Investment properties are incredible assets.
Most people want to maximize property return, so the first decision they must make is how they’ll go about renting it. You could either rent it traditionally with a lease or take advantage of something like Airbnb.
The latter has proved to become quite popular over the recent years, which leaves many people wondering one thing.
Which is worth it? Airbnb or a traditional lease?
There are many angles to consider, so that’s what we’re covering today. This will greatly depend on your situation and preferences, so read carefully.
While both are great options, one might suit you best.
Occupancy and Pricing
To fully understand their differences, we must compare the two.
For a traditional lease, the tenant and landlord sign a contract. Usually, the rent is fixed for a certain time period that is considerably longer than the average Airbnb stay. In some cases, normal leases range anywhere from 6-12 months or more.
That means you can expect consistent, unchanged payments (which many people enjoy).
With Airbnb, the period in which people stay is variable and inconsistent. You might have unexpected vacancy rates. As opposed to a normal lease, vacancy is less common. The main benefit to Airbnb, however, is that pricing is flexible.
Depending on the time of year, you can alter your prices to change with the season.
This is fantastic for cashing in on the holidays which you don’t have the option for in the traditional renting environment. Some people lean toward the side of additional flexibility.
Expenses
It’s no secret that expenses vary greatly between these two.
While Airbnb has more flexible pricing options, it comes with more expenses. The short-term nature of the system requires many repeat costs. You’ll be required to consistently schedule cleaning services and pay property management fees (if needed). And don’t forget about décor, wifi, and cable. For a quality stay, those things matter.
In short, you need to make sure the house is always in perfect condition for the next guest.
With long-term rentals, you mainly need to cover water, sewage, and trash removal. Not pretty, but still more simple. You can even automate some of these things.
Who Wins?
The winner truthfully depends on your situation.
Where is your property located? Is there any travel demand in that area? Do you prefer payment consistency over flexibility?
These questions will help you determine which renting strategy is right for you. Most people enjoy the freedom of restriction by going with long-term rentals because you are not at the mercy of a company.
If you believe that the additional income from seasonal fluctuations can cover the additional expenses that come with short-term renting, then go for it! It’s possible that your property is more suitable for an Airbnb-style strategy.
Remember that it may take more active work to pay off in the end.
If passive is your goal, long-term might be the way, it all depends.