For Melbourne property investors, deciding between short-term rentals (e.g., Airbnb) and long-term tenancies presents a dilemma. Short-term options can yield greater profits, while long-term rentals offer stable income and reduced management demands. The key question for today's market is which strategy is more advantageous.
Determining the optimal investment property strategy requires considering your specific property, investment objectives, and the prevailing conditions in the local market. Our experience collaborating with investors throughout Melbourne's northern suburbs has yielded valuable insights into this nuanced decision-making process.
Let’s start with the obvious drawcard: short-term rentals can generate higher rental income, especially during peak travel seasons. Properties near hospitals, event precincts, or universities often perform well with short-term stays, and platforms like Airbnb make listing easy.
But there are the catches.
The workload is higher. Cleaning, check-ins, messaging, restocking; short-term leasing is labour-intensive, and most investors will need to pay for a management service to stay on top of it.
There’s less income stability. Occupancy can be unpredictable, especially outside of high-demand periods. It’s not uncommon for short-term rentals to sit vacant in the off-season, eating into your returns.
And then there’s tax. The Victorian Government introduced a short-stay levy in 2023, meaning short-term rental hosts must pay a 7.5% tax on income generated from these bookings. This change can significantly impact the profitability of short-term strategies, particularly in competitive markets.
At BISE Property, most of our investor clients favour long-term leasing, and it’s not just because it’s “easier”.
Stability is key. Long-term renters provide predictable cash flow, fewer turnovers, and lower vacancy risk. With consistent lease agreements, you can plan your finances with greater confidence.
You also save on operational costs. No weekly cleanings. No frequent inspections. No constant advertising.
And when you have a quality renter who takes care of the property, it becomes a lower-stress investment with less wear and tear.
Long-term leasing also means you’re more likely to build strong relationships with your renters, which often translates to longer tenancies, reduced vacancy periods, and reliable income.
Melbourne's property market has undergone significant changes recently and continues to do so. Due to increasing interest rates and cost-of-living pressures, investors are now focusing on strategies that emphasise stability.
In the northern suburbs, we’re still seeing high demand from quality renters looking for well-maintained homes, particularly families and working professionals. These renters are seeking longer leases, stability, and good property management.
Short-term rental demand, on the other hand, can be more volatile. While some inner-city or beachside properties may perform well with tourists, suburban areas typically see stronger results with long-term strategies.
There’s no universal answer. But here’s what we recommend to our clients:
Whatever your choice, the most important factor is how your property is managed. A good property manager won’t just “set and forget”. They'll help you weigh up your options, keep vacancy low, and make sure your returns stay strong over time.
Thinking about your next move? Contact us for expert property management in Melbourne’s northern suburbs.
