How to find Airbnb success in Melbourne
Looking to create wealth is the endgame for any property investor, but one investor and executive chair of a niche real estate agency has found a new way to play the short-term letting game.
Short-term letting services like Airbnb have risen in popularity in recent years, and Evan Thronley, co-founder and executive chair of LongView Real Estate and investor, claims to have found higher returns using the service.
A typical assumption may be that a small apartment in the CBD can find success on Airbnb rather than a traditional rental, but according to Mr Thornley, this may not be the case, as comparable property on Airbnb and traditional rentals are finding comparable returns, due in part to an oversupply of small apartments in the CBD listed on Airbnb.
Specifically, Mr Thornley’s tip focuses on targeting family and group travellers rather than focusing on the CBD location, as there are not many services available to a large group of travellers, which may include multiple families travelling together, groups of people looking to find accommodation to attend a wedding, or on-site workers who need accommodation for less than a year.
“There are a lot more family and group travellers who want to stay in an Airbnb than there are suitable Airbnbs in Australia,” Mr Thornley said.
“Therefore, when demand is greater than supply, the price is driven up.”
To stress his point, Mr Thornley used the example of a block of small art deco apartments in St Kilda, rather than in the Melbourne CBD.
“The apartments were, at the time, in traditional rent, so we decided to move them over to Airbnb,” he said.
“Within a year, I was getting more than 40 percent more cash in the bank each year than I was getting through traditional rent and that’s a lot!”
Mr Thornley also added that houses could provide a larger return than apartments.
“The amount of money you can get per bedroom in a four-bedroom house in St Kilda on Airbnb is about twice as much per bedroom for a two-bedroom apartment,” he said.
“Therefore, investors have the opportunity to make about four times as much money in the house even though it’s only got twice as many bedrooms.”
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