Guide to Buying Airbnb Investment Properties in Cape Town
I’ll start with a few Airbnb buying tips when deciding on buying accommodation in Cape Town.
Then I’ll discuss if you should invest in Airbnb Cape Town property. And two common objections.
Whatever Airbnb you invest in, I’ll talk about how the impact of your Airbnb success depends on your attitude or rather how your Airbnb philosophy can make or break the best investment. .
Then I share a free Airbnb evaluation tool to give you immediate feedback on the following investment criteria and your marketing philosophy.
I’ll give you the good and the bad.
Airbnb Property Buying Criteria.
Some pointers are not directly related to the actual Cape Town Airbnb you purchase – but keep them in mind as you decide.
- The average Joe is doing poorly on Airbnb: All you need is to exceed old Joe. And it’s not that difficult. But to win big time you have to distinguish yourself from the bunch. Ask questions like: Is the design distinguishable from the rest? How will this place look on a photo? Keep this idea in mind when you search before you decide to buy in and around Cape Town.
- View: No view? You’ll be getting lower rates. But if you have views then tick the box.
- Sunshine: Patio, balcony or garden? If you can show bleak European holidaymakers two or four sun loungers (IN THE SUN) and a braai you are stacking up a winner.
- Pool: Very few Cape Town Airbnb accommodation has a pool. Two places (exactly the same) next to each other; one with a pool and one without; the one with a pool will make double (a lot more than) what the other one without a pool will do. And if anyone tells you, “But you are at the sea! Why do you want a pool?” , tell them to get lost. A pool is a winner.
- Parking: Not always easy in Cape Town but having a secure parking bay takes away the objections from those wanting security.
- Access: Lift or stairs: If you are on the 4th floor and access the apartment via stairs you have just sliced the pie smaller as the unfit population will not take it.
- Think Interior When You Buy: Modern, minimalistic, with all the bells and whistles. But that may be limited. It can be any design but if it lacks uniqueness or remarkability it will not do well. It must be pretty. Very pretty. Outdated will mostly fail.
- Location: If you can afford Camps Bay or Clifton go for it. If not, Green Point, Sea Point, CBD, Blouberg, and Southern Peninsula suburbs like Simonstown, Noordhoek, Kalk Bay, and others. Southern Suburbs and similar non-coastal suburbs can be considered but be aware as demand is not the same; lower demand, lower rates.
- On the beach: For obvious reasons, people pay a hefty premium to stay on the beach.
- Bedrooms: The more the merrier but not at all costs.
- Bachelor or studio: It can work. But people prefer to stay in a one-bedroom before choosing a bachelor. If all the other ingredients work then this is not a camel backbreaker.
- Bathrooms: Obviously ensuite will always make more than shared bathrooms. Let’s say you have 4 couples- who will stay in the ensuite bedroom and who will share bathrooms? I know I am nitpicking but flexibility is the game. If not you are eliminating potential bookings.
- Bedroom Sizes: I realise this is not always possible as you may not be building your Airbnb from scratch; equal-sized rooms are the best. An ego doesn’t like to stay in the small room while John has the master suite. For a family, the smaller egos (kids) don’t have a choice. But a party of couples; a different story.
- Business and holiday-makers; During popular seasons you’ll pay to stay in coastal suburbs. But what about winter? Problem. Let’s consider the CBD, Tamboerskloof, Oranjesicht, , etc; if you can identify the ideal property you’ll not only get seasonal guests but travel-working-guests and business travelers. But please set it up for business travellers, for example; two bedrooms = 4 beds, three bedrooms = 6 beds! You get the idea. It’s a bad idea to go for double beds when work colleagues share a bedroom. If I had to do any Airbnb property I’ll have singles which I can make into Kings. Flexibility! Don’t forget the flexibility ever.
Should I Invest in Airbnb accommodation in Cape Town?
Online, London estate agent, Nested, created the 2017 Property ROI Index to compare Airbnb city investment potential.
They use a three-bedroom property as the norm. And then calculated how long it would take for an investor in each city to recoup the property value using Airbnb and the traditional rental market.
There are commentators criticising the methodology used:
The survey uses a high 80% occupancy rate, which is out of the ordinary in many markets.
Only few Cape Town Airbnb Winners will get to 80% occupancy.
High occupancy would be 50 to 60% as Cape Town’s winters tend to be tourism-dead. The average Airbnb-Joe runs at about 35%. Bad. So. If you are Average Joe forget the 50-month recoupment.
At 30% occupancy, Old Joe will take 208 months with Airbnb. He can just as well go for long term rentals.
Although the Nested Property Index has its distractors it shows how popular Cape Town Airbnb is. And even if you only do 50% occupancy can still get your money back in half the time or less than if you tried long term rentals.
I see Pam Golding and other real estate wise guys object and say,
Market analysts note that the Airbnb market is likely to peak since there are only so many tourists wanting this type of experience and, with so many homeowners eager to join the market to provide accommodation, occupancy rates are likely to decline.
This depends on how you look at it.
Are you looking to sell an experience or just another commodity?
If you are looking for another commodity you’ll believe this drivel as the truth.
There must be 20 000 Airbnb’s in Cape Town today (See this 2018 article). Let’s assume there are 30 popular Airbnb suburbs (there are less but let me, rather be conservative); that’s nearly 700 Airbnb properties per suburb . How many more can there be? Is it not saturated already?
My point is:
If your Cape Town Airbnb is unique, remarkable and you sell a 5-star experience then bean counters are not ideal advisors as they cannot quantify the value of a trusting experience creator.
Another objection is legal limitations by the authorities.
This is another cat of worms where the old guard is trying to protect the last few nearly extinct dinosaurs; many guesthouses and hotels are under threat with the high set-up costs and poor location.
Today guests are looking for a local experience and no law will limit this wish. You may force them to stay in hotels and guest house but that’s not in SA’s best interest. More here.
The City of Cape Town has approved a new municipal planning by-law in which will it make it easier for homeowners to rent out their properties as Airbnbs..
The proposal allows for short-term letting from a house or flat for a period not exceeding 30 consecutive days for the same guest/traveller. (More.)
This is not an issue as very few guests stay for more than 28 days. However, SA Tourism Ministry suggested Airbnb’s only be available 180 days of the year. This is so ridiculous; protecting the dying dinosaurs while limiting SA tourism (money). This will not go down well with the Western Province Government and the City of Cape Town.
If, however, it happens then we close the six slow winter months as it generates less than 25% of the annual income.
The Success Of The Cape Town Airbnb Property You Invest In MASSIVELY Depends On YOUR Ability To Create Experiences!
Why am I saying this while we talk about buying a Cape Town Airbnb investment property?
If you have chosen your Cape Town Airbnb property reasonably well, you are excited and committed then very many places will work.
But I must stress…
You cannot just be another Joe Property Manager! You don’t want to compete on price! . It’s a nasty downward spiral to oblivion.
What is needed is…
You get only two kinds of Airbnb hosts:
I believe you can win this so-called saturated Airbnb market!
Choose your Cape Town Airbnb Investment property with care. When you have done it you are not involved any longer; you are committed like a Kamazi pilot. Not so destructive but so focused. Focus on creating 5-star experiences. Everyone staying must say, “WoW!” . Like these guests who stayed with Agency.CapeHolidays Experience Creators:
I suggest you use our free Airbnb Profitability Evaluation tool.
I do understand that when you are in the early stages of purchasing a Cape Town Airbnb you may be oblivious to all the drivers that will make your Cape Town Air property investment profitable.
And when you do the following Airbnb evaluation you will learn from the questions which critical factors affect your success. Some answers you may have to guess. Good. Go with your gut. And when complete it you’ll get the free Airbnb property evaluation immediately. You cannot fail. And you can do it many times.
Success or failure? Evaluate before you buy it. It’s free and easy.
Selling or Buying Airbnb Investment Properties in Cape Town is not our business. Our business is Cape Town Airbnb management: we choose to ONLY create lasting experiences using remarkable Cape Town Airbnb accommodation.
If It’s Not Remarkable It’s Not Good Enough!