What makes for the Best Airbnb Investment?
By |Published On: 23rd October 2018|

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What makes for the Best Airbnb Investment?

By |Published On: 23rd October 2018|

This article is an external press release originally published on the Landlord News website, which has now been migrated to the Just Landlords blog.

By Marc Trup, the Founder and CEO of Arthur Online

Airbnb describes itself as “a trusted community marketplace for people to list, discover, and book unique accommodation around the world”. For all intents and purposes, it’s truly living that definition. Currently active in 65,000 cities across 190 countries and constantly expanding, this £23 billion behemoth has completely taken over the short-letting marketplace. Before Airbnb began in 2008, a short-term rental could get quite complicated: advertising, making payments, carrying out viewings, dealing with disputes; these processes that made running short lets prohibitive have been simplified by Airbnb, making short letting accessible to the masses.

It’s easy to see why they’ve enjoyed such a meteoric rise, short letting is THE hot topic in property investing at the moment, with many in the UK, London in particular, seeing it as the only viable rental business model in a world where chronic supply shortages and unrestricted international demand have driven house prices to record highs, crushing yields in the process. Consult the website of any Airbnb hosting company and they will likely estimate that you can earn two to three times more from your property by using Airbnb compared to standard rents.

No one can question the opportunity, but how can you make the most of it? With hotels and other pressure groups unionizing to protect their markets, this is even more pressing; the Airbnb gold rush is unlikely to last forever.

Build trust

What makes for the Best Airbnb Investment?

What makes for the Best Airbnb Investment?

One thing that all successful hosts have in common is positive reviews. As with everything that’s driven the sharing economy revolution, the entire premise of Airbnb is built on trust. Why would you invite a stranger or group of strangers from another part of the world into your home if you didn’t trust them? Or, more importantly, why would they trust you? That’s why getting positive reviews is of the utmost importance. If you’re just starting out, a few bad reviews can destroy your reputation and cut short your venture. But getting good reviews means more guests and, ultimately, more profit. And it really isn’t that hard, just common sense and being considerate (put yourself into your guests’ shoes):

  1. Give accurate and honest descriptions and pictures – no one likes a nasty surprise, least of all on holiday or away from home
  2. Communicate with your guests before arrival so they won’t be wondering whether they can even get in, particularly concerning after a long journey
  3. Check in on guests and, at the very least, check in after the first night – not just for your peace of mind, but to iron out small issues. Most issues only come to light after the first night, like connecting to the Wi-Fi, turning on the hot water, etc. Checking in also shows that you care about their experience
  4. Keep it clean – make sure the property is clean and ready for when your guests arrive. It’s obvious that clean sheets and a nice smell will have a positive impact – don’t miss out on this easy win. For longer bookings, you should consider offering cleaning services during the stay

Find the right location

The location of an Airbnb is one of the most important factors for success. Some investors have used Airbnb to take advantage of the differences in the cost of living between countries. The low cost of living in many tourist destinations can be translated to huge returns. In Bali, it’s common to find US expats who have bought a property on the island for the equivalent of a rental deposit in the US, fixed it up and hired someone based locally to manage it on Airbnb, earning a return they could only dream of back home.

Similarly, Airbnb investments in Auckland, New Zealand have proven to work out as great investments, with many hosting companies cropping up in the area. The median price to rent an Airbnb apartment in Auckland is about £100 a night – one of the highest in the world – and the city enjoys high occupancy rates.

Las Vegas is another location for prosperous Airbnb properties. As one of the most popular cities in America for tourism, many come to the city with the intention to spend big and are often happy to splash out on an upmarket Airbnb on the strip. The high earning potential cancels out the transient lodging tax that hosts are required to pay.

Top tip: If you do decide to get a remote Airbnb investment, its best to use one of the new generation of cloud-based property management platforms to keep an eye on your portfolio from anywhere in the world. Arthur Online offers one such service, enabling property managers to respond instantly and solve problems fast, be it with guests or hosting agents.

Be non-seasonal

Many Airbnbs are seasonal, with peak periods during the summer and few bookings in winter. Peak season earnings of beach houses in Spain or Portugal don’t quite make up for off-season lulls. Instead, properties that are unaffected by seasonal changes, in cities, for example, make money all year round and earn higher average returns.

Price competitively

Charging more may be tempting, but the consequent lower occupancy rates will negate any gains. Just because tourists make up most Airbnb guests, doesn’t mean they are willing to pay tourist prices. Millennials and generation Z have been quicker to embrace home sharing than other demographics; over 60% of all bookings on Airbnb have been made by millennials. The downside is that young people often travel on a tight budget, choosing Airbnb over a hotel for just that reason. For an Airbnb host to be successful, the price needs to match the expectations of the target market and the competition, which isn’t just hotels, but other Airbnbs in the area.

Marc Trup is the Founder and CEO of Arthur Online

After selling his business to BUPA in 1998, Marc started investing in rental properties in London. Over the next 15 years, Marc grew his portfolio to over 85 properties. While successful, self-managing his portfolio became increasingly difficult. With technological advances and greater connectivity, he assumed there was software available that would allow him to manage his business from his smart phone, while sipping espresso at the local coffee shop. Following a long search, he found that nothing quite cut the mustard. So, being an entrepreneur, he started Arthur Online to make not only his life easier, but also that of other property managers.

Since Arthur Online launched in 2015, it has helped thousands of property managers like Marc run their portfolios in the cheapest, most efficient way possible by using the full potential of new technology and cloud computing. Start your free trial today by going to www.arthuronline.co.uk

About the Author: Em Morley (she/they)

Em is the Content Marketing Manager for Just Landlords, with over five years of experience writing for insurance and property websites. Together with the knowledge and expertise of the Just Landlords underwriting team, Em aims to provide those in the property industry with helpful resources. When she’s not at her computer researching and writing property and insurance guides, you’ll find her exploring the British countryside, searching for geocaches.

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