Homeowners often wonder if there are any advantages to renting long-term as opposed to short-term Airbnb rentals. There are obviously going to be differences and you’ll have to decide which style is best suited to meet your needs. We've done a series of posts on AirBNB since it's becoming a popular trend here in Fort Lauderdale, Florida, and today's topic will address doing yearly rentals vs. AirBNB rentals.
AirBNB Rentals Versus Yearly Rentals
As an example, being in Airbnb host definitely has major financial benefits to South Florida residents. But it might not be the best idea for everyone. On the other hand, long-term rental is definitely a great way to make money as a property owner and it’s definitely not the way to go for every homeowner in the US.
To help you decide which method might be right for you, we’d like to tell you about the differences between Airbnb rental and traditional long-term yearly rental. So pay attention and really look closely at what we plan to share with you below. This information will make your decision much easier over the long run.
Airbnb vs. Traditional Rental: Airbnb Pros & Cons
Many people look at traditional rentals as the only way to make consistent money in real estate. But short-term rentals have changed since Airbnb entered the picture. Now there are many wonderful benefits of becoming an Airbnb host that you just don’t get with long-term rental. We’ll do our best to highlight the pros and cons to help you better understand them below.
Pro: You Can Offer Flexible Pricing with Airbnb
Some seasons are busier than others in the short-term rental world, which means you can fully take advantage of flexible pricing. If it’s slow and you’re having a hard time bringing in new guests, you can temporarily lower your prices in order to attract new customers. This works the same the other way as well. If it’s a particularly busy season you can definitely raise your prices and still make great money because there’s a mass abundance of potential guests in the area looking to rent your place for the short-term.
Pro: Reviews for Airbnb Hosts and Guests
Hosts and guests have the ability to leave a review after a reservation is completed. As a host, you definitely want to encourage your guests to leave reviews because this will help attract more guests and more reservations for your place.
On the other hand, if you had a very negative experience with a particular guest you can leave them a negative review and let other hosts know about them. So not only are you helping yourself but you’re helping the entire Airbnb community on the whole.
Con: Rental Income Is Unstable
Some people prefer the stability of traditional long-term rentals. With Airbnb hosting, you will have some months or seasons that do much better than others. So when it comes to Airbnb short-term rentals, you need to learn how to budget your money correctly to make it last longer during the dry spells and slower times of year.
Airbnb vs. Traditional Rental: Traditional Rental Pros & Cons
And just like with Airbnb, there are definitely reasons why you might prefer traditional long-term rentals. We’d like to tell you some of the pros and cons of this option to help you make a better decision. They include:
Believe it or not, you’ll experience much better tax benefits if you rent for the long-term as opposed to focusing on Airbnb short-term rentals. Why? The federal government looks at short-term rentals as being part of the hospitality industry and you basically end up paying income tax every time you book a rental in your property.
On the other end, if you focus on traditional residential rentals, you are allowed to take advantage of excellent tax benefits. These benefits aren’t available to those focused on short-term rentals.
Pro: You Aren’t Part of the Hospitality Industry
For some people, becoming a member of the hospitality industry is not something they’d look forward to. They just aren’t good with people and they have no interest in becoming a host. If the thought of hosting leaves a bad taste in your mouth, you’d be much better off focusing on long-term rental instead. Others love hosting and excel in this area, but you might not be one of these people.
Con: Rock-solid Lease Agreements with Long-Term Rentals
Some of us believe that rental income stability is critical. But others would prefer to be able to raise or lower their rents whenever they desire. When you have a long-term lease agreement in place, you can only earn as much as you’ve established within the agreement and nothing more until the lease runs out.
As you can see, there are many differences between Airbnb short-term rentals versus long-term rental agreements. For some people, becoming an Airbnb host is going to be right up their alley and fit in perfect with their personality and income expectations. For others, long-term rental is definitely the better choice. If you have any questions about how to get started, read this post on getting started with AirBNB and you'll fully understand how the system works.