Things to consider when investing in short-term rentals
Category Property Advice
Since its inception in 2009, few people would have expected Airbnb to disrupt the marketplace as effectively as it has done. It has been no different in South Africa, particularly in recent years as the company at the forefront of the 'share economy' has changed the way local property owners and rental agents manage their properties. Short-term rentals have never been more attractive with many travelers preferring homes to hotels.
Not only is it a popular way to travel, companies like Airbnb and booking.com have also opened up a new stream of income for many property owners in South Africa, whether they look to manage the process themselves or place it in the hands of rental agencies.
But while it is an attractive option to earn a passive income and speed up re-payments on your property bond - or a handy way to pay for a summer holiday - there are some things to bear in mind before leaping into the short-term rental market.
Is it legal?
Currently, there are no laws prohibiting the use of your property on Airbnb, but in some cities such as Cape Town, there are by-laws in place and zoning regulations that may come into play. In order to rent out apartments in Cape Town, for example, the host would need permission from the City of Cape Town to do so.
You would also do well to check the rules and Constitution of your Body Corporate or Home Owners Association before listing your property on Airbnb. In most cases, you will have to receive consent from the Home Owners Association or Body Corporate in order to avoid future complications.
Managing your environment
With short-term rentals, it is absolutely critical to maintain a positive relationship with neighbouring properties. Ensure your guests are not unruly or inappropriate and acknowledge other residents in the area.
"Ensure you relay your building's common area rules to your guest. Remind guests not to bother your neighbours (e.g., don't knock on their door or buzz them to let you in)," advises Airbnb.
In other words, don't allow your positive opportunity to create a negative environment.
Additional income = additional tax
While the new source of income will be a positive for your bank balance (or bond), you also need to consider your tax. As with any form of income, tax does apply and you should consult your financial advisor on how best to declare it to avoid any nasty surprises later on down the line.
A boost to the economy?
In a number of ways, Airbnb is a positive and one that is driving the accommodation industry into new territory and according to the company that is behind the wheel, it is showing no signs of slowing down.
"Airbnb is growing because it reflects the way people live, work and travel today and while travel on our platforms accounts for less than 1 in 8 visitors to South Africa, studies show those guests boosted the economy by R8.7 billion (roughly $678 million USD) and helped create 22,000 jobs last year alone.
"This healthy and sustainable tourism model - with hosts also keeping up to 97% of the price they charge to rent the space - is transforming local economies and makes Airbnb fundamentally different to businesses that take money out of the places they do business in."
And it's not just the accommodation sector that is benefitting from the company. Airbnb Experiences is a relatively new platform that allows users to act as tour guides or experience managers.
Designed and led by inspiring locals (that's you!), these experiences go beyond typical tours or classes by immersing guests in each host's unique world. It's an opportunity for anyone to share their hobbies, skills, or expertise without needing an extra room.
In conclusion, the share economy and short-term rental model has provided home owners with a number of positive opportunities, but to ensure you get the most out of it, make sure you do all your research before making the move to list your own property.
Looking to invest in a short-term rental property? Check out this fantastic investment opportunity in the V&A Waterfront Marina HERE!
Author: The Agency Property Group
