Well, you are not alone. Everyone is jumping on the Airbnb bandwagon. Nothing wrong with that but don’t be naive.
Let me try and give you a few pointers when deciding on buying an apartment or house in Cape Town to rent out for short-term rentals on Airbnb and others.
I’ll give you the good and the bad.
- There are very many one and two bedroom apartments available in and around Cape Town. And every day, another clever property owner adds a bedroom or apartment to the self-catering pool. The bulk of them are average competitors and these small apartments compete on rates only. Not a bad way to make some money but not the most effective way. You need to exceed the average Joe’s; then you’ll call the shots. If not, then you are always a few steps behind. Find ways to distinguish! yourself from the bunch.
- View: No view – forget it. You’ll be getting low rates. But if you have views then tick the box.
- Sunshine: No patio, no balcony? Problems. If I can show holidaymakers two or four sun loungers and a braai you are closing in on a winner.
- Pool: Now, this is a difficult one with water. Very few apartments come with pools, and if they do they are shared pools. A shared pool is not ideal but better than no 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 what the other one without a pool will do. If you can buy an apartment with its own pool you may even decide to, within reason, skip the location-location-location argument of estate agents. An alternative: If you can buy a place and add a wood-fired hot tub (supplied from an off the grid rainwater) then you have just launched your place onto the winner’s podium. During summer Cape Town sells itself. During winter the locals want to escape. Give them a reason with a proper hot tub.
- Jacuzzi: Pain in the neck. Not bad when you sit in it but…. Good for winter honeymoon types. Heavy on maintenance, water and they attract weekenders. I’ll give it a pass.
- Parking: Not always easy in Cape Town but having a secure parking bay takes away the objections from those wanting security.
- 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.
- Interior: Modern, minimalistic, mirrors, with all the bells and whistles. Pretty. Very pretty. Outdated will mostly fail. Yes, some will not like modern but our modern places rent long before others.
- Features: The best high-speed Internet, DSTV, flat screen TVs, Nespresso. Skip on these and you drop out with the ones competing on rates. Some owners hate DSTV. Do not let your own lack of insight interfere with your return on invest. Invest in DSTV or something similar where guests can watch movies AND sports.
- Location: If you can afford Camps Bay or Clifton start there. If not, Green Point, Sea Point, CBD, Blouberg. The further you go from Cape Town centre the less you’ll have to pay. All first time visitors want centrality. Only those who know Cape Town well tend to move out to Southern Peninsula etc. But if you can get a lovely place with a pool further away then consider it. Too far away with no pool you will join the rate competition.
- On the beach: For obvious reasons people will travel far to be on the beach. Very far. Big Yes!
- If you can afford a three bedroom, just know that 3 bedrooms are common and supply is high. Therefore ensure the other criteria here is not skimmed upon. Location, for example, for a three bedroom is many times more imprtant. It’s an odd size.
- Batchellor or studio: If you cannot afford anything but a bachelor go for it but people tend to stay in a bachelor only when there’s nothing else or if they are on business os pick your location in the CDB well.
- 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. While I am at it consider this example; 4 singles beds that can double as a king bed is always better than two kings. By using singles you have just came a step closer to making your place ideal for business stays.
- Bedroom Sizes: I realise this is not always possible and not the most important, but equal sized rooms are the best.
- There are very few large bedroom homes available for the self catering market in Cape Town. 5, 6 and more are in high demand.
- Flexibility: Having six single beds will increase occupancy vs the same home with 3 double beds. During low season having flexible rates are critical; we have seen large homes booked by a couple if we have rates for the full house if only two, 4, 6, 8 or ten people stay. Obviously this is not necessary during peak.
- Occupancy. Occupancy is not really a criteria when you are looking at buying a property in Cape Town to rent out on Airbnb. With short term rentals you make money with occupancy x no of 5-star reviews x competitive rates. If you are only interested in maximising daily rates then don’t bother. You will fail. Understand occupancy and the impact of positive reviews – when you do; most reasonable places in Cape Town will work.
I am sure this will give you some idea of what to look for when considering the purchase of a property in Cape Town for self catering and Airbnb.
And you may need a crash course in how to run your newly purchased Cape Town accommodation as a self catering place on Airbnb.
We have developed an interactive quiz where you share a honest view on your potentail Airbnb accommodation. We then use this information to calculate and immediately share if your home/apartment is going to make the grade at Airbnb.