Landlords recoup investments faster through Airbnb, study says

Owners of three-bedroom properties in Montreal, Toronto, and Vancouver can recoup their purchase price much faster through Airbnb over average rental rates, recent research revealed.

A study by British online real estate agency Nested ranked 75 cities around the world according to the time it took to recoup the average price of a three-bedroom property in their respective locales.   A higher ranking indicates a quicker return of investment through Airbnb.

Airbnb provided a faster return of investment for three-bedroom properties in all 75 cities except for Beijing, China, which placed last, the study showed.  Airbnb rates there would recoup one’s investment in 59 years and 6 months, versus 55 years and 10 months through average rent.

At 20th place, Montreal was the highest Canadian city in the list. The average cost of a three-bedroom property there stood at USD354,371. It takes six years and two months to recoup that figure through the average Airbnb rate (USD4,816 per month) compared to 22 years and 9 months for the comparable USD1,296 average monthly rate.

Toronto and Vancouver were at the bottom half of the rankings at 52nd and 68th respectively. A three-bedroom home in Toronto costs USD615,737 on average, Nested found.  It would take 24 years and 9 months to recoup that amount through USD2,073 a month. The Airbnb rate of USD4,577 would recoup the investment in 11 years and 3 months.

A three-bedroom home in Vancouver costs about USD865,344, Nested said. Airbnb’s USD4,037 rate would return that figure in 17 years and 10 months, versus the 28 years and 5 months of the average USD2,540 rent.

Durban, South Africa placed first, as it takes just a year and six months two recoup the average cost of a three-bedroom property there (USD94,343).

Nested found Hong Kong as the city with the highest average cost for a three-bedroom property (USD3.15m), followed by London (USD2.83m) and New York (USD2.17m).


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COMMENTS

  • by 2017-02-06 11:47:41 AM

    This article is missing 3 important points:

    1. It assumes 100% vacancy rate. From my experience airbnb rentals have substantially higher vacancy rates compared to traditional rentals. Airbnb is also very seasonal in most places, so rates and vacancy can have sharp drops in off season.

    2. It does not take into account the cost of furnishing, upgrades, utilities, maintenance and management which is higher for airbnb (utilities are normally included).

    3. The average sale and rental price noted in the article (at least in Vancouver) is the price of a 3 bedroom home for an entire area including areas where there is low demand for airbnb rentals, lower rental rates and lower purchase costs. On the other hand the average price for airbnb shown is heavily weighed by where airbnb is in demand. In areas where airbnb is in demand the purchase and rental price of a 3 bedroom in Vancouver is substantially higher. Comparing average price and average rent payback for a large metro area to average airbnb payback (which tend to concentrate in smaller more expensive areas of the city) is a bit misleading.

  • by Alex 2017-02-07 11:52:52 AM

    Good points. Also, since when are Montreal Airbnb rates so high? There's absolutely no way Vancouver and Toronto rates are lower than Montreal on average.

  • by ammythomas849 2017-02-08 12:30:06 AM

    My mothers neighbour is working part time and averaging $9000 a month. I'm a single mum and just got my first paycheck for $6546! I still can't believe it. I tried it out cause I got really desperate and now I couldn't be happier. Heres what I do,

    ----------->>> www.newsnet20.com

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