Investing in a property to rent out as an AirBnb can be a fantastic way to diversify your profile and to earn passive income. However, it’s important you do your research to make this investment a successful one, so we’re here with some tips for investing in an AirBnb abroad, from your down payments to tax implications, finding the right area and looking to work with a co-host.
Make Sure You’re Aware Of Higher Down Payments If You’re Not Local
If you’re wanting to buy the property outright with cash, then this isn’t something you’ll need to worry about. However, if you’re looking to buy a property abroad, you’re not local and you’re going to be buying with a mortgage, you need to be aware of the higher associated down payments. Firstly you’ll need to ensure that you’ll be able to get a mortgage from a lender abroad, then also ensure that it’s a legitimate company. The lender will be able to help advise, however usually when someone who does not live in the country is wanting to buy abroad, then the down payments are higher. For example, if you’re wanting to buy a property in Spain but you aren’t Spanish or don’t live in Spain, you’ll typically need to put down a 30% deposit in order to get a mortgage. So, considering whether you have a 30% deposit for the kind of property you want to purchase is important.
Consider The Legal Side and Tax Implications
You also need to think about the legal side of things and the tax implications of investing abroad. Firstly, different countries have different property laws, particularly for people who aren’t residents and are wanting to buy. Having a thorough understanding of how you would be taxed based on where your AirBnb is will be important to ensure that it will provide the right level of profitability. You should also think about the tax implications of having income in two different locations, as you will likely need to pay tax to the country where your AirBnb is, as well as in the country you’re living in. Take some time to look into this because it could change your mind about where you decide to have your AirBnb.
Do Your Research To Find Popular Areas
Generating a thorough understanding of where you’re wanting to buy and ensuring that you’re finding a good area is key to ensuring you generate bookings. Choosing an area that has a high volume of visitors, from business people to tourists, is key. Once you have a general area, make sure you visit regularly, speak to locals and find an area that will provide real value. Explore your new city like a tourist to get a real feel! Somewhere with easy links to the closest airport, somewhere with plenty of local amenities, with fun activities to do and within walking distance to local bars and restaurants are all popular choices. Trying to get as central as you can is also important, as that’s why many people choose an AirBnb, because it’s good value for money and you can access a great location.
Work With A Co-Host
If you’re wanting to invest abroad but won’t be based there, then it’s highly advised that you work with a co-host. You can find co-hosts who are local to the area you’re buying and they will help you to manage the bookings and property. Usually you would pay a co-host around 25-30% of the total booking cost, if they are managing the booking, available to be contacted and will be cleaning the property too. There are professional teams of co-hosts in very popular areas too. You could also work with your co-host to provide excellent local recommendations, especially if you’re travelling to London for the first time! This is a great way to manage your property and ensure that someone is there to provide guests with the customer service they’re looking for.
Make The Property Feel Authentic
Often people will select an AirBnb over a hotel as they feel they can get a more authentic experience, which you can help to offer. Keep the main elements of your AirBnb nice and neutral, using white or off-white shades, and wooden elements, to create a warm, welcoming and fresh feeling space. Then, you should finish the rental property with local finishing touches, like local artwork, soft furnishings like sofa cushion covers and decor, so that they feel a connection between the place they’re visiting and your AirBnb. You don’t need to go over the top with this, as a cluttered space can take away from the luxury feel, however adding a few touches can transform the space and bring it to life.