Sky Gym in the new Airbnb Property – Hugoz Suites @ KLCC
There’s no question that Airbnb has permanently changed the travel industry. If you’ve stayed in an Airbnb rental, you may have wondered what it would be like to be on the other side.
We can see the appeal! By becoming an Airbnb host, you can diversify your income without needing to be a real estate expert. Airbnb’s rise in popularity has made this potentially a solid approach to buying an investment property, but that doesn’t mean it will work for everyone.
If you’re looking for passive income, a real estate investment may be a good option to consider Airbnb Property.
Infinity Sky Pool overlooking to Twin Towers in Scarletz Suites @ KLCC
A property is considered an Airbnb Property when all of the property is rented out on Airbnb after purchase. These rentals are typically short-term, which allows you to host many guests throughout the span of the year, whereas traditional investment properties are most commonly rented to long-term tenants.
Because each investment is unique, there’s no quick answer to this question. But in high-demand areas, the nightly cost of an Airbnb can lead to higher profits.
For instance, let’s say you want to rent out a one-bedroom apartment in Kuala Lumpur City Centre.
As of December 2022, the average monthly rental of that apartment is about RM2,500, meaning you could make roughly RM30,000 if your tenant signs a 12-month lease. But short-term rentals like Airbnb are able to charge more per night, which means you could make more.
According to AirDNA, the average daily rate for an Airbnb in Kuala Lumpur City Centre is about RM200 on average, with units typically occupied 67% of the year. This means you could make over RM48,000 off of your Airbnb per annum– a pretty significant RM18,000 more than you would through traditional renting. Airbnb also charges renters a maintenance fee or cleaning fee, which means you may save on necessary repairs. Moreover, some professional Airbnb operators like Mana-mana Hospitality or MyKey Global Sdn Bhd even have Content & Liability Protection Coverage which is up to RM30,000 coverage per household!
Still, when considering the potential for a higher profit through Airbnb, you must also consider the key differences between these types of rental properties and how those differences will impact your wallet.
Investing in an Airbnb property can offer several benefits to savvy investors. The ability to charge premium rates for short-term stays in popular tourist destinations can result in higher rental income potential than traditional long-term rentals. This flexibility and control allows investors to customize their rental strategy to meet their financial goals.
One of the biggest advantages of investing in an Airbnb property is the potential for diversification of income. For those who already own long-term rental properties or other investments, an Airbnb property can provide a diversified source of income. This is particularly important for those looking to spread out their risk and reduce their dependence on any single source of income.
Investing in an Airbnb property can also offer tax benefits. As an Airbnb host, you may be eligible for tax deductions related to owning a rental property, such as deductions for expenses related to maintenance, repairs, and cleaning. These deductions can help reduce your overall tax burden and increase your net income.
Another potential benefit of investing in an Airbnb property is the opportunity for property appreciation. If you invest in an Airbnb property in a desirable location, you may see appreciation in the value of the property over time, which can further increase your returns. This is particularly true in popular tourist destinations where property values tend to increase over time.