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Pros and cons of renting your home on Airbnb vs traditional long term rental
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hey guys James Hunt from Airbnb
guide.com and this morning I received a
great question from one of our followers
named Robert he sent me an email and
said James I have a property what are
the benefits of putting it on Airbnb
versus a traditional long-term rental
and I think that's a great question
because if you do have a property that
you're looking to make money off of as a
rental generally you would go the
traditional route which is to lock a
tenant into a six month to a one-year
lease that's just the way that things
have been done you know with rentals for
a long time however if you've been
hearing about short-term rentals and
you're interested in testing out Airbnb
or other short-term rental platforms you
should know the pros and cons of using
Airbnb versus a traditional rental in
this video I'm going to be discussing
the pros and cons of using Airbnb versus
a traditional long term rental first
benefit of using Airbnb versus a
traditional long term rental is that
you're going to have an increased
nightly rental rate now with Airbnb you
can actually make double or triple the
amount that you would with a traditional
rental now this is because you're
renting it for shorter periods of time
generally when you sell something or
rent something to someone over a long
period of time you decrease the payments
in order to make it a better deal now
when you're looking at using Airbnb to
rent your property you have to compare
it to hotels and the price of hotels
versus traditional rental prices just as
an example my next-door neighbor Lee was
renting his spare bedroom out as a
long-term rental and he was charging
about $400 a month now that he's using
Airbnb his goal is about $900 a month so
he has more than doubled the amount of
money that he was I'm using Airbnb
versus his traditional long term rental
another benefit of using Airbnb as a
rental platform versus traditional long
term rentals is that you can also make
money off of a cleaning fee now this is
going to be a flat rate that you charge
per guest
you can set it to whatever you want to
but that's what you're going to charge
guests to clean the rental if you rent
your house out sixty times in one year
with a $25 cleaning fee
you just made fifteen hundred more
dollars so obviously you do have to
actually clean the place and justify
your cleaning fee however most people on
Airbnb are used to charging or paying
and cleaning fees so you can make extra
money off that as well
another really positive thing about
using Airbnb for short-term rentals
versus a traditional long term rental is
that you can use Airbnb s review system
to kind of vet your guests beforehand
and see what kind of a renter they're
going to be now with a long-term rental
a lot of times you will try to get
references and you might run a
background check or a credit check on a
guest however that doesn't mean that
your guest is going to be very clean and
it doesn't mean that they're going to
treat your rental with respect so on
Airbnb you can read through your guest
reviews and see hey this guy has five
stars for cleaning he's a five star
guest so I can pretty much guarantee
he's going to take care of my property
now you can run into nightmare stories
or bad guests I mean you know we've read
about them we've heard videos and people
talk about you know running into a bad
guest I haven't really had any myself
however there are some out there with
that being said if a guest has ten
five-star reviews for cleanliness you
can pretty much guarantee hey this is
going to be a clean guy or girl and we
can trust that our rental property is
going to be in good hands the second
part of the Airbnb review system and a
reason that makes it so great is that
guests will oftentimes want to treat
your property with respect and keep it
clean because the fact that they know
they're going to be reviewed when they
leave your property most people that use
Airbnb want to continue to use Airbnb
therefore they're going to try their
best to be clean and treat your
environment with respect so they they
don't get a bad review they want to get
a good review so they can keep using the
app and because of that you can
generally expect that your Airbnb guests
are going to treat your property fairly
and keep
clean another great thing about using
Airbnb versus a short-term rental is the
fact that your guests pay the full
amount in advance now there are some
instances where the guests will pay
basically a month at a time
so if they rent your property for
several months they will just pay you
for that month in advance however most
of the time guests only come for three
days to maybe a week and the entire
amount that they're going to pay you
gets put into your bank account the day
after they check in now their funds are
actually held the moment that they book
your property Airbnb goes ahead and
charges their credit card and puts a
hold on that amount and then after they
check in the funds go to your bank
account so one of the problems with a
lot of traditional long term rentals is
that you're chasing your tenants trying
to get money every month with Airbnb you
don't really run into that problem
because the funds get pulled from their
account the moment they book your
property so you don't really have to
worry about that something that's also
good to think about and to keep in the
back your mind is that as a host on
Airbnb you have a million dollar
insurance policy that comes with your
hosting account
it doesn't cover things like theft
however if a guest does destroy your
apartment or house you can pretty much
guarantee that Airbnb will cover the
cost of damages so yeah with the
long-term renter or with long-term
rental you would have probably a
commercial insurance policy that would
cover stuff like that however with
Airbnb you kind of have the same thing
as well which is nice with Airbnb there
is less consistency when you sign a
tenant into a long term lease it's
generally going to be six months to a
year so for that six months to a year
you can count on a certain amount of
income coming in to your bank account
every month once again like I said
sometimes as a landlord you do run into
issues of guests not wanting to pay
their rent but for the most part for
that six months to a year you can
guarantee that income with Airbnb there
is no guarantee that you're going to
have renters maybe you have a calendar
that book to pull this month
but then next month is a slow season
which means that the double amount that
you made on your nightly
rate is really cut in half because you
had an empty calendar the next month if
you're really smart about your Airbnb
and you've done the research you can
pretty much be consistent with your
calendar in st. Petersburg where I'm at
our calendar stays pretty consistent and
we stay booked out I think we have a
very competitive nightly rate and we
offer a very clean and comfortable
environment for our guests so we have
put a lot of research into it and we do
a good job and I think that as an Airbnb
host although your potential earnings
are less consistent than with a
traditional long term rental if you are
smart about it you can ensure some
consistency
the second downside to using Airbnb
versus a traditional long term rental is
that it does take work to get the
property ready in between guests because
there is a higher turnover rate you're
going to be constantly cleaning a
property and managing a property and
providing your guests with their
required amenities and necessities with
a long-term renter you just sign the
lease they go into the property and very
rarely do you actually have to interact
with your tenant sure you have basic
maintenance that might have to be done
on the house like mowing the lawn and
taking care of the property however for
the most part once the tenant gets into
the property they just do their own
thing with Airbnb you're going to be
interacting with guests on a weekly
basis sometimes on a daily basis which
is going to require you putting in a
little bit of extra effort or quite a
bit extra effort just to be honest in
order to maintain your business once
again though if you're making double or
potentially triple the amount you would
it is worth the effort
and you can charge like I said a
cleaning fee to help cover any expenses
that would come from having a lawn crew
or a cleaning crew or something like
that and lastly I think one of the
biggest downsides to using Airbnb versus
a traditional long term rental is that
with most traditional rentals you rent
the place unfurnished with Airbnb it has
to be move-in ready the guests just come
as they stay there and then they leave
meaning you have to fully furnish your
apartment your house your spare bedroom
or what
Everitt is that you're renting most
people who just rent out their spare
bedroom don't really have to worry about
that because they probably have a bed in
there anyways however in my case it's
just Rebecca and I in the house
therefore we really didn't need that
extra bedroom so for the several
thousand dollars that we spent to
furnish that extra bedroom that really
is an added expense however we did make
that back in the first several months of
using Airbnb so from here on out we have
our fully furnished extra bedroom and
bathroom that we can use at any time and
we do make money off of it so there you
go guys those aren't all the pros and
cons of using Airbnb versus a
traditional long term rental but I do
think it does cover quite a few of the
pros and cons that you're going to run
into in stuff that you should think
about if you're trying to decide whether
or not you should use Airbnb versus a
traditional long term rental if you have
any other questions feel free to send me
a message through youtube and as always
you can go to airbnb.com to learn more
hosting tips and tricks from super hosts
like myself
