Rooming Houses vs Airbnb: Which Delivers Better Long-Term Returns?

In recent years, many investors have looked to Airbnb and other short-term rental platforms as a way to maximise returns. The promise is attractive: higher nightly rates, flexibility and the ability to tap into booming tourism markets. But when compared to rooming houses, the differences in risk, income stability and long-term growth are stark. For investors serious about building sustainable wealth, rooming houses often come out on top.

Cashflow Consistency

Airbnb properties thrive when tourism is booming and occupancy levels are high. However, occupancy is seasonal and can fluctuate dramatically with events, travel restrictions, or economic downturns. A rooming house, by contrast, delivers steady weekly rents across multiple tenants. Even if one room is vacant, the property continues generating income something an empty Airbnb cannot do. Investors benefit from consistent, predictable cashflow that cushions against market swings.

Yield Comparison

While Airbnb can deliver impressive income during peak seasons, the annualised yield often falls short once vacancies, cleaning fees, property management and platform commissions are factored in. Rooming houses, on the other hand, regularly achieve gross yields of 8% or more. Importantly, those yields are based on year-round occupancy, not seasonal highs and lows. For investors seeking reliable returns rather than occasional spikes, rooming houses hold a clear advantage.

Time and Management

Running an Airbnb is essentially running a hospitality business. It requires constant attention, guest communication, check-ins, cleaning, restocking and reviews. Unless investors hire a professional manager (which eats into profits), the workload can be overwhelming. Rooming houses are far less management-intensive. Tenants typically sign six- or twelve-month leases, meaning fewer turnovers and lower costs. With the right property manager, a rooming house operates more like a traditional rental but with far superior returns.

Regulatory Risk

Governments across Australia are tightening restrictions on short-term rentals, from zoning rules to higher compliance standards and licensing fees. Some councils have even introduced caps on the number of nights a property can be rented on Airbnb each year. Rooming houses, by contrast, operate under the established Class 1B framework, providing legal certainty and long-term compliance pathways. For investors, this reduces regulatory risk and protects future income streams.

Capital Growth Potential

Beyond cashflow, investors also care about capital growth. Rooming houses are purpose-built assets that respond to one of the most pressing housing needs in South East Queensland, affordable accommodation. With housing shortages and population growth accelerating, these properties remain in strong demand. Airbnb properties, however, are more vulnerable to shifting tourism trends, oversupply in popular areas, or regulatory clampdowns that can limit their growth appeal.

Final Word

Both Airbnb and rooming houses can deliver strong returns in the right conditions. However, when it comes to long-term, reliable wealth creation, rooming houses are the superior strategy. They combine high yields, consistent occupancy, manageable workloads, and regulatory certainty. For investors looking to balance strong cashflow today with capital growth tomorrow, rooming houses offer a pathway that Airbnb simply can’t match.

by Greg Khan CPA FGIA