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Across the world, millions of homeowners and property owners have turned everything from a spare room to a spare apartment into a new way for tourists to visit new places. To the public, these short-term rentals are known as Airbnb and VRBO, and they’re giving traditional hotels a run for their money.
And why shouldn’t they? For roughly the same price as two beds and a bathroom, Airbnb and VRBO customers get access to a complete home or apartment. It’s like renting a suite without draining your bank account. The critical question for a real estate investor assessing the recent popularity of short-term rentals, the question remains: does that benefit go both ways?
With all that in mind, here are the pros and cons of hosting a property on Airbnb.
But first, if you would like to learn how to finance an Airbnb rental click the link below to book a free strategy call with our team at LendCity today.
Regular infusions of cash
Let’s start with the biggest and most obvious benefit of using your rental on a site like Airbnb or VRBO: the cash. When you have a constantly rotating assortment of renters, you also have a constant, incoming source of income. When you use your rental property for long-term renters, that income dwindles to once a month. If you’re interested in getting a lot of cash in a short time, a short-term rental could be great.
There’s an off-season
With all but a few exceptions, short-term rental hosts will notice that there is a period every year where bookings dry up (or at least become harder to come by). Unless you live in a big city like Toronto, or you’re in an area where people rent your place for business purposes, you could experience an annual drought. On the other hand, committing to a yearlong lease means a yearlong source of income.
Invite the world
There are some areas in Canada where a new long-term renter could be hard to come by. What’s more, finding the right way to advertise to potential renters can be somewhat confusing. When you work alongside a company like Airbnb or VRBO, you can broaden your potential customer base, from a few blocks to the rest of the world. That’s a pool of potential visitors that long-term rentals simply cannot match.
Potential pushback from the neighbourhood
The opposite end of that coin is that some people in your neighbourhood may be less-than-thrilled about the constant influx of new people into their community.
Even if you’re not worried about public opinion, you should understand that those people who shudder at the thought of another visitor are taking their voice to local governments. In Ottawa, local officials are cracking down on short-term rentals by enacting a host of new regulations to keep them in check.
More flexible schedule
When you get a tenant into your annual rental, you’re a landlord all year long. If the furnace breaks on Christmas Day, you’re the one who will spend their time on the phone calling a repair technician. That’s not necessarily the case when you operate a short-term rental. If you want to keep your rental free of tenants during certain portions of the year, that’s your prerogative.
When you operate an Airbnb or VRBO short-term rental, you can also make sure you’ve always got a place to house friends or family when they’re in town and need a place to stay.
Discover How To Analyze a Properties Cash Flow With This Step By Step Guide
Vacationers will treat the Airbnb like a hotel room
Let’s be perfectly honest: tenants will never treat a home like it was their own. We’ve all experienced it, likely on both sides of the spectrum (everyone has moved out of an apartment without giving it the real scrub it was due). Even long-term tenants are likely to expose your rental property to some degree of neglect. That goes double (sometimes triple) for those vacationers who blow through your short-term rental.
The biggest drawback, here, is that it’s on you to ensure that your rental property is cleaned — and, if need be, repaired — between every single tenant. This cost will inevitably shave some of the profit off your investment.
A company can have your back
When the worst happens, and a short-term renter treats your property like a garbage bin, it pays to represent a larger organization like Airbnb or VRBO. Property owners representing these companies receive some sort of indemnity against damage. That kind of coverage is something that’s no small matter.
The other good side of working with established companies like VRBO and Airbnb is that the screening process goes both ways. When someone options your apartment, you aren’t required to give it to them. You can use these companies’ enormous databases and look into the past experience individual customers have left in their wake. This can substantially decrease your odds of getting a rude or dirty tenant.
The time investment
If you have a property in the right location, an Airbnb or VRBO short-term rental can be extremely lucrative. Far more than a long-term rental. That said, if you want to drum up that money, you have to spend a whole lot of time working on your short-term rental. Not only is there a lot of cleaning involved, but you also have to spend time talking to potential tenants, checking their background, soliciting new customers and generally advertising your place.
With a long-term rental, once you’ve got a tenant in the doors, you’re good for the next several months, potentially longer if your tenant renews their lease for years to come.
The bottom line
There is a lot to love about the short-term rental market. They can generate a lot of cash in a short time. That said, there is also a whole lot of work involved from the beginning to the end. If you’re not prepared to put in the time and effort, you might see your short-term rental go bust.
If you would like to learn how to finance a short-term rental click the link below to book a free strategy call with our team at LendCity today.