I am considering properties to rent as I am about to relocate and start a new career. Property in the area is pretty expensive and would amount to 45-60% of my net salary (depending on location), however, I am considering a larger property with an extra room at 70-80% of my net salary and then subletting that room.
I would need a 40-50% occupancy rate (depends on pricing) for this option to be viable. I consider this to be pretty risky as if I don't meet the occupancy rate or get any bookings in a month then I will have only 25% of my net salary to live off. (25% of net salary = <£5000/year).
I live in the UK so I have two options for tax, (1) there isn't any tax to be paid on the income from AirBnB if the income is under £7500, (2) pay 20% tax on the profit gained from the venture.
Hopefully a 40-50% occupancy rate is obtainable, the AirBnB market in my area is quite strong, although not as strong as other major cities (Manchester, Birmingham, London). I have experience using AirBnB and know about digital marketing, so hopefully this should help.
I know to start a new venture you have to spend money to make money, and the income that comes from AirBnB will reduce the amount I spend on rent. The rates below also factor in the costs involved in renting a property and being an AirBnB landlord (Setup costs, AirBnB costs, insurance etc). These are all estimates but set at my largest estimates.
- If I get a 0% occupancy rate then I will be spending 70-80% of my net income on rent.
- If I get a 40-50% occupancy rate then I will be spending 45-60% of my net income on rent. (My desired amount to spend on rent).
- Anything above a 40-50% occupancy rate, I guess can be considered a "profit".
I wanted to get some input on this idea. Do you think spending this large percentage of my net income on rent is too risky?
Submitted June 24, 2017 at 09:55AM by Ashintosh http://ift.tt/2sBZtdk
