The rise of Airbnb internationally has shaken up the traditional home rental industry. But while people may be turning to Airbnb as an alternative method of renting out their property, this may not be the best idea.
Marshall White property manager Lucy Arter says she has dealt with many Airbnb owners hoping to transition into a traditional renting arrangement. ‘We’ve had a number of owners calling us in distress telling us about their awful experiences with Airbnb,’ she says.
‘Initially people get caught up with the excitement of potentially higher rates but they soon discover that in the long run, owners can end up worse off both because of damage to their property and accelerated deterioration of their home.’
One of the major advantages of traditional renting over Airbnb is that it provides a consistent and reliable stream of income from your rental property. Lucy says traditional rental properties are generally offered for longer leases than Airbnbs, which helps to provide stability and consistency for renters and owners.
While Airbnbs may be able to charge slightly more, this is counteracted by the fact that the average stay in an Airbnb is just three nights, while the average stay in a traditional rental runs much longer at over four years.
Melbourne’s Airbnb vacancy rate is significantly higher than traditional rental properties as it stands at roughly 50 per cent, as opposed to the standard vacancy rate of just over two per cent. It’s unlikely that a property listed on Airbnb would have a consistent or regular occupancy, making it nearly impossible to reap a higher income than a traditional rental property would yield.
Lucy also points out that traditional rentals have a much greater ability to assess prospective renters. ‘Potential renters’ references are thoroughly checked by our team to ensure that they are financially stable and of good character, but on Airbnb it’s much more difficult to check references,’ she says.
An additional cost associated with Airbnb is that properties need to be listed as furnished, which adds to the overall expense, both from the initial purchase of furnishings, to the required upkeep to make the Airbnb property an appealing prospect. Maintenance of an Airbnb property can be more challenging than in a traditional rental. Without the mediating presence that a property manager provides, it can be easy to lose track of the condition of a property.
Lucy says that renters are also better off in traditional rental arrangements, benefitting from the property manager acting in their capacity as mediator. Issues can therefore be addressed promptly and effectively. ‘When you’re a traditional renter, you have a highly experienced property management team available to answer any queries,’ she says. ‘We also ensure that Marshall White properties are in excellent condition and well presented when the renter moves in, as opposed to Airbnbs, which can often be filthy when you first arrive.’
Because Airbnb stayers move through apartments quickly and are often holidaymakers whose actions while they stay in your Airbnb will have little ongoing impact on their lives, occasionally this gives people scope to act without consideration for the consequences. This often leaves owners with damaged property and few avenues for recourse.
While renting a property through an Airbnb may provide a greater level of flexibility which will suit some people, there are additional expenses that often pile up because of inconsiderate renters and a higher level of risk due to high vacancy rates and the difficulty of generating a consistent income. Lucy encourages those considering putting their property on Airbnb to consider the potential risk to the property and compare that with the greater level of accountability and legal responsibility of a renter in a traditional rental arrangement.