Critique: Why You Should Not Buy This Large Property in Kalk Bay, Cape Town as an Airbnb investment….
An owner asked me to critique a few homes he consider as a potential investment.
Some of the questions any buyer have:
- How do you decide if it has all the features Airbnb guests expect?
- How much money can you potentially generate?
This is how the estate agent described the 6 bedroom Kalk Bay home for sale:
This magnificent well-preserved heritage home provides splendid sea views from every bay window, with a backdrop mountain view. The home exudes character with a large lounge, separate TV room and dining room with an open-plan well-fitted kitchen and laundry area. Study area with full bathroom and guest loo. Upstairs are four well-sized bedrooms, all en-suite. The dwelling includes a separate cottage on the lower level with two bedrooms, bathroom and lounge area. The perfect income generator or Airbnb.
Using our internal Airbnb profitability calculator the owner can potentially generate R600000 (35% occupancy) to more than R1m at 65% occupancy.
Now I want you to look at all the photos. Carefully. Watch them over a few times.
Assumption: you have the ten million asking price, you want a six bedroom, you love the sea and Kalk Bay in particular.
What are the positives going for this potential Kalk Bay Airbnb investment property?
✅ Unique location. Other side of the road – on seaside homes are rare in Cape Town.
✅ Six bedrooms are few and far between and demand a high rate during peak times.
✅ Beautifully designed, and very spacious; exactly what 12 guests want for a holiday.
✅ Close to the Kalk Bay buzz but not in it. Easy to walk to shops, restaurants, and (a few) beaches.
What are the negatives?
✅ The train coming past and access across the railway line to the sea.
✅ No pool. Although you are at the sea never underestimate the extra money generated with a pool.
✅During slow season demand for large properties are lower. And clever pricing strategies are required to maximise income.
✅ Did you notice the 8 seater lounge table? Not ideal for a 12 sleeper home. If it sleeps 12 ensure you can accommodate 12 adults.
The negatives above are not the deal breaker.
I left the one critical deal breaker out. As I want you to really look why this home in the current form is a no go.
Don’t get me wrong; if you already bought it then adapt. Make some changes to ensure that you maximise your income. It is a lovely home in a great location as I have mentioned.
What is the final straw breaking the camel’s back?
Have a look at these subset of photos and tell me what is wrong. Ignore the railway line.
Let me digress quickly to set the scene.
Why do tourists visit Cape Town?
✅ They want an experience their drab working lives cannot give them.
✅ They are mostly “bleak” looking for the sun. But not only bleak people buy an idyllic experience in the Cape Town sun.
✅ Wine, beautiful nature, great people and more.
Everything and more they get at this home, except one.
♦️The outside sunny areas are limited or non existent.
When 12 guests book this home they choose using many criteria including sunny social areas.
This home has place for two (or very few sun loungers). If 8 adults and 4 kids want to stay who will win the battle for sun loungers? No one. Where will 12 people gather when they want dine or socialise outside?
The fact that you don’t have a pool is negative but not having a large outside entertainment area (with at least 6 or 8 sun loungers) is a camel back breaker.
Fix the social area. Add sun loungers and a large outside table. You must sell the “sun”. And even invest in a plunge pool.
If you cannot adapt and improve the social sunny areas invest somewhere else.
Do you agree or disagree?