Comparing ROI for Airbnb and Traditional Rentals

February 28, 2020

In recent years, the Nairobi real estate market has expanded significantly as investors want to increase their returns. Short-term rentals, like those provided by Airbnb, are one area that has drawn a lot of attention. Traditional rentals have been a well-liked option for a long time, but Airbnb has arisen as a potentially lucrative substitute, with the possibility for greater rental rates and occupancy rates.

Nairobi real estate ROI varies greatly depending on a number of variables, including location, property type, rental income, property management, and market conditions.

The typical rental returns for residential properties in Nairobi range from 4.7% to 7.1%, according to 2021 research by HassConsult, a real estate consulting business in Kenya. This indicates that you can anticipate making between KES 470,000 ($4,300) and KES 710,000 ($6,500) in annual rental income if you purchase a residential property in Nairobi for KES 10 million ($91,000). Airbnb rentals have, however, proven to generate higher ROI than traditional rentals due to their ability to command higher rental rates per night. This is largely due to the fact that many Airbnb apartments come fully furnished with lavish finishes that are often superior to those found in even 5-star hotels.

As previously stated, the typical return on investment (ROI) for conventional rentals in Nairobi is approximately 4.7%–7.1% per year. In contrast, Airbnb rentals can offer significantly higher ROI, ranging from 15% to over 25% per year. Recent research suggests that Airbnb rentals tend to have higher average daily rates and occupancy rates compared to conventional rentals, which may contribute to increased rental income and a higher return on investment.

Because of the frequent guest turnover, it’s vital to keep in mind that Airbnb rentals may also have greater running costs, such as cleaning fees, management fees, and higher utility bills. Also, there can be zoning or property management rules that prohibit or restrict short-term rentals, which could have an impact on the return on investment for Airbnb units.

On the other hand, ROI in real estate can also be influenced by capital appreciation, which is the growth in a property’s worth over time.

It’s crucial to remember that investing in real estate entails a variety of risks and expenses, including market volatility, property taxes, upkeep and repairs, and vacancy rates. Consequently, before investing in real estate in Nairobi or elsewhere, it’s crucial to conduct careful study and analysis, obtain competent guidance, and have a sound investment strategy Or just talk to Us. 😊

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