Buying an Investment Property for Airbnb in Melbourne

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Most people buying an investment property run the numbers the traditional way — capital growth forecasts, rental yield comparisons, maybe a chat with a mortgage broker. Then they decide to run it as an Airbnb, and discover too late that the property they bought doesn't actually work as one. Wrong layout, an owners corporation that won't allow it, or a location that photographs beautifully but doesn't draw the right guests. The purchase decision and the short-term rental decision are usually made by two different people who never talk to each other — and that gap is where most STR investment mistakes happen.

Here's what to actually check before you buy, if the plan is Airbnb from day one.

Strata and Council Rules — Check Before You Offer, Not After

This is the single most common reason a "great investment" turns into a headache. Since January 2025, owners corporations in Victoria can vote to ban short-term letting in a building by 75% special resolution — the exception being an owner's principal place of residence. If you're buying an apartment or townhouse in a managed building, get the strata rules and recent AGM minutes before you make an offer, not after settlement. A building that currently allows STR can vote to ban it later, so it's also worth asking how that question has come up in recent meetings.

One other regulatory details to factor into your numbers from the start:

Victoria's 7.5% short-stay levy applies to all stays under 28 nights and gets calculated on the total booking fee, including cleaning and GST — build it into your return projections, not as an afterthought.

Layout Matters More Than It Does for a Standard Rental

For a long-term tenancy, layout is a nice-to-have. For Airbnb, it's close to the whole game. Guests are booking based on photos and a promise of a good few days, so the property needs to:

  • Sleep the right number of guests for your target market (a 3-bedroom that only comfortably sleeps 4 underperforms a 2-bedroom that comfortably sleeps 4)

  • Have a bathroom-to-bedroom ratio that doesn't create bottlenecks for group bookings

  • Offer at least one genuinely photogenic space — a balcony, a decent living area, good natural light — because that's what gets the click in a crowded search results page

  • Work for "lock up and leave" turnover — awkward access, shared driveways, or noisy common areas all add friction for cleaners and guests alike

Location: Optimise for Guests, Not Just Growth

A suburb can be excellent for long-term capital growth and mediocre for short-stay demand, and vice versa. Proximity to the CBD, transport, event precincts (the Australian Open, the Grand Prix, AFL finals) and Melbourne's café and dining culture all drive short-stay bookings in ways that don't always show up in a standard property report. Walkability matters more here than it typically does for a family home purchase — guests without a car need to be able to get to the good stuff.

The Numbers That Actually Predict Performance

Purchase price and a generic rental yield calculator won't tell you what a property will earn as an Airbnb. What will:

  • Realistic occupancy and average daily rate for that specific suburb — not a citywide average, which can be misleading given how much performance varies block to block

  • All-in costs: the short-stay levy, GST treatment, management fees, cleaning and turnover costs, and any building setup fees

  • Seasonality — Melbourne's short-stay demand isn't flat across the year, and a property near an event precinct will have a very different curve to one in a quiet inner-suburban pocket

This is the piece that's genuinely hard to get right without operational experience — projections built on comparable listings' asking prices tend to overstate what a property will actually earn, versus real booking and occupancy data from properties already being managed nearby.

Why the Buying Decision and the Management Decision Shouldn't Be Separate

The properties that perform best as Airbnbs tend to be the ones where short-stay viability was part of the buying criteria from the start — not bolted on after settlement when the owner realises the layout or the strata rules don't cooperate. Buying with a team that will also operate the property means the acquisition brief includes the questions that actually predict performance: guest capacity, strata STR rules, photogenic potential, and real occupancy data from comparable properties already being managed nearby — rather than a generic yield calculation.

Before You Make an Offer, Ask:

  1. Does the owners corporation currently allow short-term letting, and has it come up at a recent AGM?

  2. What would this property realistically earn based on comparable managed listings nearby — not just the suburb average?

  3. Does the layout suit your target guest (couples, families, business travellers) without expensive reconfiguration?

  4. What will the all-in cost look like once the levy, GST, management fee and turnover costs are factored in?

  5. Is this a property you'd be comfortable managing long-term, or one you're hoping will simply "work out"?

Thinking about buying a property specifically for short-term rental in Melbourne? AG & Co.'s combined buyer's advisory and Airbnb management service means the property search happens with real occupancy data and STR viability built in from the start — not worked out after settlement. Get in touch to talk through what you're looking for.