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More than 80 per cent of Australia’s Airbnb hosts are sharing their homes with guests, earning on average, an extra $5000 a year. If you’re considering joining the army of worldwide Airbnb hosts, here’s what you need to know before getting started.
Being an Airbnb host was never part of Sue Devereaux’s plan. She was having issues with bad renters at her Ararat property, having had to completely refurbish the house several times in just ten years. Out of frustration, Sue decided to put the house up for sale.
“I dressed it for sale, so I put furniture in it, made it look good. We took photos of it and my daughter actually said to me, ‘sitting there, it’s not doing anything, how about if you actually put it on Airbnb?’, and I thought, ‘it’s Ararat, who’s going to want to rent it in Ararat?’, so I did, but since then, we’ve actually been running it at about 80-90% occupancy per year, and it’s actually bringing me in almost as much as I earn in a full-time position.”
Sue has a portfolio of five properties, some for long-term rentals and a couple for Airbnb short-term rentals in Ararat and Bendigo. Whilst her Ararat property is doing well, her Bendigo listing only has about 70 per cent occupancy rate due to competition in the area. For Sue, making extra money from Airbnb is more involved than simply listing it on the platform.
“We had to come up with a business plan pretty bloody quick, so Ararat’s a pretty small town, so we actually had to work out what our market was from what we’d actually been renting to in terms of short stays.”
Oliver Lee runs Hostmybnb, a property management company dealing specifically with Airbnb hosts, who don’t want the hassle of regular communication with travellers and the logistics of maintaining their property.
“Hosts are required to be on the phone at all times essentially. So, whenever someone messages, it could be anything from Wifi password, to gas or water issues in a property.”
Airbnb listings are rated based on things like your communication with guests, cleanliness, location, and value for money and the overall experience for travellers.
Lee says whilst you can’t change where you’re located, you can increase your bookings by the way you present your property.
“When you think about furnishing, it’s not just about what you want; you have to think about the end users. So, someone coming to a property, a business person, wouldn’t particularly want to sleep in a floor old bed or things that are more androgynous, things that are more professional and modern usually do a lot better than things that has a certain style to it.”
Letting your place to strangers may sound scary but there are ways to manage the risks such as checking their profiles and reviews from previous hosts, as well asking specific questions.
“If people are filtering guests out properly, whether you get some sort of a smart lock program, or get a key that can’t be cut, these are all things that’ll circumvent people from doing that. There’s a certain level of trust though, people, not only do they have to be reviewed by somebody else, but they also have to be verified. For all our properties, people have to have verified IDs so whether that’s social media, passports, government IDs, driver’s licenses.”
As for Sue Devereaux, she uses a smart lock system, changing the pin code as often as she needs to.
“I have heard of people who have put things like security cameras at their front doors so they can actually monitor people as they come and go.”
One of the appeals for Airbnb guests is the lower cost accommodation.
A recent study by Deloitte Access Economics estimates that guests travelling to Sydney would have saved around $26 million in between 2015 to 2016 compared to staying in traditional accommodation.
Andre and Julian have 14 properties listed on Airbnb in Sydney and the Blue Mountains. They’ve also been letting out extra rooms in the terrace house they share without noticing major issues in the three years they’ve been hosts.
“Broken glasses, I meant, you just sort of accept it as a thing that comes. I mean, we probably break as many glasses as they do, but there are some wear and tear things you've got to take into account. Like, we have quite a lot of stairs, and people are bringing their luggage up and down, so our walls get a bit mucked up - that's just what we have to deal with and do touch up paints and that sort of things.”
Sue has also been lucky with most of her guests who use her Ararat property as a stopover for long-distance travel.
“In that particular property, I think we’ve had over 400 guests in that 3 years, and I think that we’ve probably only really ever had 2 problems where I’ve gone, ‘oh my god, really?’, and it was more about they'd left about a full complement of dishes on the sink, there was some issue with grease on some sheets and stuff like that it so wasn't like, oh my god, it's a disaster, but it was like ‘oh my god, really?’”
Many guests expect nothing less than hotel-grade cleanliness. Sue uses a professional cleaner from time to time but prefers to do the cleaning herself.
“So to clean the two properties - it takes me 3 hours roughly if I give them a really thorough clean. I actually have a professional who goes in and does some cleaning and some changeovers. He comes in when I can’t, but the majority of time, I actually go in and clean them, it gives me a good opportunity to check things like the quality of linen and that we’ve got enough glasses there and all that sort of thing too so it’s actually good for me to do that.”
Airbnb hosts still need to pay capital gains tax even if they’re only letting out empty rooms in the family home.
Anand Shukla is a tax accountant from Melbourne’s A One Accountants. He says Airbnb hosts don’t need to worry about paying for GST as it doesn’t apply to income made from letting out your place.
“However, with regards to income tax, like a normal property investor, an Airbnb host has to declare their income as well as expenses. This is the rental income they receive from renting out a part of their home to generate an income and then all the expenses in regards to maintenance of that property would be generally deductible, anything from say, council rates, interest on loan, electricity and gas, insurance, cleaning and maintenance cost, as well as the fees that they pay towards Airbnb.”
What surprises many Airbnb hosts is the fact that they still need to pay capital gains tax even if they’re only letting out empty rooms in the family home.
“What happens is when you actually sell this property you might have to pro rata the number of years that you’ve generated that income and pay a pro-rated CGT on this property a well.”