Real Estate Investor Magazine South Africa Dec/January 2020 | Page 52

HOSPITALITY
Airbnb opens the door
to passive income
The pros and cons of being a host
AMY STEADMAN
S
hort-term rentals may not be passive income invest-
ments right away, but how investors approach the
management of their properties determines their
earnings. Gaining experience or hiring a management com-
pany will ensure that your investment property will be a
source of income – while you sit back and relax.
People invest in property for a multitude of reasons. As it
is an investment, they focus on the returns it can provide.
As times change and the digital age gains traction, property
investment has evolved and there are multiple ways of
capitalizing off it.
Perhaps this is caused by the need to match the demands
of society today. Statistics show that people around the world
are looking for alternative ways (besides their day job) to make
extra income. They are more connected than ever before
and this boom of the digital age could be the cause of the
innovative ways in which they’re making money.
An interesting observation as these ideas take off is how
big, successful enterprises are using technology as their main
platform and getting the public to capitalize off it at a fee. This
creates passive income for the public and larger business from
these leading platforms. One of the first businesses created in
this way, was Uber – a platform for drivers to source customers
in their area and take them wherever they wanted to go, all via
the Uber app.
If you own or co–own a property, there are other ways
(besides letting and selling) to turn it into a profitable side
or main business. A well-known platform is Airbnb – a
property application run by consumers and businesses alike
was developed, providing a faster and more efficient way
of finding accommodation for holiday makers around the
world. Many people have chosen to open up their investment
properties or spare rooms of their homes to tourists travelling
to their country.
Airbnb is essentially an online marketplace for arranging or
offering lodging (primarily homestays) or tourism experiences.
The company does not own any of the real estate listings, nor
does it host events. It acts as a broker, receiving commissions
from each booking. Airbnb came to fruition in 2008 when
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DECEMBER/JANUARY 2020 SA Real Estate Investor Magazine
three roommates were working out a way to make a few extra
bucks, and has seen exponential growth since then.
What some people may not know is where to start and how
to turn their home into a viable source of income, provided
you have the time to do so. Should you join Airbnb? There is
no point in exhausting yourself to run your Airbnb business.
You can also employ/appoint someone to help you complete
the administrative tasks involved with running the business.
Part of the argument against the possibility of earning
passive income through Airbnb investments is due to
maintenance and preparation for tenants. If a property owner
does not delegate these tasks, then managing their Airbnb
rentals becomes active income. Many investors who rent their
properties through online marketplaces use managing agents
like airManaged, changing soon to Propr.
Propr manages everything from the initial set-up and
marketing to housekeeping. They have an in-house system
that manages every aspect of the business from automatically
generating optimal cleaning schedules to synchronizing rates
and availability. Using property management companies like
Propr ensure that your investment earns you passive income.
2.9million
Hosts on Airbnb
800 000
Average Airbnb stays each night
14 000
New hosts per month
SOURCES Propr, Forbes, Entrepreneur Magazine