I wrote an article about moving my Petone, Lower Hutt 3 bedroom property from a long term rental to a holiday rental on Airbnb a few weeks ago.
I took the house from being rented at $700 per week ($36,400 pa) to getting $5,500 per mont from airbnb and booking.com ($66,000).
Some what astounding figures when you think about it but you need to consider the reality too that I’ve been paying $1,100 per month in cleaning fees, toilet paper, power and maintenance that’s over a above the previous arrangements.
I’d say in all reality my profitability is probably up by $800 per month or $9,600 pa, which really just makes it boarder line as to being worth doing or not.
What you need to consider is the cost of furnishings, the time it takes to manage and let the property and the stress of having people expect a standard residential home to be a 5 star commercial hotel.
Then a few weeks ago Airbnb and booking.com both announced new cancellation policies for during Covit19 meaning any existing bookings could cancel without the home owner being given any cancellation fees, literally meaning that all bookings for future stays cancelled and received a full refund.
Great for them, terrible for my Airbnb business or so it seemed. Airbnb launched a recovery campaign to try and save face with their accommodation providers by offering a $250,000,000 fund that they would pay out in lost cancellation fees but it only really covered 25% of whatever the lost cancellation fee may have been.
Meaning if I lost a $1,000 booking and my cancellation policy said I should get $400 if they cancelled within 14 days then I will actually receive $100 from Airbnb.
What I did actually lose was around $8,000 in bookings for which I will be remunerated less than $500 for, which will hardly pay my mortgage, but is better than nothing.
What happened next did actually surprise me, firstly I got a 14 day self quarantine booking from a guy who had arrived into New Zealand but didn’t want to potentially infect his family, I gave him a good deal as 14 days full is great for me.
As that 14 days started to come to an end I was a little worried about getting the house full again as it’s not like I can show the property and people can’t move round during quarantine.
Then yesterday I had a doctor from the local hospital message me about the house asking if I could let her have the property for 57 days, we negotiated a rate which ended up being close to half of what I normally get but it in effect means I don’t have to worry or think about this property till mid june.
I think what will happen next is that most people will panic and rent their properties long term again which will for the next couple of years kill off all the competition.
My advice would be to look to the horizon, don’t mistake a very different current situation as a “New Normal” because it’s just not going to be like this forever.
People will always need somewhere to live, accomodation is the ultimate “Essential Service”.