Airbnb Vs Renting: Pros Vs Cons
If you own a property and don’t live in it, you are probably wondering the best way to maximize its earning potential. Rental prices are high and steady these days, so it is a great time to lock in a tenant in a year lease.
But there is also Airbnb to consider. With the ability to adjust the nightly rate and charge close to hotel rates (or higher), you can really rake in the income. So, when it comes to earning money off your rental property, which is better: Airbnb or renting?
It is possible to earn much more money by listing your dwelling on Airbnb versus renting it. This works best if you live in a beautiful home in a desirable location. Airbnb fees, including the increased utilities, constant cleaning and upkeep, can make it a costly and labor intensive-endeavor. Long-term renting, however, is consistent income, does not require furnishings and is more hands off.
Choosing between renting out your apartment or home long term versus through a short-term rental service like Airbnb or VRBO is a tough decision. Not only are there lots of factors to consider, but it is a decision that you might have to lock in for up to one year. So, before you draft a one-year lease for a new tenant, consider both options.
In this article, we consider all the top pros and cons of renting long term and also those of listing your dwelling on Airbnb.
Pros Of Using Airbnb
Can Be Highly Lucrative
One of the biggest perks to booking your place on Airbnb is the fact that you can maximize your earning potential. This is only true, however, if you are in a desirable location. If you find it hard to rent out your unit on Airbnb, try longer term rental. But for those in great spots, you can really capitalize on much higher prices than monthly rent.
Airbnb Makes It Easy To Book Your Place
Airbnb is also great at making it easy to get your place booked. It is a very popular app, and you can easily upload your property info and make it an approachable place to book. This exposure can be great to help you get the place filled fast and often.
You Can Adjust Your Price According To Demand
If you live somewhere with a big seasonal festival, you can charge significantly more during that week or month. This is also true for seasonal vacation destinations. You can earn a year’s worth of rental income in just a few months using Airbnb if you plan and price things right.
You Can Read Feedback On Guests Before Confirming
Renting out your place is often a gamble. The good thing about Airbnb is you get to read feedback from other hosts who hosted your prospective guest. This helps you weed out the good from the bad.
You Can Book or Block The Dwelling However You Desire
Another great aspect about Airbnb is you can book your apartment up as much or as little as you want. If you want to reserve the place for yourself or for family, simply block it off. If you want to make sure it is rented during a particular time, lower the rate a bit. It’s that easy.
Cons Of Using Airbnb
Potential For Bad Experiences And Guests
One con of renting your place through Airbnb is that while you can screen potential guests based on reviews, it doesn’t mean you won’t have bad guests. Unlike renters who are worried about a security deposit, most Airbnb guests are not all that concerned with your feedback.
This means that the odds of walking into a messy dwelling are much higher. There is also a chance that the guests can be noisy, unruly and even damage property. This can cause all sorts of headaches that are far more involved and difficult to manage than simply honoring a landlord and tenant agreement.
Requires Frequent Cleaning
Another major drawback to consider when it comes to using Airbnb is the cleaning. You have two options when it comes to cleaning: you can clean it yourself or pay to have the unit cleaned. Sure, you can add a cleaning fee to the rental price, but that might not cover the entire cost of cleaning.
Further, the higher your cleaning fee, the less attractive your listing becomes. This also requires you to entrust more people with access to your unit on a regular basis, as well as coordinate a schedule. This is where renting through Airbnb becomes more like a full-time job rather than a simple landlord.
Increased Expenses For Furnishings
Unlike long term rentals, with an Airbnb you need to make sure the unit is well-furnished. This means a bed, bedding, artwork, bathroom essentials, toiletries, kitchenwares and more. This can really add up. It is also fairly costly to maintain. You will need multiple sets of bedding, and will likely need to replenish supplies on a regular basis. This is not only costly, but time consuming.
Requires More Included Utilities
Another big difference between renting and using Airbnb is the fact that you are expected to include additional complimentary utilities. In most countries, heat, hot water, electricity and other standard utilities are all included in the room rate. This means that if it is hot and a guest runs the air conditioning for their entire stay, you have to pay that bill.
Most Airbnbs also include things like high speed Wi-Fi, streaming services and other bells and whistles. Not only are these services expected if you add them to your listing, but you are also responsible for ensuring they operate properly throughout the stay. If there’s an issue, you need to fix it or risk a bad review.
Limited Ability To Recoup Damages
While Airbnb does help to charge for major damages, smaller issues might be difficult or impossible to prove. Dents in the wall, rips in furniture, stains on the carpet, missing kitchen utensils – these might not even get noticed right away. These small damages can add up over time, and become quite frustrating.
Need To Be Available In Case Of Emergency
Perhaps the most important thing to consider when it comes to listing your place on Airbnb instead of renting it is the time commitment. Not only is there the check in, check out, cleaning and maintenance, but there is the time while the guest is staying with you.
Airbnb guests often require assistance during their stay, and sometimes there is an emergency. Whether locked out of their unit, having an issue with the internet or hot water, a power outage or worse, things happen. This means you, or someone you hire, is essentially on call 24/7 while you have guests. You or someone you trust needs to be nearby in case there is an issue that requires someone to go to the unit.
Highly Reliant On Customer Reviews
Another thing to consider is the customer review part that Airbnb uses. Guests are allowed to state their opinion of your place, no matter how fair or unfair you think it is. Unless it is blatantly false or offensive, this feedback is available for all to see.
Also, the site uses a star system with their ratings. This means one negative review can hurt you for some time, especially when you are first starting out. This is a lot of pressure, and more than some would like to deal with.
Pros To Longer Term Renting
More Consistency And Stability
One of the biggest perks to renting long term is the stable and consistent income. You might be able to earn a bit more hustling on Airbnb, but when you rent long term, there is a steady stream of income. You are also able to budget your finances much easier since you can forecast the exact amount of rental income you will receive during a lease period.
No Need To Furnish
Another great benefit to renting to a long term tenant is the fact that you don’t need to interior design and furnish the entire space. This can be a costly endeavor, and it’s one you can completely opt out of when renting out for a long term. This also means you don’t need to worry about keeping fresh linen, toiletries and all the other elements involved in an Airbnb rental.
Not Responsible For Energy Usage
Energy usage is a huge variable, especially when you are the one paying the costs. Lights, cooking, air conditioning and heat can add to your upkeeping costs. When you are renting out to a tenant, you can stipulate that the tenant is responsible for all these utilities. This helps you maximize your profit margin.
Leases And Security Deposits Add Security
A lease is a legally binding document. Also, most landlords collect a security deposit. These two combined help give you a good sense of security knowing your unit will be in good condition when it is returned to you. Bad tenants do exist, but at least you have the security deposit to help counter any negative impacts on the home.
Do Not Need To Be On-Call 24/7
Another perk to having a long-term tenant is the fact that it is a much more hands-off approach to renting. As a landlord, you need to make sure your dwelling is habitable and safe. But you don’t need to tend to every constant concern immediately. This is because you are not so reliant on constant guest feedback. It is also because long-term renters are mostly responsible for their own utilities.
Cons To Longer Term Renting
Not Always As Lucrative
One of the major drawbacks to long-term rentals is you might be leaving some money on the table. Even if you are charging a solid monthly rent, you could likely earn more using it as an Airbnb (if you rent it out often). This is particularly true if the place in question is in a highly sought after location.
Can Get Stuck With A Bad Tenant
A lease is a great thing to have, until it isn’t. You can get stuck with a long term headache. At least with Airbnb, with a bad guest, you always know they will be gone sooner than later, or you can contact Airbnb for help.
Low Rental Flexibility
Another downside to having a long-term lease is you can’t block out dates when the place is not in use. With Airbnb, you can block out dates for when family visits or when you want to perform renovations. This is much more challenging when you rent longer term. In general, it means less access to the unit, which might pose problems for you.
Wrapping Up Using Airbnb Versus Renting Out Your Dwelling
There are lots of benefits to both renting out your apartment or using Airbnb. After all, both result in profit. But when it comes to Airbnb, there is the potential to earn more money overall. There is also more flexibility when it comes to when to rent and how much you want to charge. But there is also a lot of extra work and potential headaches.
From managing all utilities, to keeping the place in perfect and furnished condition while remaining “on-call,” there are lots of downsides as well. Renting your apartment out might not always yield as much money, but it is a steady and consistent income. It is also a more hands-off approach with fewer obligations and stresses.
Related Guides:
Tom Gaffey is an expert writer who currently resides in Washington D.C. Tom has a passion for real estate and home improvement writing, as well as travel and lifestyle writing. He lived the last twelve years in Hawaii where he worked closely with luxury resorts and event planners, mastering his knowledge of aesthetics and luxury products. This is where he found his passion for home improvement and a keen interest in DIY projects. Currently, Tom resides in Washington D.C, and also working on his debut fiction novel.
More by Tom Gaffey
