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  1. #1
    Join Date
    May 2007
    Location
    Hamilton
    Posts
    3,536

    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
    14,614

    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.
    With all the Draconian new laws for residential rental LLs, perhaps AirBnB would be better? To avoid any hassle in Hawke's Bay, consult Be My Hostess. Want a great looking concrete swimming pool in Hawke's Bay? Designer Pools will do the job for you!

  3. #3
    Join Date
    May 2007
    Location
    Hamilton
    Posts
    3,536

    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
    14,614

    Default

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

    At best, $15 would be the daily charge only.
    With all the Draconian new laws for residential rental LLs, perhaps AirBnB would be better? To avoid any hassle in Hawke's Bay, consult Be My Hostess. Want a great looking concrete swimming pool in Hawke's Bay? Designer Pools will do the job for you!


 

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