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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 – 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!
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 – 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!
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