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My wife and I rent in Sydney but we have an investment property in Melbourne which is currently being rented out on an airbnb and managed by a company. It’s a 2 bedroom 1 bathroom unit in an inner city locale about 3 km away from the CBD.
The number of airbnb listings in melbourne seems to be tripling by the year, and right now the property is honestly not making a lot of money for us. The few hundred dollars we pay the company each month (20% of all bookings) actually left us out-of-pocket. In the past, we could comfortably finance the shortfall without any worries as our jobs were pulling in more than a 100K a year after tax. However, things are about to take a dramatic turn as my current employer has requested me to leave the firm. Revenues have dried up with automation and my skills/knowledge are now good-for-nothing. I’m the main income earner so this is a 70% loss of income for us.
I am considering temporarily moving to Melbourne to manage the property myself as I can no longer afford paying the manager 20% of my revenues (more than $600 a month). I thought if i rented out the 2 rooms and did all the cleaning myself, I could probably turn in a small profit each month, which would help our finances tremendously. My plan is to:
Rent out both rooms on airbnb if possible. If both rooms are taken, I’ll just stay at a local hostel for $20 a night.
I’ll come in everyday between 10 pm - 3 pm to do laundry, cleaning, etc. I have a storage cage in the carpark to store extra towels and linens.
Have a list of backup laundry service companies (I found one who can clean an entire place for just $49) for emergencies and handymen for repairs.
Is the above plan workable? The one problem I’ve yet to find a solution for is how to receive guests and clean when i’m travelling back to Sydney (I’ll have to travel back 10 days a month to see my wife). Most things can be automated, but its hard to automate key exchange, walkthrough and boots on the ground for emergencies. If I find a co-host, what would be an ideal arrangement and remuneration structure? Room rates are low in Melbourne. If i average a mininmum 3 night booking, I could probably offer $59 per changeover - I’m not sure if that’s an acceptable rate for a host to do key exchange, changeover and also clean the bathroom.
Hmmm , with all the stuff that has been happening at STR’s in Melbourne, I would be waiting to see if the rules change.
Is STR allowed in your building?
The property manager knows about it. But STRs are legally allowed in Melbourne, and there’s actually not a lot the local councils can do about it. The restrictions only apply to party flats.There’s been some talk of the strata manager trying to make some rules to restrict airbnb, but I’ve not heard anything so far, and its unlikely they are enforceable - unless the Victorian government changes its ruling.
You haven’t factored in travel costs Melbourne/Sydney and costs for utilities, local taxes etc which you are responsible for with Airbnb and having two sets of food budgets to maintain etc
Why don’t you just change it to a long term let if the figures don’t stack up for an Airbnb?
You can then focus on looking for a new job and spending more time with your partner. And perhaps both of you can work full time if that’s what’s needed for your household.
You live in a large tourist hot spot which is good news as it means work is much easier to come by then in a remote area.
Alternatively sell the place in Melbourne and get another place in Sydney is you want to continue to do Airbnb.
Indeed. And it’s absolutely crazy how anyone can take a life so whimsically.
A quarter of my building complex is probably also STR. I’m also contemplating long term rentals, but now is probably not the best time, given my financial situation. We’ve discussed moving to Melbourne permanently so we can just rent out a room and stay in another. If the Vic legislation goes the way of NSW, there should be no cap on the number of days you can rent out on airbnb so long as the owner is physically present in the house.
I appreciate the conflict but sometimes when circumstances change you need to ‘cut your cloth’ according to your income streams. Either you find ways of increasing your income ie both work full time and cut your Airbnb costs ie co-host or you need to reduce expenditure ie selling the Melbourne place and getting a smaller place there.
Have you looked at a local co-host rather than a management company which is likely to be cheaper.
Yup. Actively exploring a co-host. It’s actually the co-host remuneration structure I’m grappling with. How best to remunerate a co-host who is only expected to help out 10 days a month?
The plan was actually to host airbnb as a temporary solution until I get another education and another permanent job, which will likely take 6-8 months, if I’m lucky. In the current job market, it’s probably easier to win the lottery than to get an administrative job that requires no specialised knowledge. i’ve applied to Woolies, Coles, Daiso, and have got no replies. I’m competing with a lot of 15 year olds for these part-time jobs and I’m already 35.
Well you can manage the bookings from your end so why not just pay a cleaner to do the turnarounds. Presumably you have CCTV or similar so can check that guests aren’t bringing in unpaid guests etc. If you go for a co-host pay them based on what you want them to do I know hosts here where I live pay a fixed sum per turnover and then a cleaner for the rest.
Have you registered with all the agencies in your sector? Have you asked them advice on your options for someone with your skills? You will have transferable skills after working for what must be at least 15 years.
I know my son who recently spent a year in Sydney with few qualifications found it easy to pick up work landscaping, working on building sites, in bars and in cafes. And it was much better paid than in the UK.
Thanks Helsi. how do you manage emergencies? For example, very recently the water in the apartment stopped suddenly and my manager had to be on site to check out the issue.
To be honest @Daniel35 you need to work out what is best for you.
I am just making suggestions for you to consider. Obviously if you just used a cleaner you would need to have your own suppliers on hand for emergencies.
Not an issue for me I live at my listing and have trusted suppliers for emergencies.
