Earning a lucrative nightly Airbnb rate all year round with your Auckland rental property sounds like an investor’s dream, but to achieve a consistent 80% occupancy there are only a few small areas that could make it a reality.
“There is basically a T-junction running from Queen St, intersecting at Mayoral Dr, down to the Viaduct in Auckland’s CBD that could work annually for Airbnb rentals,” says Director of Apartment Specialists Andrew Murray.
The further away the property is from this area in Auckland, the further away it is from the steady flow of tourists and business travellers requiring one to two night stays all year round.
“If you have an Airbnb it needs to be pumping the whole year. Most of the Auckland region does well between the peak months of November through to March, but overall return is all that matters.
“If your apartment is not in that desirable year-round location, you could do six months Airbnb rental during peak months and six months short term residential, but it’s probably better to just opt for long term tenants instead,” Murray says.
One Auckland property owner who recently decided to stop advertising her compact Ponsonby apartment on Airbnb, said it became more labour that it was worth financially.
“The apartment was way slower and made a lot less money over the winter months and washing linen became a massive hassle. It might be worth Airbnb-ing if it’s left empty over summer, but this is tricky because it’s best to have the property advertised on the website for as long as possible as people from overseas book in advance,” she said.
The labour involved such as organising cleaners can be avoided by using an Airbnb management company, who generally charge between 15 to 20% commission fee, however, property owners still need to way up the stress involved versus the profit made.
The most profitable properties for nightly rental are one bedrooms, Murray specified.
“Expect to pay freehold $400,000 to $550,000 for a 48sqm one bedroom apartment in that desirable T section. You could then aim to make around $5000 per month in rent if you achieve 80% occupancy. You would be renting it out at around $150 per night during peak times and the management company would drop the price during low season,” Murray explained.
Private Banking Advisor at Westpac, Chris Oldfield, says Airbnb can also provide flexibility to owners on top of potential great cash flow.
“If owners want the flexibility to sell the property at short notice then renting it through Airbnb rather than having long term tenants makes it easier from a lease perspective. However, ultimately people need to way up the risks and make a commercial decision that’s best for them,” Oldfield said.