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Best Places to Buy Investment Properties in Victoria: Top areas for Airbnb around Melbourne

best places to buy investment properties in victoria

Key Takeaways
  • As a leading capital city, Melbourne is home to a strong economy and offers a solid labor market and great quality of life. Thanks to this, real estate investors are able to earn a nice passive income through rental properties.
  • Discover the benefits that real estate investors have when investing in Melbourne, VIC.
  • The 10 most profitable neighborhoods and nearby cities in Melbourne, Victoria are revealed! Also their recommended property types & corresponding Airbnb data.

Introduction

Bordered by the impressive Great Australian Bight and the Tasman Sea lies the small yet beautiful state of Victoria. This is a picturesque state with charming coastal towns and mountain villages that offer the most striking views. In Victoria, there’s a wide array of tourist attractions and activities to suit everyone’s taste.

The capital of Victoria, Melbourne, is the sporting, cultural, and financial center of the state. It’s home to many renowned landmarks such as the National Gallery of Victoria, Princess Theatre and Melbourne Skydeck. Furthermore, Melbourne is one of the 42 UNESCO Cities of Literature thanks to its vibrant literary scene!

Melbourne is also one of the most profitable Airbnb cities in Australia according to the top rental market stats. Additionally, Airbnb cited Melbourne as one of the top family destinations in Australia. They even stated that the city is a trending travel spot for 2023 international travel.

In this article, we’ll feature the best places to buy investment properties in Victoria including the top neighborhoods in Melbourne. You will discover some of the expectations for real estate investments in this city. Continue reading to learn more!

Reasons to invest in real estate in the suburbs of Melbourne, VIC

Owning rental properties in Melbourne can allow you to generate a good income stream because it offers attractive investment opportunities to investors. But what are the main reasons why investors should consider investing in Melbourne? 

Check out some of the reasons why doing real estate investment in Melbourne is a profitable idea:

  • Great living conditions

Considered one of the most liveable cities globally, Melbourne offers the best living conditions for residents. The city has world-class infrastructure, top-tier universities, and a reliable healthcare system.

Living in Melbourne means that you will be living in a safe, clean, and multicultural environment while enjoying top-quality amenities. No wonder Melbourne is the most populous city in Australia and its population is projected to continue growing in the coming years. 

  • Stable and diverse economy 

Melbourne boasts a strong and stable economy that accounts for around 25% of Australia’s GDP. Its diverse labor market allows people to find great employment opportunities in different sectors such as tourism, healthcare, science, technology, trade, and entertainment among others.

Victoria’s capital city is the leading financial center of Asia-Pacific region and it ranks 28th in the Global Financial Centres Index 33. Moreover, Melbourne holds the 42nd spot on the Global Start-ups Ecosystem Index.

  • Lots of things to do!

Melbourne is a multicultural city where over 260 different languages are spoken. The city offers an extraordinary cultural, dining, and arts scene with no shortage of leisure activities, shopping and events.

If you’re looking for outdoor activities, cultural experiences, or even want some retail therapy, then you will love Melbourne. There’s no lack of museums, parks, chick boutiques, and great restaurants. On top of that, we must add that the city offers a lively nightlife and hosts renowned festivals and events throughout the year.

  • Top market for Airbnb investment properties in Australia

Are you still uncertain about investing in Melbourne? Then let us add another positive factor: it’s one of the best places for Airbnb investment properties in Australia! Melbourne offers many profitable opportunities for real estate investors. For this reason, if you aim to achieve financial freedom by owning a positive cash flow property in Victoria, then you should consider starting an Airbnb listing in Melbourne because it can help you create a nice rental income easily.

Is Airbnb Profitable in Melbourne, VIC?

Are you concerned that your investment property in Melbourne or the surrounding areas won’t give you a good rental return? Take it easy! Airbtics confirms that investing in real estate in Melbourne is financially rewarding. 

However, investors like you should keep in mind that the level of profitability depends on the property type and location. Other than that, it’s also a good idea to consider the Airbnb Rules in Melbourne so that you can run your listing smoothly.

Based on Airbtics data, an Airbnb host can expect an average annual revenue of A$73,019 and a median occupancy rate of 88% for operating a 2-bedroom property in Melbourne. With over 6,291 Airbnb listings and a seasonality of 29%, Melbourne certainly is a catch for property investors!

best places to buy investment properties in victoria

Top 10 Suburbs and Nearby Cities to Invest around Melbourne, VIC

Melbourne is the largest and most populous city in Victoria with more than 321 designated suburbs. Furthermore, there are many interesting cities located nearby as well. Hence, it can be a challenge to choose the best location to buy an investment property in Melbourne.

Check out the best suburbs and nearby cities in Melbourne, VIC that are highly recommended for rental properties:

1. South Melbourne
  • Total Number of Airbnb Listings: 113
  • Best bedroom size: 2 bedrooms
  • Median property price (2 bedrooms): A$700,000
  • Airbnb Annual revenue: A$87,703
  • Gross rental yield: 12.53%
2. Richmond, Melbourne
  • Total Number of Airbnb Listings: 185
  • Best bedroom size: 2 bedrooms
  • Median property price (2 bedrooms): A$660,000
  • Airbnb Annual revenue: A$79,070
  • Gross rental yield: 12%
3. St Kilda, Melbourne
  • Total Number of Airbnb Listings: 346
  • Best bedroom size: 2 bedrooms
  • Median property price (2 bedrooms): A$580,000
  • Airbnb Annual revenue: A$71,048
  • Gross rental yield: 12.25%
4. North Melbourne
  • Total Number of Airbnb Listings: 120
  • Best bedroom size: 2 bedrooms
  • Median property price (2 bedrooms): A$555,000
  • Airbnb Annual revenue: A$69,486
  • Gross rental yield: 12.52%
5. Brunswick, Melbourne
  • Total Number of Airbnb Listings: 135
  • Best bedroom size: 2 bedrooms
  • Median property price (2 bedrooms): A$570,000
  • Airbnb Annual revenue: A$62,814
  • Gross rental yield: 11.02%
6. Healesville, VIC
  • Distance from Melbourne: 64 kilometers 
  • Total Number of Airbnb Listings: 141
  • Best bedroom size: 2 bedrooms
  • Median property price (2 bedrooms): A$580,000
  • Airbnb Annual revenue: A$76,969
  • Gross rental yield: 13.27%
7. Greater Geelong, VIC
  • Distance from Melbourne: 74 kilometers 
  • Total Number of Airbnb Listings: 294
  • Best bedroom size: 2 bedrooms
  • Median property price (2 bedrooms): A$49,000
  • Airbnb Annual revenue: A$61,579
  • Gross rental yield: 12.57%
8. Torquay, VIC
  • Distance from Melbourne: 103 kilometers 
  • Total Number of Airbnb Listings: 409
  • Best bedroom size: 4 bedrooms
  • Median property price (4 bedrooms): A$950,000
  • Airbnb Annual revenue: A$95,243
  • Gross rental yield: 10.03%
9. Daylesford, VIC
  • Distance from Melbourne: 114 kilometers 
  • Total Number of Airbnb Listings: 368
  • Best bedroom size: 2 bedrooms
  • Median property price (2 bedrooms): A$785,000
  • Airbnb Annual revenue: A$95,187
  • Gross rental yield: 12.13%
10. Ballarat, VIC
  • Distance from Melbourne: 116 kilometers
  • Total Number of Airbnb Listings: 283
  • Best bedroom size: 3 bedrooms
  • Median property price (3 bedrooms): A$470,000
  • Airbnb Annual revenue: A$51,226
  • Gross rental yield: 10.90%

Takeaway

In summary, rental properties in Melbourne offer favorable investment opportunities to real estate investors. There are plenty of profitable suburbs as well as a few of promising cities that guarantee the best rental returns around Melbourne, Victoria. This is why we recommend making use of Airbtics’ free Airbnb profit estimator so that you can stand out among your competitors.

Discovering the best places to buy investment properties Airbnb in Victoria is an excellent way to start your Airbnb journey. But you should aim further and make use of the Airbnb analytics tool! This way you can make data-based decisions and improve your property investment strategies.

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Airbnb Investment All About Airbnb

Investing in Property for Sale: How to Buy A Profitable Property for Airbnb in Melbourne City Centre

airbnb property for sale melbourne city centre

Melbourne offers plenty of reasons for one to live in and even start a business! Known for its many laneways and cultural diversity, Melbourne also has excellent dining options for all budgets and portrays amazing street art. It’s also known for being the coffee capital of the world and for being regularly voted as the world’s most livable city.  

If you are looking to invest in a property where you can maximize profitability in a particular region, then it’s certainly a must to consider the major things when buying a property for Airbnb. Particularly, Airbnb rules in Melbourne make it easier for those who want to start an Airbnb business because a planning permit is not required. Aside from this, Airbnb rental arbitrage in Melbourne is another option for those who are on a tight budget.

In this article, we’ll discuss the important Airbnb metrics in order to gauge the best property investment in Melbourne, Australia. This includes the best website recommendations for property investment, along with each property’s gross rental yield, cash-on-cash return, and annual revenue.

According to a recent study, vacancy rates for Melbourne apartments remain above +6% in the inner suburbs. With some of these factors easing into 2022, and affordability pressures returning to the housing market, units could become more appealing for many buyers pursuing property investment in Melbourne.

While there are plenty of houses for sale in Melbourne, looking at Airbnb occupancy rates in Australia can also give you a wide overview of profitability in the entire country. Continue reading to learn more about the properties that will generate profit for Airbnb!

Is Property Investment Profitable in Melbourne City Centre?

Australia is currently ranked as the top short-term rental market in Oceania with an impressive occupancy rate of 56%. Using an Airbnb calculator, it was discovered that a 3-bedroom apartment in Melbourne City Centre can generate an annual revenue of A$97,933 with a steady occupancy rate of 67% and a nightly rate of A$387.

airbnb property for sale melbourne city centre

airbnb property for sale melbourne city centre

Profitable Properties for Sale in Melbourne City Centre

Finding the best properties that have the potential to produce high yields and capital growth are certainly some of the preferences of major investors. It’s always best to ask for assistance from real estate agents to access exclusive and unique properties during the development stage. 

At the same time, it’s even better when a property investor like you conducts research about predicted growths and market forecasts. Here are some of the profitable properties in Melbourne City Centre along with the calculated gross rental yield, cash-on-cash return, and annual revenue:

Studio-type Property for Sale Melbourne
Studio-type Melbourne

16A/116-130 Main Drive, Macleod, VIC 3085

1. Studio-type Property for Sale Melbourne
Located within Kingsbury Gardens Apartments

Asking Price: A$114,000

GROSS RENTAL YIELD 23.53%
ANNUAL REVENUE A$26,825
CASH ON CASH RETURN 44.82%
airbnb property for sale melbourne city centre
airbnb property for sale melbourne city centre

411/42-50 Barry Street, Carlton, VIC 3053

2. 1-Bedroom Property for Sale Melbourne
0.72 km to University High School

Asking Price: A$128,000

GROSS RENTAL YIELD 24.83%
ANNUAL REVENUE A$32,030
CASH ON CASH RETURN 48.72%
2-Bedroom Melbourne
2-Bedroom Melbourne

136/325 Nepean Highway, Frankston, VIC 3199

3. 2-Bedroom Property for Sale Melbourne
1.11 km to Kananook Primary School

Asking Price: A$185,000

GROSS RENTAL YIELD 24.11%
ANNUAL REVENUE A$44,595
CASH ON CASH RETURN 46.55%
airbnb property for sale melbourne city centre
3-Bedroom Melbourne

3503 Diamond Leaf Ct, Valrico, FL 33594

4. 3-Bedroom Property for Sale Melbourne
Located at City Fridge Arrow Apartments

Asking Price: A$245,000

GROSS RENTAL YIELD 23.03%
ANNUAL REVENUE A$56,413
CASH ON CASH RETURN 43.31%
4-Bedroom Melbourne
4-Bedroom Melbourne

16 Sumac Street, Brookfield, VIC 3338

5. 4-Bedroom Property for Sale Melbourne
1.38 km to Catholic Regional College Melton

Asking Price: A$310,000

GROSS RENTAL YIELD 24.07%
ANNUAL REVENUE A$74,602
CASH ON CASH RETURN 46.43%

Conclusion

Since Airbnb is rapidly increasing and constantly changing for each city in the world, it is crucial to make decisions based on wild guesses. The data points mentioned in this article for Melbourne such as Airbnb occupancy rates, annual revenue, and average daily rate should be the primary basis before investing in a property. 

Hence, if the data presented above has given you ideas to boost your strategic pricing plan for your business, then an Airbnb rental arbitrage calculator is certainly what you need for success in the long run. It’s a fact that some of the STR investors are also considering Airbnb Rental Arbitrage, but they still need to have a reliable data tool on to base their conclusions! 

As we live in a digital era, an accurate data analytics tool can help your business stand out among your surrounding competitors and benchmark your property by tracking the occupancy rates of competing listings in your preferred city.

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Airbnb Rental Arbitrage All About Airbnb

Airbnb Rental Arbitrage in Melbourne

Did you know that don’t need to own a property at all in the Airbnb rental arbitrage business? In this article, we featured the entire process of Airbnb rental arbitrage in Melbourne, its profitability, Airbnb key metrics including occupancy & average daily rates, along with the best areas for investment. 

Continue reading to learn more about short-term regulations and ways to convince landlords to sublet properties for rental arbitrage.

What is Rental Arbitrage? 

Rental Arbitrage is a perfect way to start an Airbnb business with no money. By convincing landlords to lease you a property, you can furnish and sublease it on Airbnb and VRBO. No need for you to buy a property! 

It is perfectly legal and is a proven scalable business model. In my podcast, I have spoken to various entrepreneurs doing Airbnb arbitrage full-time. 

Here’s a proof! In Melbourne, Dave manages 78 listings and I’m pretty sure he doesn’t own all the properties. Overall, he made A$3,467,284 in the last 12 months.  

Melbourne airbnb rental arbitrage

Is Rental Arbitrage Profitable in Melbourne?

In order to start a rental arbitrage in Australia, particularly in Melbourne, it’s primarily important to take note of the overall cost & potential revenue. 

For instance, the best neighborhood to invest in is Southbank. As its leading contemporary art gallery is located in Southbank, a host can earn an average of A$3,060 monthly. Using Airbtics’ income generator, you can easily find out that rental arbitrage in Melbourne is profitable.

Melbourne airbnb rental arbitrage
Profit & Monthly Expense in Melbourne

Based on Airbtics’ data, you can earn a whopping A$7,605 per month for a 3-bedroom apartment in Southbank alone. With the data provided, you can certainly tell that investing in a property in Melbourne is profitable.

Average Rent Price Airbnb Monthly Revenue Monthly Expense Monthly Profit
A$4,780 A$7,605 A$1,521 A$1,304

Source: Airbtics dashboard

The monthly profit can be calculated by subtracting the Airbnb monthly revenue, the rental price, and the monthly expenses (A$7,605 – A$4,780 – A$1,521 = A$1,304).

 Startup Cost in Melbourne

Now that you have an overview of how much your monthly expense & revenue are, let’s talk about the start-up cost! How long does it take for an investor to get back the startup cost? Let’s take a look at this calculation:

Total Startup Cost (Average startup cost + 2 months rent price) Cash Return Time
A$11,560 9 months

The average estimated startup cost (for furnishing) in Melbourne is around A$2,000. To compute the total startup cost, it is necessary to add the 2 months of average rent price (A$9,560). Now that we have a total startup cost of A$11,560, cash return time can be calculated by dividing this by the monthly profit (A$1,304). 

Given your monthly revenue of A$1,304, it will take approximately 9 months time to get back the startup cost in Melbourne.

In such a brief period of time, you can already expect profit and can even start considering a second unit for rental arbitrage. If this sounds promising to you, then go ahead and look at the other best areas for rental arbitrage in Melbourne.

Best Areas for Rental Arbitrage in Melbourne

Before investing in a particular area in Melbourne, you have to take a look at the top markets and number of listings to set your expectations towards success. Check out the top 3 suburbs in Melbourne ranked by their annual revenue, along with their occupancy & daily rates!

1. South Yarra

This neighborhood is ideal for tenants as it has great proximity to the essential stores in Melbourne. Check out the Airbnb data such as the average revenue, occupancy rates, and more in South Yarra:

Type of Bedrooms Average Rent Price Average Airbnb Revenue Occupancy Rates Average Daily Rate
1-bedroom A$1,738 A$2,856 78% A$173
2-bedrooms A$2,564 A$4,973 82% A$255
3-bedrooms A$3,889 A$6,804 84% A$564

According to our Airbtics Dashboard, there are more than 307 Airbnb listings with 32 condo properties and 159 one-bedroom properties in this area. The monthly revenue for most properties in South Yarra is more than A$3,772 per month with occupancy being more than 60%.

2. Mornington

This neighborhood is popular for its wineries and local produce. While the majority of locals prefer to hang by the seaside of Mornington, there are also tourists who are visiting the attractions near the area. Check out the Airbnb data such as the average revenue, occupancy rates, and more in Mornington:

Type of Bedrooms Average Rent Price Average Airbnb Revenue Occupancy Rates Average Daily Rate
1-bedroom A$1,521 A$5,816 82% A$296
2-bedrooms A$2,173 A$5,444 72% A$383
3-bedrooms A$2,781 A$6,854 74% A$487

This area has a total of 62 Airbnb listings with 6 private room properties and 26 one-bedroom property. The monthly revenue for most properties in Mornington is more than A$4,934 per month with occupancy being more than 65%.

3. Southbank

Southbank is a beautiful inner-city suburb that is home to fine dining restaurants, shopping districts, and art galleries. Check out the Airbnb data such as the average revenue, occupancy rates, and more in Southbank:

Type of Bedrooms Average Rent Price Average Airbnb Revenue Occupancy Rates Average Daily Rate
1-bedroom A$1,999 A$3,060 81% A$170
2-bedrooms A$2,650 A$4,721 78% A$287
3-bedrooms A$4,780 A$7,605 77% A$574

This area has a total of 379 Airbnb listings with 59 private room properties and 138 one-bedroom properties in this area. The monthly revenue for most properties in Southbank is more than A$3,560 per month with occupancy being more than 60%.

DISCOVER PROFITABLE LOCATIONS IN AUSTRALIA FOR AIRBNB INVESTMENTS

Check out other best places for buy to let investment in Australia!

Short-term rental regulations in Melbourne

To begin with, it’s certainly important to be familiar with the Airbnb rules in  Melbourne to make sure that your business will run smoothly. Here are some of the short-term rental regulations and laws to take note of:

  • Short-term rentals and short stays are considered as accommodation and residential buildings by the Victoria Planning Provisions. This means that a planning permit is NOT required to operate a short-term rental.
  • The city of Melbourne does not impose any night limits or other restrictions on short-term rentals.
  • If an apartment is issued with three breach notices in a 24-month period, Victorian Civil and Administrative Tribunal (VCAT) will be able to make orders restricting that apartment from being let for short-stay purposes for a period of time. The breach notices must be issued for separate events (rather than a single event that attracts multiple complaints).
  • According to the City of Melbourne and Consumer Affairs Victoria, there are no current zoning restrictions for short-term rentals or short stays in Melbourne.

Rental Properties in Melbourne

To run an Airbnb rental arbitrage in Australia, you can look at property websites and get a grasp of the ranging prices in Melbourne:

1. Domain
sublet in Melbourne
2. Rent AU
sublet in Melbourne

How to Find Landlords for Airbnb Rental Arbitrage

Airbnb investment through rental arbitrage is one of the best strategies to have passive income. However, it could be a challenge to find a landlord that allows their property for subletting on Airbnb. You can also convince a landlord by following the rental arbitrage email template & be extra creative! 

Here are ways how you can find landlords that allow Airbnb rental arbitrage:

  1. Real Estate Websites

Renters in the digital world who are looking for properties online can easily connect with landlords. Some of the most recommended online real estate websites which allow you to filter by city, state, or ZIP code are:

However, you can also find apartment & condominium properties online in the following websites:

  1. Search Engines & Marketplaces

There are numerous property owners who are leasing their properties and you can easily find them on Google & online marketplaces. Check out some of the most recommended marketplaces:

  1. Communicate with Landlords

If you are currently renting a space or know someone who is, then it’s also recommended to speak with them. Start by asking if there are vacant rooms or properties and let them know about your intentions of putting them up for rental arbitrage. They might also be able to recommend neighbors or local friends who are also interested in this idea!

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Airbnb Rules All About Airbnb

Airbnb Rules in Melbourne

Before you start to invest in a property in Australia, particularly in Melbourne, the primary key metrics that all investors need to know should be considered for a successful investment! In this article, we will feature some of the essential Airbnb metrics such as average daily rates, monthly revenue, and occupancy rates in Australia.

Continue reading to learn more about Airbnb rules in Melbourne and learn more about profitability in this city!

Is Airbnb legal in Melbourne? 

Let’s cut the story short: Yes, Airbnb is certainly legal in Melbourne! With a shocking number of 36.5 million visitors annually, Melbourne is truly a profitable city to do Airbnb. This city constantly attracts more tourists to book accommodations to visit The National Gallery of Victoria, Royal Botanic Gardens, Federation Square, and see other tourist attractions. 

Here is a little proof! As of July 2022, there are 124,150 nights available in Melbourne  from Airbnb alone. Valeria manages 144 listings, while MadeComfy and Dave operate 115 and 78 respectively.

How much can I make by running an Airbnb in Melbourne?

Currently, there are 7,931 Airbnb listings in Melbourne, with 58% of entire houses earning up to A$3,459 a month. The Average Occupancy Rate in Melbourne is 51% and the average daily rate is A$141. According to vacation rental market data source Airbtics, a 2-bedroom apartment in Melbourne can make up to A$49,651 each year. Check out our Airbnb Profit Calculator!

Melbourne airbnb rules
What Are The Short-term Rental Accommodation Policies in Melbourne?
  • Short-term rentals and short stays are considered as accommodation and residential buildings by the Victoria Planning Provisions. This means that a planning permit is NOT required to operate a short-term rental.
  • The city of Melbourne does not impose any night limits or other restrictions on short-term rentals.
  • If an apartment is issued with three breach notices in a 24-month period, Victorian Civil and Administrative Tribunal (VCAT) will be able to make orders restricting that apartment from being let for short-stay purposes for a period of time. The breach notices must be issued for separate events (rather than a single event which attracts multiple complaints).
  • According to the City of Melbourne and Consumer Affairs Victoria, there are no current zoning restrictions for short-term rentals or short stays in Melbourne.
how much can you make on airbnb

Is Melbourne A Profitable Area to Invest In?

If you’re worried about spending thousands of bucks to purchase a property, the good news is you don’t need to! 

Property investors and hosts prefer to do rental arbitrage in Australia since this does not require owning a property. Based on statistical data for Melbourne, the rental population in this area is 48.65% with a steady rental yield of 3%.

By using an accurate short-term rental calculator, you’ll be able to confirm if Melbourne is a good place for investment! It’s important to know your estimated annual revenue and high-return investment opportunities in Melbourne – and with Airbtics, it shouldn’t be a difficult task at all!

Melbourne airbnb rules

Source:  Property Investment in Melbourne

Melbourne’s Property Market 2022

According to Melbourne’s housing market update, the rental market in Melbourne has low supply levels which reflects the increase in rental prices. In addition to this, there is a rising demand from international students and returning workers across central business districts.

Melbourne airbnb rules

Source: Housing Market in Melbourne

Here are some of the most recommended neighborhoods in Melbourne that you can look into & consider purchasing based on Airbtics estimator:

Suburbs Price of 2bd Apartments Average Rent Price Average Airbnb Revenue
South Yarra A$550,000 (715.35 sq.m. apartment) A$2,564 A$4,973
Mornington A$690,000 (266 sq.m. apartment) A$2,173 A$5,444
Southbank A$650,000 (190 sq.m. apartment) A$2,650 A$4,721

Source for Property Price: Properties in Melbourne

Conclusion 

In general, considering the Airbnb rules & regulations in Melbourne will help your Airbnb business to run smoothly! Aside from the fact that this is a passive income for various hosts, starting an Airbnb business is also a way to enjoy life and connect with new people from all over the world. Try Airbtics now and make the wisest investment decisions!

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Airbnb Rental Arbitrage All About Airbnb

Rental Arbitrage Melbourne

Table of Contents
    Add a header to begin generating the table of contents

    Introduction:

    The monthly cost of a Melbourne resident is over AUD $1,000 excluding rent. But what if we tell you that you can augment your income by renting out a property without actually owning it? Rental Arbitrage enables this setup. It is a smart way to earn passive income with only minimal investment!

    In this guide, we’ll explain rental arbitrage in layman’s terms and provide some expert tips. We also included the best areas to do rental arbitrage in Melbourne to help you make the best investment decisions. Stoked to learn more? Continue reading!

    What is Rental Arbitrage?

    Rental Arbitrage is a method similar to house hacking, where you rent out a spare room in your property. The difference between these two is you don’t need to own the house in rental arbitrage. Instead, you convince the property owner to allow you to sublease the house on Airbnb and VRBO.

    Rental Arbitrage in Melbourne is applicable to multi-room apartments, houses, and condo units – as well as duplexes, and triplexes. It is a smart way to add a stream of income through the short-term rental of your subtenants. This allows you to pay your own rent and earn more. 

    Assuming you are renting a duplex in Melbourne for AUD $1,800/month. You are living by yourself on either side and you decide to sublease the other on Airbnb.  Let’s say you listed it for AUD $100/day and got 80% occupancy. This will bring in approximately AUD $2,600/month in revenue. Not only will it fully cover your rent, but it will give you a profit of AUD $800. This, in a nutshell, is called Rental Arbitrage.

    Go over this essential guide for Airbnb Rental Arbitrage and learn more about the business!

    Short-Term Rental Regulations in Melbourne

    Short-term rentals are allowed in Melbourne. The manager has the option to lease the space as long as the operations do not break any rent or tenant contracts. In case of violations, proprietors can sue the managers under the rules set out by authorities. 

    • No Drafting Requirements for Short Stays in Melbourne

    There are currently no restrictions in any zones for normal rental units or short-term rentals in the city of Melbourne.

    • Penalties for Violations

    While there are zoning restrictions for either normal or short-term rentals in Melbourne, both hosts and visitors can be fined if applicable guidelines in the Owners Corporations Act 2006 are violated. These include noise complaints as well as maintaining peace and order in the neighborhood. Complaints must be written to the concerned manager of the property whose owner will then decide the kind of action to be taken.

    Hosts with three violations within two years may be prohibited from continuing a short-term rental business. 

    Short-Term Rental Regulations in Melbourne

    Short-term rentals are allowed in Melbourne. The manager has the option to lease the space as long as the operations do not break any rent or tenant contracts. In case of violations, proprietors can sue the managers under the rules set out by authorities. 

    • No Drafting Requirements for Short Stays in Melbourne

    There are currently no restrictions in any zones for normal rental units or short-term rentals in the city of Melbourne.

    • Penalties for Violations

    While there are zoning restrictions for either normal or short-term rentals in Melbourne, both hosts and visitors can be fined if applicable guidelines in the Owners Corporations Act 2006 are violated. These include noise complaints as well as maintaining peace and order in the neighborhood. Complaints must be written to the concerned manager of the property whose owner will then decide the kind of action to be taken.

    Hosts with three violations within two years may be prohibited from continuing a short-term rental business. 

    ​​How do I start an Airbnb arbitrage in Melbourne?

    1. Convince the landlord

    Let’s say you want to get into Rental Arbitrage. Now comes the big question, how to find a good property and how to convince the landlord. Later in the blog, we’ll be explaining how to find a good property by doing proper research using Airbnb analytics. In this section, we will be focusing more on how to convince landlords. As you’ll begin your Rental Arbitrage journey, you’ll come to know that this is the hardest part of the whole process.

    You need to be prepared and well-researched about the Airbnb demand in your area. Good communication skills will also come in handy here. Another thing to always keep in mind: never sublease without informing the landlord! There will be a huge number of people coming in and out when you’re sub-renting. It will only be a matter of time before the landlord figures out what you’re up to, and you might end up getting in trouble. 

    For convincing the landlord, rule number one is always talking about the upsides. If you can rent the property on Airbnb, so can the landlord himself. You need to make a deal with the landlord that is beneficial to them. So they lease the property to you instead of renting it by themselves.

    Points to tell an indecisive landlord
    • Doing rental arbitrage is a full-time business. It doesn’t generate passive income like long-term leasing. You should try approaching older people who are looking for some sort of passive income.
      They are more likely to agree to a fixed long-term lease. You can also reach out to full-time working professionals or business owners. They will also be happy with a source of passive income until their property is well maintained. This brings us to our next point.
    • You’ll take care of the house better than a normal renter. As you are using the property for Airbnb, you will maintain it very well to make sure you get better reviews. Having a beat-up property isn’t good for business and you are more likely to monitor it often. 
      Not monitoring it will affect your revenue a lot. You may end up paying a huge sum of money for damages done by someone else. So telling this to the landlord might instill some confidence in them.
    • You can ensure timely monthly rent. You can tell the landlord that doing Rental Arbitrage is a full-time business with ups and downs. It doesn’t guarantee fixed income at all like long-term leasing. But if they lease it to you, you’ll make sure to pay the lease no matter what. Either from the money made after rental arbitrage or from your savings. You need to ensure timely monthly lease payments to gain the trust of the landlord.

    In conclusion, you need to take care of the property like your own. Make sure to timely pay the monthly lease and keep the situation beneficial for both parties. You can also use a free rental arbitrage email template and propose your ideas to landlords!

    2. Ensure the property and gain the landlord’s trust

    Being on the safe side is always a good idea. Use the right tools to ensure the property is safe, and the neighbors can go on with their lives happily while you do rental arbitrage. Many landlords will have this concern when renting out their property to you. They will be worried about neighbors raising noise complaints, and it’s a legitimate concern. To help you with all these problems, here are some suggestions that you can implement: 

    • SimpliSafe – These are home monitoring tools that you can install in the house to make sure no suspicious activity is happening there. Make sure to let the guests know about them and have their consent.
    • Auto host – Automatically screens problematic tenants.
    • Alexa Guard: If you already own an Alexa, you can use its Alexa guard feature to detect parties. It is an inbuilt feature that monitors changes in sound and sends you an alert in case the guests are having a party and making too much noise.
    • InsuraGuest – This insurance and tech company helps you with risk analysis and gives protection beyond Airbnb and VRBO policies.
    • Airbnb Calculator – Give your landlord ease of mind by providing income estimates backed by Airbnb data.

    Pros and Cons

    Be prepared for what you can expect from Rental Arbitrage in Melbourne:

    • Pros
      • No purchase of property required
      • Low upfront costs
      • Opportunity to repeat and scale easily
      • Generate profit for other investments or business
    • Cons
      • Invest money and time in furnishing the property

    AIRBNB OCCUPANCY RATES IN AUSTRALIAN CITIES?

    We conducted in-depth research & utilized our Airbnb occupancy rate calculator to feature the occupancy rates of major cities!

    how much can you make on airbnb

    The initial cost of starting rental arbitrage in Melbourne

    You can expect to spend anywhere between AUD $3,000 to AUD $5,000. This cost includes deposit, furnishing, amenities, legal paperwork, and LLC Incorporation.

    But doesn’t this contradict the low upfront cost of rental arbitrage? Well, these estimates vary from city to city. There is a possibility to do rental arbitrage for even less than this depending upon your situation and the type of property you lease.

    Still, the amount is much less than investing in a new property and getting a mortgage of thousands of dollars. Plus you won’t be on the hook for property maintenance expenses and being stuck for years with debt.

    But this doesn’t mean rental arbitrage can be done with zero or on a very tight budget. There will be some upfront costs that you will have to prepare for by having some extra cash on hand. It will help pay off the lease during the off-season.

    Expense 1: Rental Deposits

    A rental deposit is going to be your first major expense. You will need money to be able to sign a long-term lease with the landlord. For that, you will need a security deposit for your first and previous month’s rent. Sometimes you can negotiate with the landlord and use the first month’s rent as a security deposit.

    Expense 2: Furnishing

    Ideally, you should aim to lease a place that is semi-furnished. Furnishing a place from scratch can add anywhere from AUD $3,000 to AUD $5,000 to your initial capital. Not choosing the right property can make rental arbitrage not so low cost, so choose wisely.

    If the place is semi-furnished, then your best bet is to shop cheap for the rest of the stuff. You can go and find cheap supplies from places like Home Depot and IKEA. Sometimes even Walmart can have a hidden gem if you look closely.

    Expense 3: Photography

    It’s highly recommended to try DIY photography as a start to save money. You can even learn how to take the best Airbnb photos to highlight your listing! But if you have the budget, hiring a professional photographer is also an excellent option. 

    Expense 4: Cleaning Services

    This is not a starting cost, but you will end up spending on cleaning eventually. The best way to save money is to do it yourself initially if you have the skills and experience.

    If you have no experience or you don’t want to invest time in cleaning a place, then your best bet will be to hire a professional cleaner. This can cost you anywhere from AUD $50 to AUD $250 depending upon the size and location.

    Expense 5: Legal Consultation

    Maintaining a professional relationship with a Real Estate lawyer can be very helpful in the Airbnb business. Airbnb regulations keep updating and you would need some legal guidance on the way to adjust your business accordingly.

    They can also come in handy if you face any legal issues with the landlord or guests. They can help in damage claims and insurance as well in case of any mishappening.

    Best areas for Rental Arbitrage Melbourne

    Some of the obvious places that you can think of in  Melbourne are  Richmond, Footscray, and Fitzroy. But two of the best choices for rental arbitrage top our list.

    1. St Kilda
    Rental Arbitrage Melbourne

    According to Airbtics Dashboard, St Kilda is the top market to start your rental arbitrage business. There are more than 486 Airbnb listings. The annual revenue for most properties is more than AUD $49,151 with an occupancy rate as high as 83%.

    2. Prahran
    Rental Arbitrage Melbourne

    According to Airbtics Dashboard, Prahran is another top market to start your rental arbitrage business. There are more than 35 Airbnb listings that have an average annual revenue of AUD $51,111 with also a very high occupancy rate of 83%.

    Conclusion

    In summary, rental arbitrage in Melbourne can be a very profitable side income. Since it does not require you to purchase a property, it’s also practical for beginners trying to be real estate players without spending millions.

    Leverage your rental arbitrage opportunities by using a free Airbnb estimator and determine the best areas that will bring long-term profitability!

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