Buying an Airbnb Investment Property in Cairns? 5 Things You Need to Know
Would you buy a $550,000 investment property if it could generate $91,000 in annual Airbnb bookings?
On the surface, that's an attractive proposition.
But before you start searching for Airbnb investment properties in Cairns or Palm Cove, there's something important to understand.
A great Airbnb doesn't automatically make a great property investment.
We own four Airbnb properties in Cairns that have generated approximately $285,000 in bookings over the past 12 months.
And while these properties have delivered substantial accommodation revenue, their financial performance tells very different stories.
One of our apartments generated approximately $71,000 in bookings, yet its estimated income advantage over traditional renting is relatively modest after accounting for short-term rental operating costs and professional management.
Another generated $91,000 in bookings and produced a much stronger financial comparison.
At The Buyers Co, we help property investors identify, assess and purchase investment properties throughout Cairns and North Queensland.
Our approach combines extensive local real estate experience with lessons learned from building and managing our own investment portfolio.
Here are five things we'd consider before buying a property specifically for Airbnb.
1. Calculate the Actual Airbnb Return Before You Buy
When researching investment properties in Cairns, it's easy to get excited about potential holiday rental revenue.
You might see comparable properties advertised for $300 or $400 per night and assume you've discovered an exceptional investment opportunity.
But asking prices aren't the same as achieved nightly rates, and gross bookings aren't the same as profit.
Take our one-bedroom Cairns City apartment.
Located directly opposite the Cairns Esplanade Lagoon, we estimate its current market value at approximately $550,000.
Over the past 12 months, it generated:
$91,000 in gross Airbnb bookings.
90% occupancy.
Approximately $60,000 after direct short-term rental operating expenses.
Approximately $49,000 after additionally allowing for professional Airbnb management.
That last figure still excludes certain property ownership costs, including body corporate levies, rates, insurance, maintenance and furniture replacement.
However, we estimate the property could generate approximately $30,000 annually if rented to a long-term tenant after traditional property management fees, but before other ownership expenses.
On those figures, Airbnb delivers approximately $19,000 more annual income before the remaining ownership expenses.
That's a substantial difference.
But the important lesson isn't that Airbnb always wins.
It's that every investment property should be assessed on its realistic net return, not simply its advertised rental potential.
At The Buyers Co, we believe investors should understand the numbers before making a purchase, including the costs that can be easily overlooked.
2. Buy Where Holidaymakers Actually Want to Stay
One of the biggest differences between traditional property investing and Airbnb investing is understanding your target market.
Long-term tenants and short-term holidaymakers often have different priorities.
A traditional tenant might value proximity to schools, employment, shops and public transport.
A holidaymaker might prioritise being within walking distance of restaurants, beaches, tourist attractions or beautiful recreational facilities.
Our portfolio provides an interesting comparison.
Despite being smaller, our Cairns City apartment generates approximately $20,000 more in annual accommodation bookings.
A major advantage is its location directly opposite the Cairns Esplanade Lagoon.
Guests can walk to restaurants, cafés, the waterfront, swimming facilities and many of the attractions that bring visitors to Cairns.
For holidaymakers, convenience can be worth paying for.
Where Should You Buy an Airbnb in Cairns?
The right location depends on the type of accommodation you intend to offer.
Areas worth investigating include:
Cairns City: Central accommodation appealing to travellers who value proximity to restaurants, waterfront attractions and Great Barrier Reef departure points.
Cairns North: A mix of accommodation options close to the CBD and Esplanade, although individual complexes vary considerably.
Palm Cove: A tropical beachside destination where attractive holiday homes, resort facilities and coastal positioning can appeal to holidaymakers.
Trinity Beach and the Northern Beaches: Locations that may suit families and travellers wanting more space and a relaxed coastal experience.
However, buying in one of these areas does not automatically guarantee good short-term rental returns.
The individual property, its facilities, purchase price, operating costs and suitability for short-term letting all matter.
3. Don't Confuse Airbnb Occupancy With Investment Performance
High occupancy figures can be impressive, but they don't always represent the best financial outcome.
Imagine two comparable Airbnb properties.
Property A achieves 90% occupancy at an average nightly rate of $200.
Property B achieves only 75% occupancy, but its average nightly rate is $270.
Over a year, Property A generates approximately $65,700 in accommodation revenue.
Property B generates approximately $73,900.
That's more than $8,000 in additional revenue despite having fewer occupied nights.
For investors, this matters because an Airbnb's performance depends on the balance between occupancy, nightly rates and expenses.
In destinations such as Cairns, seasonal visitor demand also plays an important role.
Winter travel, school holidays, local events and quieter tourism periods can all influence achievable prices and occupancy.
When assessing a potential Airbnb investment, we would want to understand:
Realistic average nightly rates across the year.
Expected occupancy during high and low seasons.
Booking platform fees and management expenses.
Cleaning, utilities and consumable costs.
The impact of seasonal fluctuations on cash flow.
It's particularly important not to assume that peak-season nightly rates can be achieved throughout the entire year.
4. Understand the Property's Facilities, Body Corporate Costs and Setup Budget
Some of the most attractive Airbnb investment opportunities in Cairns are apartments with access to resort-style facilities.
Beautiful swimming pools, tropical landscaping, outdoor entertaining areas and well-maintained common spaces can significantly enhance a property's appeal to visitors.
But those facilities also have a cost.
Body corporate levies can materially influence the financial return from an apartment investment.
A property generating excellent Airbnb bookings may still deliver a disappointing return once all ownership expenses have been considered.
And this is where thorough due diligence becomes essential.
Before purchasing an apartment for short-term accommodation, we'd want to investigate body corporate costs, sinking fund balances, potential special levies, insurance arrangements and any restrictions affecting short-term letting.
We would also check the relevant council planning requirements, body corporate by-laws and other legal or operational requirements before relying on holiday rental income in the investment assessment.
Don't Underestimate the Cost of Furnishing an Airbnb
Another common mistake is underestimating how much it costs to establish a property as attractive short-term accommodation.
Unlike traditional unfurnished rentals, an Airbnb generally requires furniture, kitchen equipment, linen, appliances and numerous other items.
Professional photography and attractive presentation also influence how the property competes online.
The setup budget should reflect the expectations of your intended guests.
A premium Palm Cove holiday property needs a different level of presentation from an affordable family apartment.
And furnishings don't last forever.
Replacement and ongoing maintenance costs should form part of your long-term investment calculations.
5. Compare Airbnb With Traditional Rental Income
Before purchasing any property specifically for Airbnb, we'd always want to compare its likely performance against the traditional long-term rental market.
Consider the difference between two apartments we own.
Case Study: Two Cairns Properties, Two Very Different Outcomes
All figures are approximate and represent income comparisons before other relevant ownership expenses. The differences are not additional net profit.
For the Manoora apartment, the estimated income advantage of Airbnb is relatively small.
Once you consider additional insurance, furniture replacement, maintenance and the complexity of operating short-term accommodation, the financial benefit could reduce further.
Our Cairns City apartment tells a different story.
The estimated $19,000 income advantage provides a stronger case for short-term accommodation, although additional costs must still be considered.
These examples reinforce an important principle.
You shouldn't purchase an investment property simply because it could operate as an Airbnb. You should purchase it because the overall investment makes financial sense.
Short-term rental income should be assessed as one component of the property's overall investment potential.
What We'd Look for When Buying an Airbnb Investment Property in Cairns
If we were purchasing another short-term rental investment today, we'd approach the decision in five stages.
First, the purchase price. Is the property fairly priced based on comparable sales, and are we buying an asset with sound long-term investment fundamentals?
Second, location. Is there a compelling reason for holidaymakers to choose this property?
Third, rental performance. What is the realistic annual income after allowing for seasonal demand, operating expenses and professional management?
Fourth, property costs. What will the property cost to furnish, maintain, insure and operate? Are there any regulatory or body corporate restrictions?
Finally, the alternative. What could the same property generate as a traditional long-term rental, and is the additional return from short-term letting sufficient to justify its additional complexity and risk?
We also consider capital growth potential, the property's resale appeal and how the investment fits into an investor's broader financial strategy.
Because the ultimate goal isn't simply to generate high Airbnb bookings.
It's to build wealth through well-considered property investment decisions.
Work With a Local Cairns Buyers Agent Who Understands Airbnb Investing
At The Buyers Co, we specialise in helping property buyers and investors source, assess and negotiate properties throughout Cairns and North Queensland.
Our local expertise, combined with firsthand experience owning and operating short-term rental properties, gives us practical insight into the considerations involved when purchasing property for Airbnb.
We understand that finding an attractive holiday apartment is only one part of the equation.
The property also needs to make sense as an investment.
Whether you're buying your first Cairns investment property, expanding an existing portfolio or exploring short-term accommodation opportunities in Palm Cove, we can help you assess the available options and make informed purchasing decisions.
Explore our Cairns buyers agent services at www.thebuyersco.com.au.
Already Own a Property in Cairns or Palm Cove?
If you already own an investment property and want to investigate its short-term rental potential, our related business, Pebble Stays, provides professional Airbnb and holiday accommodation management across Cairns and Palm Cove.
From preparing your property for guests to managing bookings, pricing and day-to-day operations, Pebble Stays can help you explore whether short-term accommodation is the right strategy for your property.
The bottom line: A great Airbnb doesn't automatically make a great property investment. But purchasing a quality investment property that also performs exceptionally well as an Airbnb can create an attractive combination of income and long-term investment potential.
Financial information is based on our personal investment experience and estimates. Figures are illustrative, exclude certain ownership expenses and do not guarantee future investment performance. Buyers should undertake their own financial, legal and property due diligence.
