Investment in Residential Properties and Apartments for Airbnb and Holiday Lets
Introduction
Investing in residential properties and apartments for use as Airbnb and holiday lets has become an increasingly popular business model. This comprehensive guide will provide you with the latest trends, considerations, and potential income expectations for such investments. Whether you’re a seasoned investor or new to the market, this guide will help you navigate the complexities of short-term rental investments.
Why Invest in Self-Catering Apartments?
Self-catering apartments offer a unique blend of hotel-like amenities and the autonomy of a home, making them highly attractive to a broad range of travellers. These properties provide essential services such as Wi-Fi and housekeeping while allowing guests to set their own schedules and budgets. The market demand for self-catering apartments has been strong, with 3,200 new units introduced since 2020, indicating a robust growth trajectory.

Market Trends and Profitability
Higher Returns Compared to Traditional Tenancies
Investments in self-catering apartments can yield significantly higher returns compared to traditional tenancies. The serviced apartment sector has outpaced traditional hotel room investments, achieving a Gross Operating Profit (GOP) margin of 43% in the 12 months leading up to May 2022. This trend is expected to continue, with the UK’s serviced apartment sector projected to expand to over 27,000 units by the end of 2022.
Competitive Market Landscape
The short-term rental market has grown more competitive, making it crucial for investors to conduct thorough research and develop a strategic approach before diving in. Online tools like Air DNA and Rabbu can provide valuable data on rental prices and occupancy rates in various markets.
Additionally, scoping out competing properties on platforms like Airbnb and VRBO can help you gauge potential earnings.
Location-Specific Factors
The performance of self-catering apartments is heavily influenced by location-specific factors. For instance, New York City’s short-term rental market is complex, with strict zoning laws and dynamic demand patterns driven by tourism and business activities. Proximity to transportation and tourist attractions can significantly enhance a property’s attractiveness to guests.
Operational Considerations
Management and Marketing
Managing self-catering apartments requires a modern approach that incorporates digital solutions to enhance the guest experience. A strong online presence is indispensable for attracting bookings, and professional-quality photos can elevate your property’s profile on platforms like Airbnb or VRBO. Effective management and marketing strategies are essential for maximizing profitability.
Furnishing and Amenities
Short-term rental units must be furnished and equipped with essential amenities to meet guest expectations. Adding luxury amenities such as hot tubs, fire pits, or sports courts can significantly increase your income. Providing a high-quality guest experience can turn your property into more than just a place to stay, making it a lifestyle choice for travellers.
Regulatory Environment
The regulatory environment for self-catering apartments, especially in the UK, demands careful consideration to ensure compliance and successful operation. Rules and regulations can change, so it’s important to stay informed about proposed legislation and local officials’ attitudes toward short-term rentals.
Income Expectations
Potential Earnings
Rental income is the lifeblood of Airbnb investing, with properties in sought-after locations like New York potentially yielding considerable returns. Despite challenges such as increased interest rates and inflation, the average occupancy rate for short-term rentals has increased from 2023 to 2024 in all major cities. Offering competitive prices and carefully planned discounts can encourage longer stays and boost your income.
Seasonal Variations
If you’re investing in an area where tourism is seasonal, it’s important to account for variations in rates and bookings throughout the year. Understanding the market dynamics and adjusting your pricing strategy accordingly can help you maintain a steady income stream.

Conclusion
Investing in residential properties and apartments for use as Airbnb and holiday lets can be a lucrative venture if approached strategically.
Why not take the plunge with no risk and start your journey today
By understanding market trends, managing your properties effectively, and staying compliant with regulations, you can maximize your returns and build a successful short-term rental business. Keep these considerations in mind as you explore this exciting investment opportunity.
*Written by Edward Swindells, Auctioneer at World of Auctions*