As both a popular holiday location and the state’s hub for business and education, Perth has embraced Airbnb and its easy-to-navigate accommodation model.
When it comes to property investment, there’s certainly money to be made on Airbnb. But is it the smart choice for Perth property investors?
In this blog, we review the pros and cons of making Airbnb properties a part of your investment strategy.
Pros of buying an Airbnb investment property in Perth
Higher potential for short-term rental income
Generally speaking, you can charge a much higher daily rental price on a short-term rental property than on a long-term one. In fact, your rental yield on an Airbnb could be as much as 25%, compared to 5% for a traditional rental. As such, you’ll be able to make more money in a shorter period of time if you have a consistent flow of guests staying in your property.
You’ll also save money on advertising costs. Provided that you make your Airbnb sufficiently attractive to your target guests, they’ll be directed to your property through the app without much effort on your part.
Bad tenants will soon move on
An added bonus of having a rotating cast of tenants is that you’re never stuck with a bad one for long. While in a traditional rental situation, you may have to deal with a frustrating tenant for months on end, short-term guests have often moved along before tensions can mount.
Flexibility
Want to use your Airbnb for your own holiday? Because your guests are only staying for short periods at a time, you won’t have to wait months to make the space yours again. Then, when you’re done, you can open it back up to guests. You can even block out availability far in advance to ensure that you have access on certain dates.
New to property investment? Read our beginners guide.
Cons of buying an Airbnb investment property in Perth
Increasing competition
There are already 12,000+ short-stay rentals in WA. If you invest in an Airbnb in 2024, you’re going to be up against a lot of established properties with a strong foundation of solid reviews and goodwill online. This means it could take a while for your property to gain traction and build up a trustworthy base of good reviews.
Risks
Short-term guests are a less reliable source of income than long-term tenants. You may find that your property is unoccupied for months at a time, particularly if it’s impacted by seasonal changes in demand. This can cause substantial cash flow strain.
As with any investment property, maintenance is a crucial owner responsibility, but the commitment tends to be bigger for short-term stays. More people coming in and out of your property creates a higher risk of damage or misuse, which will likely be reflected in higher insurance premiums.
Time and monetary cost
Compared to long-term rentals, guests at short-term stays often expect an accommodation experience more akin to staying in a hotel. This will involve a substantial initial financial investment to get the property to an appropriate standard. You’ll then need to spend time and money keeping this standard consistent via regular maintenance and cleaning.
Changing rules regulations
The WA government passed new laws in 2024 that require all short-term rental accommodation (STRA) to be registered by 1 January 2025. STRA can be classified as either hosted (the owner lives onsite) or unhosted (the guest has the property all to themselves). As part of the registration process, you will need to declare whether you own or lease the property and whether it’s part of a strata. The Commissioner for Consumer Protection may then choose to cancel the registration if it’s in breach of the relevant strata rules.
Unhosted STRA in Perth that are let for more than 90 days in a year will need development approval, while hosted STRA will not. In regional areas, the relevant local government will determine whether planning approval is required. There is no cap on the number of nights a property can be let.
As the STRA landscape continues to change amidst the evolving rental crisis, there may well be more regulatory changes to come.
Advantages of long-term rental property investment
Airbnbs look good on paper but the reality can be quite different. Unless you’re able to keep your property occupied throughout the year, generating a consistent income that makes the investment worthwhile is often a challenge.
Though long-term rentals may not generate the same daily income as Airbnbs, having a tenant in place year-round is a much more reliable source of income than sporadic bookings. In fact, it can even lead to higher annual returns, particularly when you consider the ongoing cleaning and maintenance costs incurred by short-term stays.
You’re also not as tethered to a long-term rental property. If you have a property manager looking after your rental, your day-to-day responsibilities are minimal. You don’t need to communicate with tenants, organise maintenance or regularly clean the property. The opposite is true of managing an Airbnb, with many finding it to be like a second job.
Conclusion
Deciding on a property investment strategy can be difficult, especially if you’re new to the process.
Access Property Management are here to guide you. We can help you make an investment decision that aligns with your long-term financial goals, as well as your current circumstances.
Get in contact today to chat with our expert team.
