The best advice you’ll ever get on investing in apartments

investing in apartments

Smart real estate investing is a superpower. Master it and you can have an income to live off for life and enough capital growth to secure your financial future. Learn about investing in apartments for financial freedom in just 10 minutes with out top 8 investing tips.

Let’s hit it!

investing in apartments


  1. Living off rental income
  2. What to avoid in an investment property
  3. The problem with negative gearing
  4. How to quickly identify a cashflow positive property
  5. Our top tips for investing in apartments to live off the income
  6. The best advise you’ll ever get on investing in apartments – summary

Living off your rental income

Living off rental income is part of the property investing holy trinity.

It’s when your rent covers all of your costs to hold the property, and then some. In investing terms, this kind of property is known as ‘cashflow positive’. Once your investment is cashflow positive, you get money in your pocket each month. Money you don’t have to earn from a day job. Huzzah!

There are a lot of moving parts to this equation playing out, on both the expense and the income side of your investment.

Firstly, let’s examine your holding costs. Many folks make the mistake of thinking it’s just your mortgage. Without a doubt your mortgage will likely be your largest cost and the biggest determinant of whether a property is cashflow positive. But remember, holding costs also include rental agent fees, city taxes or rates, accounting costs, fixed water supply charges (in Oz), tax accounting costs, advertising costs, vacancy allowances, and repairs and maintenance!

The last three on that list can be a cashflow killer if you haven’t factored them in.

On the income side the most important factor for cashflow is your ability to maximise rent, often by going above and beyond what the average investor is willing to do, or does.

What to avoid in an investment property

The opposite of ‘cashflow positive’ property is ‘negatively geared’ property. Negative gearing is a fancy term to try to make it sound strategic for your property investments to take money out of your pocket each year. You are ‘negatively geared’ when your property produces a loss which can then be used to offset your income tax at the end of the year (producing a tax saving).

Negative gearing may reduce your income tax bill, but that saving is premised on you making a loss on your cashflow at the end of the year! So the question is: why o why would you buy and hold an asset to lose money on it each year? Let’s look at why people buy negatively geared property.

1. Capital gains

The main argument for negative gearing is that the value of the property will grow more than your loss to operate it each year, leaving you net better off. Here’s a demonstration:

Single story home mortgaged at 80% LVR
Cost to purchase (excl. stamp duty & other fees)$500,000
Median annual growth (5 years)$20,000 (4% / yr)
Rental income$18,720
Mortgage costs (3.85%)$22,512
Agent fees (8.5%)$1591
Total operating cost per year$31,303
Owner’s cost to hold-$12,583
Tax deductions on loss (@ 37% tax rate)$4655
Total operating loss-$7928
Total return after capital gains$12,072 ((-$7928 + $20,000)

You can see in this example that he owner is $12,072 better off at the end of the year if the property grows by its 4% historical growth. This is after costing $12,583 out of pocket to hold the property over that time. That’s a BIG IF in our view and there are much smarter ways to invest in property & build a property portfolio.

2. Time in the market

The second reason people buy negatively geared property is because they believe by paying down the mortgage and increasing rents, the property will become cashflow positive over time. Over 40% of Australian investment properties are said to be paying their owners an income after holding costs.

But if you dig deeper, many of these properties have been held for at least a few years, most for more than 5. The investments have become positive cashflow over time.

For their first years of ownership however, the vast majority of Australian investment properties are negatively geared and actually cost their owners money! And a lot of first time investors can come unstuck in this period, especially if their personal income, rental income or mortgage situation changes!

3. Depreciation

Depreciation is an additional tax deduction on building, fittings and fixtures. Depending on the age and condition of your property, depreciation gains can be significant (but generally decline over time). For example, one year we received around $5000 in depreciation benefits on a 1970s brick and tile property we held until recently. To claim depreciation benefits, you need to engage a professional to do a deprecation report. Not all properties are eligible for benefits.

Deprecation lowers your taxable income, so it further reduces operating losses in negatively geared properties. In some cases, depreciation benefits can turn a negatively geared property into a positively geared property. This can happen if your depreciation benefit is > cost to hold – other tax deductions.

In the example above, if your depreciation is > $7928 (-$12,583 + $4655) then the property would be ‘positively geared’ at the end of the year.

In this example, you will have money in your pocket at the end of the year after tax. You will still be out of pocket during the year to hold the property. One problem with depreciation as a strategy is that you don’t know what your deductions are at the time you buy the property (unless you fork out for a report).

The problem with negative gearing

Where to start! We’re not fans of negative gearing as an investment strategy for so many reasons. Here are some of the biggest:

  1. The out of pocket cost. Can you afford $12,000 out of pocket ($1000 per month) to hold an investment property during the year? A lot of families trying to get ahead just can’t.
  2. The risk. Your losses can blow out easily – particularly if rents decline, vacancy rates increase or mortgage interest rates go up.
  3. It’s reliant on historic property market trends. Ever heard the line ‘past performance is not an indicator of future growth’? What if your investment doesn’t grow by 4% per year over the time you hold it?
  4. It’s harder to grow an investment property portfolio. Losing cash each year will impact your ability to service additional loans, if you want to add to your investment portfolio.
  5. There are smarter ways to invest in property!

How to quickly identify a cashflow positive property

Cashflow is important in property investing because it helps you hold the property without stress, minimise financial risk, and grow your portfolio. If you’re aiming for financial freedom, a positive cashflow property or two can be a game changer and speed up the time it takes to get your financial freedom.

But how do you quickly identify whether an investment will be cashflow positive?

In Oz, we apply what we call ‘the 10% rule.’ You can apply the 10% rule to a property’s gross rental yield when you’re out looking for your next investment. But it is just a rule of thumb. It’s always best to use it that way and do full due diligence before you invest.

As you do your research, what you will find as you scour through real estate ads and data, is that very few areas (at least on Oz) have rental properties returning a gross yield of 10%!

And this is exactly where apartments come in!

Why invest in apartments?

Firstly, we’re not talking about investing in just any old kind of apartments. We’re talking a specific type of apartment, in certain areas with certain features. If you follow our tips, investing in apartments can definitely be cashflow positive and pay you at the end of each month. They can also appreciate in value and provide options to take equity out of your investment over time.

We know all of this because we invest in these types of apartments and live off the income.

So lets get to the juicy bit 🙂

Our top tips for investing in apartments to live off the income

We’re about to run through the type of apartment investment that we hold and that pays us an income each month Before we start – this is not a straight forward or a passive investment strategy. If it was easy, everyone would be doing it….

So here’s our best advice you’ll get on investing in apartments:

  1. Buy multiple apartments on a single title
  2. Go regional
  3. Buy ‘walk-up’ apartments
  4. Buy brick or cement
  5. Find a cosmetic renovator
  6. Buy occupied apartments under market rent
  7. Supercharge your income
  8. Buy in a trust with a company trustee

Now let’s break down what exactly we do and have learned from experience:

1. Buy multiple apartments on a single title

This is critical, so we’ve made it number 1 on the list.

Buy multiple apartments on a single title, ideally on one registered parcel of land (or Lot). We’re talking about investing in a Duplex, a Triplex or Fourplex. Buying multiple apartments on a single title increases your rental and value add opportunities. We’ll get into this further below. It also lowers your buying and holding costs compared to buying single or multiple apartments, each on their own title.

We recommend stopping at four apartments. Anything over four apartments and you start entering the realms of commercial lending (at least in Australia), which can complicate the loan process and make loan criteria harder to meet.

Four key benefits of a single title apartment block

  1. It’s cheaper to buy – buying multiple apartments on a single title incurs lower buying costs than a block of separately titled apartments. Since buying costs such as title registration, mortgage insurance and stamp duty are all attached to property title, you pay these fees once for multiple properties. Buying multiple apartments on a single title can save tens of thousands of dollars in the buying process.
  2. It’s cheaper to hold – expenses such as water bills and council rates (city taxes) are much lower with a single title apartment block. Rates are attached to land parcels (lots) in Australia. A block of units on a single title over one lot attracts much lower council rates each year. You also pay less in fixed water charges, which landlords foot the bill for here in Oz. Multiple titles equals multiple water connection points, each with a separate water bill.
  3. Multiple rental streams – high vacancy rates can kill a good property investment dead in the water. Dual income properties help you manage this risk through diversified income streams. When one is vacant, you have rent from the other and so on.
  4. House hack and live for free: You could even live in one apartment and have tenants pay your mortgage. A $500,000 duplex with $400,000 loan gets you $1213/month rent. Your principle and interest repayments are $1876/month. Your rent is $153/week! You’d need to be onsite manager to realise this outcome but it’s doable.
  5. Subdivide – You can subdivide the right duplex, triplex or Fourplex. Subdividing is the process of putting each apartment on a single title (often called ‘strata title’). This allows you to sell one or all apartments separately if you want to. Why would you do this? Firstly, to increase a valuation on your investment. Three separately titled apartments will often reach a higher book valuation than a triplex on a single title. A higher valuation allows you to draw equity and keep investing…. Secondly, to access capital from your investment. If each apartment is on a separate title you can sell one or two apartments and take some cash off the table.

Note, there are certain features a property must have if want to subdivide in the future for a profit. But that’s a whole different article right there 🙂

Together, these 5 factors increase your potential for positive cashflow, organic growth and manufactured value – the property investing ‘holy trinity’.

2. Go regional

Property markets have experienced some pretty wild growth in 2020 and 2021. If you’re looking for an investment property right now, it’s highly likely that Duplex, Triplex or Fourplex apartments in tier one cities are out of reach. Unless you have a cool $1.5M…

The good news is, people still need a place to live in regional areas! Regional areas offer a lower buy in price for these types of properties. A LOT lower! You can still pick up Dduplex or Triplex in regional areas with sound local economies for around $650,000.

Add to that new remote working trends, and you may find that rents in regional locations are on the rise and are even outpacing city rental increases in some areas.

All of this bodes well for your chances of getting into the duplex or triplex market and of achieving a decent rent. In our view, regional areas with diverse and growing economies are great markets for investing in apartments as unit blocks.

3. Buy ‘walk-up’ apartments

A lot of folks were turned off apartment living during the pandemic. Apartments with shared lifts, facilities and common spaces definitely had a stink about them. People wanted distance from their neighbours. This is where ‘walk up’ apartments come in. A ‘walk up’ apartment is an apartment accessed by stairs or located the ground floor, with its own private entrance and facilities. This means they work for social distancing – ‘pandemic proof’ in a sense.

Walk up apartments were mostly built in the 70s in Australia, at a time when there was just more ‘space’ around and less people. They’re often larger internally than contemporary apartments. Updated walk up apartments can be appealing to renters for this reason.

Look for walk up apartments with minimal common areas. Individual rather than shared laundries, parking and outdoor areas is what you’re after.

4. Buy brick or cement

Earlier we mentioned that maintenance and repairs can blow out to your costs to hold a property. Multi-unit properties can exacerbate this as there are more kitchens and bathrooms, which is where the bulk of maintenance and repairs occur. So when you’re looking to buy, opportunities to reduce maintenance and repair bills are the same as money in your pocket.

One way to lower these costs is buy brick veneer properties instead of timber buildings, which require far more maintenance for wood rot, painting etc. Brick buildings typically require less up keep, making it easier to cashflow the property. You’ll also have a greater chance of retaining tenants with brick construction because shared timber walls can make for very noisy living.

5. Find a cosmetic renovator

Cosmetic renovations involve simple upgrades like cleaning, paint, flooring, window furnishings and tidying or landscaping gardens. Cosmetic renos are a great way to add value to an investment property for relatively cheap. They can also lead to higher rents and better cashflow.

When you renovate a Duplex or Triplex, there can be economies of scale in the renovation cost as well as a multiplier affect on rental increases. Win win for both value and cashflow! Just remember you need to have some extra money left in the bank for renovations after buying the property! Also, talk to your account about the timing of your renovation before you buy. According to Upside Accounting you need to be really careful what work you do to a property in the first 12 months of owning it as ‘initial repairs’ are not tax deductible!

6. Buy occupied apartments under market rent

You have to do some market research to get this tip right, but it can be worth it. What we’ve observed is that some landlords are reticent to raise rents on long term tenants that ‘look after the place’. We’ve also found that somewhat dated properties can also be rented at below market rates.

These are exactly the kind of duplexes or triplexes we love! You’re looking for an opportunity to raise rents significantly, without spending a lot extra to do so.

Tips 5 and 6 go hand in hand many times, and can turn a borderline investment into a cashflow positive one. Something to note is that you may need to move existing tenants on for this strategy. Firstly, to renovate. Secondly, because in many states there are limits to rent increases at lease renewal. These limits don’t apply to new tenants and leases. Instead, you’re free to find a new tenant and set your rent at or above market rates.

7. Supercharge your rental income

Renters will pay more rent for certain amenities. Understanding what these are, and the mark-up for them in your area, presents opportunities to supercharge your rental income. Examples include providing furnished rentals, renting to students by the room, or installing amenities like air-conditioning. You might also consider opportunities for short term rental accommodation, which for us has been the ultimate supercharge strategy and helped us get to financial freedom!

8. Buy in a trust with a company trustee

This is a no brainer if you want to build a property portfolio, protect yourself legally, and minimise tax. A properly structured trust with company trustee can help lower your tax bill significantly, protect you from legal liability, and help with estate planning if you want to transfer asset ownership among family members. Be warned, you will need to lodge separate tax returns for the trust. This will cost extra in accounting fees, which you should also add to the cost of holding the property!

For us, the tax advantages of using these vehicles have produced at least a 10x return on our accounting costs… Wooorrth iiiit!

The best advise you’ll ever get on investing in apartments – a summary

To recap, if you want to live off rental income then investing in apartments may be the strategy for you. But you’re not looking for just any apartments. You’re looking for multiple ‘walk up’ apartments on a single title and lot, located in regional areas. Properties that are: brick construction, in need of cosmetic update, and currently rented below market rates. You’ll need to have some money on the side to update the property and the gumption to move long term tenants on as part of this strategy. Oh, and don’t forget to buy in a trust and look for every opportunity available to supercharge the rent!

Always do your own research into the local rental market and economy. Always crunch the numbers before you buy!

We own a triplex in our investment portfolio and live off the income it provides. It’s almost doubled in value in 10 years and we still have the option to subdivide with pretty minimal cost if we want to sell.

This is active investing but if you want above average results, you can’t just do what the average investor does (buy negatively geared property).

We genuinely feel we’ve that this is some of the best information about investing in apartments on the internet. We hope it helps you on your investing journey to financial freedom! If you feel the same, you can help us out by sharing it around. Oh, and happy hunting!

Until next time financial freedom seekers – have fun, be happy, do good!

Can you really make money with rental arbitrage?

rental arbitrage

You don’t need a lot of start up capital or to be a real estate mogul to make money on Airbnb. Hell, you don’t even need to own any property. You just need to know the shit outta how to find and run a great rental arbitrage opportunity. So let’s dive in and get started! Rental arbitrage has become an increasingly popular strategy for making extra money in real estate, and many people are interested in learning how to do it themselves. In this blog post we will cover:

  • what rental arbitrage is,
  • how rental arbitrage works on Airbnb,
  • what to look for in a rental arbitrage property,
  • 6 traps to avoid when rental arbitraging, and
  • our own personal rental arbitrage case study!

What is ‘arbitrage’?

In its simplest form, arbitrage is the process of buying a product in one market and then immediately selling it in another market for a higher price. This can be done by taking advantage of price differences between two different markets, or by taking advantage of discrepancies in the price of similar products offered by different sellers.

There are tonne of arbitrage opportunities available nowadays with the internet giving everyone access to different marketplaces instantaneously.

One well known arbitrage strategy is ‘rental arbitrage’.

What is rental arbitrage?

rental arbitrage

Rental arbitrage is about taking advantage of price differences in different property rental markets. There are different ways to do this. For example, you might buy a rental property in disrepair for a price based on the current rental return. You can arbitrage the rent by fixing the property up cheaply and increasing the rent. In this case you are arbitraging rental sub-markets between run down and well-presented rentals. The difference could literally be a lick of paint, some gardening and new curtains!

Another rental arbitrage technique – and the one we’re going to focus on here – is the practice renting a property long-term and then re-renting it on short term accommodation sites like Airbnb or Vrbo.

This kind of rental arbitrage is also known as ‘house hacking’ and there are two main ways to go about it.

  1. You can rent a property, live in it and rent out a room in that property short term.
  2. you can rent a property long term solely to rent it out to others on a short term basis. You don’t live in it at all.

We’ve made money with the second strategy, but this post applies to both methods.

The rental arbitrage model

The model for rental arbitrage using Airbnb is simple – your Airbnb earnings need to more than cover your cost to rent the property from the owner, plus your operating expenses as a short term rental. If you’re able to find a property where the Airbnb income will be more than your costs, you have created an opportunity for rental arbitrage!

Making money from rental arbitrage is highly location and market dependent as you can see from the AirDNA graph below. AirDNA is a great source of real data from Airbnb rentals.

This image shows the short term rental premium for different US markets based on real Airbnb and long term rental data.

The graph shows that long term rental rates have increased in some US markets and decreased in others due to changes in demand. Short term rental nightly rates and occupancy rates have also changed with demand. But what does all this mean? Well, markets where growth in short term rental demand and nightly pricing exceeds long term rental rates are golden!

In this post we are going to demonstrate that rental arbitrage can be satisfyingly profitable if done correctly, but there are also risks involved. You need to know your numbers and market trends (like those illustrated above) to make money. But don’t worry, this data is available on the internet! We use AirDNA for all of our Airbnb analysis.

Make sure you keep on reading right to the end where we share our own personal case study showing how we made money with rental arbitrage.

6 rental arbitrage traps to avoid

Once you understand the basics of rental arbitrage, it’s important to be aware of some traps that can derail your profits. Here are five to watch out for:Your own time commitment – managing a short term rental takes time, so make sure you factor this into your calculations

  1. Not properly researching an area – if the short term rental market is weak or there are too many short term rentals in the area, your earnings will be lower than expected. You need to be clear what your Airbnb occupancy rate will be and the nightly rate you can charge.
  2. Underestimating operating costs – from cleaning supplies to wifi service, make sure you have a realistic estimate of all your expenses. You can take a look at our case study below to get a better idea of what these might be.
  3. Ignoring the rules – governments and municipalities can make and change rules related to short term rentals, so always stay up-to-date on any new rules that could impact your bottom line. It’s best to find a location where there are already clear rules about running Airbnbs.
  4. Finding properties with hostile building management – some building managers or body corporates will do everything in their power to keep Airbnb businesses out of the building. Airbnbs can undercut their profits. Find Airbnb friendly buildings in rent in!
  5. Not managing risk – from damages to rental theft, there are a number of things that can go wrong with Airbnb properties or guests. Make sure you have enough in your budget to cover any unexpected costs and get short term rental insurance!
  6. Make sure you have a clear written agreement with the property owner stating your intention to rent the place short term. Be crystal clear about who will pay what costs – utilities, maintenance, and repairs.

What to look for in a rental arbitrage property

There are several things we recommend that you look for when identifying rental arbitrage opportunities:

  • The numbers of course! There must be a good short term rental premium in that location. We talk about ‘short term rental premium’ above.
  • The property should be in a desirable location with high demand from Airbnb guests. You can check short term rental demand for an area using AirDNA.
  • The rental rate that you pay should be below or at market value.
  • The property should be well-maintained and (ideally) furnished. This will reduce your Airbnb set up costs to things like small appliances, kitchenware, and consumable items (bath products). Lower costs mean quicker profits!
  • Properties that offer extra value that isn’t reflected in the rent. Like plenty of room to sleep more people using sofa beds or ways to turn dead spaces into a profit. Examples might be transforming a study into an extra bedroom, or an ‘insta-worthy’ view that’s not reflected in the rent.
  • A property that can out compete other Airbnb listings in the area. This means that the amenities, the interior design, the space, the light and the comfort level are better than the average local listing.

When considering a rental arbitrage opportunity, always do your research to make sure these factors are present!

Now you understand what rental arbitrage is, how it works, some of the traps to avoid, and what to look for. Huzzah! Now let’s take a look at an example of how we successfully made money with this strategy.

Our rental arbitrage case study

We’re going to share with you a personal case study using rental arbitrage. Hopefully it helps you understand how to go about finding these opportunities and how much you can actually make, if you do it well!

Due diligence

When looking for an investment opportunity, we always start with a due diligence phase. For Airbnb, we use AirDNA to do our research, as well as the Airbnb platform itself. Our aim was to find a rental arbitrage opportunity and set up a new Airbnb income stream for our financial freedom goals!

Our due diligence on AirDNA discovered:

  • strong demand for Airbnbs in a particular Brisbane CBD area; an entertainment district featuring restaurants, bars, clubs, and cultural venues
  • a limited supply of quality 1 bedroom apartments in the direct vicinity
  • a pricing gap in the nightly rate for singles or couples wanting to stay in the area
  • the most successful Airbnb listings in the area had a ‘wow factor’ to them.

Once we identified this gap in the market we went about finding an apartment to rent to specifically fill that gap in market demand and pricing…

The property

We found a one bedroom apartment for rent in the area through a real estate agent in our network. These are the features that we felt made the property a potentially good Airbnb option:

  • spectacular city views
  • walking distance to entertainment venues, restaurants, pubs and clubs
  • spacious apartment for a 1 bedroom
  • all new interior
  • Airbnb friendly apartment building.

The rental arbitrage deal

After further discussion with the agent, the apartment was offered to rent for $460 per week.

Next it was time to do the numbers….

After crunching some high and low scenarios we realised from the combination of Airbnb demand (occupancy) and achievable nightly price, compared with the weekly long term rent and likely expenses that this particular would be a good rental arbitrage opportunity.

We signed the lease, snapped into action and began to set up the Airbnb listing.

Set up costs

The apartment did not come furnished, which meant that we had higher start up costs. We would also face a pay back period before we started making actual profit. We needed to limit the set up costs to achieve a payback period of under 6 months if possible, given we had a 12 month rental lease.

It cost us $7000 AUD to furnish, decorate and equip the apartment for Airbnb guests. This included all new items and buying our own linen. It did not include the 7 days it took to set everything up, which you’re paying rent for. Make sure you factor this in to your analysis.

Income and expenses

Here is our actual income and expenses ledger for the month of January.

January ExpensesCost per month**
Hot Water$165.50
Cleaning and laundry$370
Total cost$2896
Total income (net of fees)$4519
Monthly profit$1622
** numbers are rounded

Annual profit

Extrapolating from these monthly figures we can get an indication of annual profits.

Year 1 profit is equal to the net income after start up costs….

= $1600 x 12 months – $7000

= $12,200

Year 2 profit is more like $19,200.

Thats just from one x 1 bed apartment! You get three of these things that work well and you could consider quitting your job and building an empire!

Final word

It’s worth knowing that not all months are equal in Airbnb income – some have higher demand and some have lower demand. CBD locations like this one are not particularly seasonal however, and can experience strong demand all year round due to the variety of entertainment options in the area. What you really need to watch out for is oversupply of properties locally – this can really impact your occupancy rates and your bottom line. We have ways to manage this risk which you can read about in our upcoming ebook!

Our eBook will also share the due diligence strategies we use to help our Airbnb business ride through business risks like unexpected dips in demand (from a pandemic maybe!).

If you’re doing due diligence on a potential property of your own, AirDNA will show you average occupancy for a particular area as well as average nightly price for different types of properties. Base your due diligence off of this data but allow a buffer for expenses. We also recommend running some sensitivities on your analysis based on higher and lower demand scenarios!

Next steps

In this post we’ve shared some beginners knowledge about rental arbitrage and how we make real honest to god money from it.

If you want to learn more and set up an Airbnb income for yourself, here are two things you can do:

  1. Sign up for the BNBformula training and get cracking on building your own Airbnb business empire, OR
  2. Bookmark our Host Hub page and stay tuned for our upcoming eBook. It’ll cover all of our hacks and tips with this rental arbitrage strategy.

Or you can read our other cool posts on making money with Airbnb!

How to manage Airbnb properties for other people
Make money on Airbnb without owning property – $6400 in one month with this apartment
How to start an Airbnb in a pandemic

Financial freedom with Airbnb using rental arbitrage is real peeps. Let’s get stacking those Benjamins (or Pineapples if you’re from Oz!).

We bought a new home with cash!

We bought a new home with cash

Here’s the first of our updates on our personal assets, income and savings. Our big news for July? We bought a new home with cash!

So here we are in July 2021…we’ve pulled it off!

When we decided to sell up in Brisbane move to Tasmania in mid 2020 we had one thing on our mind. Financial freedom. We cooked up a plan during the lockdowns of 2020 to pimp our home with some clever DIY renovations and sell up. Our aim was to take our profit and our savings and buy a house for cash.

It’s a strategy called geo-arbitrage and you can use it to bring forward your financial freedom date, just like we have.

We worked out that Tasmania was a viable option for us to pull off some crafty geo-arbitrage. Tassie also provided the sustainable living, self-reliant lifestyle we were after. We wanted no neighbours, a spectacular view and some room to grow food. Most of all, we wanted to lower our living costs.

After three months of careful searching, we’ve pulled it off!

Views to the mountains over our back fence

How geographic arbitrage smashed our housing costs

In many cases homes are not assets (an asset puts money in your pocket at the end of the month). This is generally dependent on the type and cost of housing. When we moved to Tasmania we wanted to buy a home that we could count as an asset. Let me explain how we’ve found exactly that.

Our cost of housing in Tasmania will be around $3500 per year.

Here’s the breakdown.

Typical housing costsOur new home
Mortgage$0 – owned outright
Water$0 – two tanks and pumped creek water
Sewage$0 – Septic
Grey water$0 – pumped grey water system
Power$1900 – grid but soon to have solar PV
Heat / cooling$800 – daytime from solar + wood heater
Council Rates$874

The way we’ve wrangled it, as long as our home appreciates in value by >$3500 per year, we can count it as an asset. We figure that’s likely given the strapping pace of inflation, at least in the near term. We also calculated our Brisbane housing costs by way of comparison. Here’s what that looks like:

Housing costBrisbaneTasmania
SewageSee Rates$0
Grey waterSee Rates$0
Heat / coolingSee power$800
Council rates$1420$874

What this means for us is that we have to make $23,000 less in income each year to live in Tassie. And that’s just housing costs. It’s not living costs.

Geo-arbitrage is an underrated weapon in the arsenal of any financial freedom seeker because you can use it to cut one of your biggest living costs – housing.

Our net worth

As at July 2021, our net worth is north of $1.5M. Just goes to show you don’t need millions to be financially free! You just need to kick ass crafty about it. 🙂

Our good debt position

Our net worth is calculated after debt is deducted.

We hold (indirectly) good debt on our investment properties. I say indirectly because we have company and trust structures in place. So the debt is not on our personal balance sheet. These mortgages are paid by other people, through the property investment and management company we run. These investment properties are assets not liabilities because they put money in our pocket each week as you’ll see when we get to “Income’ down below.

Our bad debt


We have zero bad debt at the end of each month (bad debt takes money out of your pocket). That’s right. Zero. The only bad debt we carry is credit card debt, which is cleared in an auto sweep of the card. Every. Single. Month.

We do use our credit card to give us free stuff. We direct all of our expenses through the credit card to earn cash rewards, which we use to buy groceries. So far this year we’ve earned roughly 77,000 points or $350 worth of free food.

Credit cards can make you money if you use them the right way.

Our July income

About half our income this month was rental income. We worked 4 to 5 hours a week for this income. We’re still keen to save and invest so we had earned income in July as well. Our capital gains is mostly from shares we own. We also had a small bit of income from cryptocurrency. Our profit income covers things we like to do on the side – retail arbitrage (reselling), cash rewards, and other online income. We’re working on diversifying our income streams further in the medium term.

Our July savings rate

75%. Huzzah!

Our next asset investment?

A solar PV system.

We’re still a bit too heavy in cash so we are looking for new investments. (Cash is trash). We’ll likely buy a solar power system, which we expect will produce an ROI of 23% year-on-year, with a payback of 4.25 years. Not a bad outcome.

We’re also busy building digital assets that will pay us an income in the future. More about that later….

Airbnb passive income – can you make good money in 2021?

Airbnb passive income

You may have heard the horror stories of Airbnb hosts having to shut down and losing all of their Airbnb income as the pandemic raged globally in 2020. It wasn’t just Airbnb hosts losing their pants – a lot of businesses and families struggled. But it did bring into sharper focus the risks of hosting on Airbnb. We lived it. We’re here to tell the tale. So is Airbnb profitable for hosts in 2021? How much can you make on Airbnb in a post pandemic era? Or is it all too damn risky now? In this post, we’ll look at how much you can make in Airbnb profit in April 2021, starting with our own one bed apartment. We’ll also delve into how to manage the financial risks of setting up Airbnb passive income. Read on peeps to see for yourself what an Airbnb side hustle can be worth.

The perfect ‘lil Airbnb passive income property

We have a little one-bedroom apartment on Airbnb in regional town in Australia. It’s located close to the city centre and next to a nice golf course. It’s about 52m2 internal, with a full galley kitchen, bedroom, separate bathroom/laundry and open living dining. The place has its own private, sunny courtyard with nice seating area and lovely garden.

We used to rent it on the long-term rental market for $210 per week or around $10,080 per year, factoring in vacancies between tenants. $10,080 was gross income, and after mortgage and bills we were in the red (negatively geared) by a little each year. A dumb position to be in looking back and I’m not sure why we let so many years go by with it negatively geared. But that’s another story.

We began thinking a few years ago when we were looking at how to better our financial equation that our little one bedder would be the perfect property to trial on Airbnb. We had renovated the place in 2014 and it wouldn’t take much in terms of capital to turn it into a short-term rental. Airbnb side hustle number one, here we come!  

We set up the property for short term guests, (another capital outlay), had professional photos taken and listed the place in May 2019. We weren’t sure who would book as there was not a lot of data on that regional market, but we knew how much moolah we had in the deal. We did our best with the data available and knew the nightly rate we needed, based on local market occupancy, to make a good profit.

How much money can you make on Airbnb in 2021?

Fast forward to April 2021 and that little one bedder has long since paid back its initial set up investment and is no longer negatively geared. Here is how much we made in Airbnb profit from this property in April 2021:

Airbnb passive income
Our one bed Airbnb listing in regional Australia
how much can you make on Airbnb in 2021

So the answer financial freedom seekers is yes – you can make money on Airbnb in 2021. Even with a global pandemic holding back the reins on international travel. This one bed apartment that used to lose a few grand for us each year on the long-term rental market made a profit of $1559 in April alone. The first of our 4 Airbnb properties turned out to be the perfect toe in the water….

If you want to know how to make Airbnb but don’t have any investment properties – we’ve got your covered too! The good news is there is a strategy to make Airbnb profit with zero investment properties that we’ve used and made good money from. Check it out here along with all of the other tools and resources we know and love to make money with Airbnb.

Airbnb passive income

The beauty of that $1559 is that it ranks pretty highly on the passive income scale. During the month of April we put a total of no more than 5 hours into running that apartment on Airbnb. We’re able to do this because we have set up the operating and financial systems and processes to run the listing passively. So that’s a cool 300 bucks an hour. For a little one bedder with a small initial investment risk, turns out it was no-brainer. But taking that first step financially was not easy until we really got a handle on the risks.

Taking your first step to Airbnb profit

Time to pimp your assets peeps! If you want to escape the rat race and you own some property, then one of the first places to start is reviewing those assets. Are they costing or making you money? Have you got the best cashflow strategy in place? Can you use them to live financially free here and now? Airbnb can be a very rewarding passive income strategy and we’ve shown here Airbnb is profitable for hosts in 2021. If you can pimp your property assets financial freedom seekers, we say get on it!

If you’re thinking about an Airbnb profit strategy for yourself but are worried about losing money, then it’s a simple case of doing the numbers. One of my favourite bosses of all time has a sign on his office wall:

“in God we trust, all others bring data”.

I’m not into god but the rest is plain truth. Actually, I’m not into data either, but there’s no financial freedom without it! What I’m getting at is that the financial risk with Airbnb is tangible and manageable. So where to get started?


We’ve lauded the benefits of AirDNA in a previous post so no need to go on about it too much here. In short, it’s a genius tool if you’re worried about taking the first steps into making killer Airbnb passive income. It gives you critical insights into the nightly rate you can charge and the occupancy you can expect in your local area – based on real data. And it’s darn cheap at under $50 for the month, no ongoing subscription – especially for information you get.

How do you work out potential Airbnb income and profit?

So what do you do with the AirDNA data, once you get it? You’re going to want to turn it into useful financial information to help your investment decisions. Sign up for our free Airbnb Profit Estimator to put your Airbnb data into action!

Airbnb Profit estimator – The Airbnb Profit Estimator is our simple to use spreadsheet tool for wannabe Airbnb investors, and time poor Airbnb hosts. The aim?  To help y’all with the financial side of investing in and making money on Airbnb. Here’s what’s in the bundle:

This is where you plug in the AiDNA research. The profit estimator helps you see the potential Airbnb profit you can make based on the nightly rate you can achieve and the occupancy rates in your local market. This data is available through AirDNA. Or you can work it out in a round about way on the Airbnb App – its just way more complex and time consuming.

Airbnb set-up budget planner – this will help you make sure you don’t over capitalise when setting up your first Airbnb. It works in tandem with the Profit Estimator. It calculates your investment breakeven in weeks based on your potential profit and projected (or actual) set up costs. Spend too much early and you’ll be slogging it through months before you see any actual profit.

Income statement – helps you record your Airbnb income and expenses from day one. It calculates monthly and annual profit, profit margin as well as capitalisation rate. This one is for time poor Airbnb hosts or Airbnb side hustlers. If you have a real job, this will make the finances of running an Airbnb a breeze.

This tool is designed to help you take the first step to Airbnb passive income and stay on top of the numbers as you grow your Airbnb profits and maybe even your Airbnb business.

The final word – knowledge is only power with action!

Don’t be held back by disinformation or false news. But also, probably don’t make investment decisions based on the numbers we give you here. Do the numbers yourself like you would for any investment. Start with out free Airbnb Profit Estimator.

If you want to become an Airbnb Host, here is a link to the platform. As they say in the (wherever they say it)…. the rest is up to you!

Until next time – have fun, be happy, do good!

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