay? Designer Pools will do the job for you!


 

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