With Airbnb’s enormous popularity, many property owners are wondering whether to rent to short-term vacationers or lease to longer-term tenants. We’ll discuss the advantages of each here.
But first, a couple of key definitions: in the Airbnb world, a short-term renter is someone renting for under 30 days (for example, a vacationer who rents a property near the beach in Santa Monica, California, for 10 days). And as you may have suspected, a long-term renter is someone who leases a property for 30 days or more (for example, an advertising pro who accepts a job in Lower Manhattan and signs a one-year lease for a condo unit across the river in Hoboken, New Jersey – which, by the way, happens to be Frank Sinatra’s hometown).
In some cases, the decision is fairly easy. If your property is located in, say, Camden, New Jersey, even with its proximity to Philadelphia, that city’s low demand level among vacationers translates into a well-below-average vacation rental opportunity. In that case, long-term rental will probably be the best bet. But if you own a residence 4,900 miles away on the beach in Waikiki, Hawaii, upon receiving a revenue projection, you may quickly conclude that renting to short-term vacationers is your best way to go.
In other cases, even where demand among vacationers is strong, regulatory issues may prevent owners from getting their property listed on Airbnb and related sites. Some city ordinances lay down specific geographic boundaries for short-term vacation rentals inside city limits. And even when no city regulation locks out vacation rentals, HOA bylaws may include a requirement that all renters sign an agreement for 30 days or more. Because the vast majority of vacationers rent on Airbnb for under 30 days, such terms all but eliminate a short-term vacation rental opportunity.
What’s more, personal preferences often tip the decision in one direction or the other. For example, if your vacation home in Asheville, North Carolina is enjoyed by you, your spouse, children, cousins, and friends for, on average, one month each year – during different times of the year – you probably aren’t going to want a renter to sign a lease for a year or more (Asheville, incidentally, is in high demand among vacationers).
Here are key advantages of each option:
LONG-TERM LEASE ADVANTAGES
Greater Revenue Consistency
A long-term lease usually runs for one year or more. This can create a highly predictable revenue stream. One key tradeoff in comparison to vacation rentals: average revenue over each day of occupancy may be considerably lower with a long-term lease. But for less risk-averse owners – including many seniors – this option is often attractive.
Fewer Financial Responsibilities
Long-term leases often enable owners to hold renters responsible for utility bills. In areas with high heating and air conditioning bills in the winter and summer, that can translate into substantial savings.
Reduced Number of Variables
When renting to long-term tenants, owners don’t have to list their property, respond to inquiries, stock basic supplies, ensure housekeeping is taken care of, and so on. One outstanding tenant may stick with you for years.
SHORT-TERM VACATION RENTAL ADVANTAGES
Higher Net Income
Your daily rate for vacation rentals from Airbnb may be MUCH higher than your rate from a long-term renter. How much more? Lots of factors contribute to the difference, but you could net 50% or even well over 100% greater income by renting to short-term vacationers.
Lower Degradation Rate
In many cases, vacation rentals earn owners more income while reducing wear and tear on the property in comparison to long-term tenants. That’s because unlike long-term rentals that are generally used every day, even under the best of circumstances, vacation rentals aren’t occupied 100% of the time.
More Fulfilling Interactions
In Airbnb listings, you have the option of renting your entire property or a private room/area. Fact is, many owners love the company and thoroughly enjoy meeting new people regularly. Others who rent their entire place derive considerable joy by reading reviews from vacationers who had an amazing time.
Greater Property Availability
Many owners of vacation homes want their property available for personal use. Very often, it’s the main reason they made the purchase in the first place. With short-term vacation rentals on Airbnb, you’re able to block out days, weeks, or even a full month for personal use of your property, while enjoying the income advantages of short-term vacation rentals.
Improved Scalability Opportunities
Yes, it’s possible for an ambitious property owner to scale a business consisting entirely of long-term leases. But lots of entrepreneurs have started with a single property on the Airbnb platform, and in a relatively short amount of time, grew a substantial property portfolio. Very often, these Airbnb moguls found the best Airbnb property manager available to maximize their income while minimizing stress.
On that note, a recommendation: schedule a complimentary consultation with a One Fine BnB Airbnb expert. If you qualify, you’ll receive a free revenue projection for your property. And you’ll learn how One Fine BnB – an innovator in Airbnb vacation rental management – makes the entire process surprisingly easy. So you mainly sit back and collect a direct deposit each month.
[av_button label=’REQUEST A FREE CONSULTATION’ link=’https://onefinebnb.com/free-consultation’ link_target=” size=’x-large’ position=’center’ icon_select=’no’ font=’entypo-fontello’ color=’red’ custom_bg=’#444444′ custom_font=’#ffffff’ admin_preview_bg=”]
