The rise of short-term investment properties has taken the real estate market by storm. Short-term rental platforms like Airbnb are becoming a major influence in the real estate market today. The influence is hugely affected by people’s reliance on Airbnb nowadays to generate income from their investment properties. More people are finding that short-term rentals can generate more income than traditional rentals.
Related: Real Estate Investing: Traditional vs. Airbnb Investments
The defining factor that gives Airbnb an edge in today’s market is that it has the power to enrich people. The Airbnb platform acts as a third party between owners and renters. Compare that to traditional rental properties where the owner would be fishing for tenants, making less profit and less connections, and worrying about vacancies for long periods.
Here we discuss the reasons why investors should make the leap from traditional to short-term Airbnb rental.
Flexibility and Options
- Short-term investment properties are flexible, you can make them what you want them to be. If you have money to purchase one property and you are planning to live in that property, then you are able to rent some rooms on Airbnb. That idea developed from couch-surfing websites, which was considered very cheap, but also a bit awkward and uncomfortable for most people. Airbnb developed the idea to give renters a cheaper resemblance of a hotel. If you are living somewhere else and own another property then renting the entire home on Airbnb for days, weeks, or even months is a possibility.
- Short-term Airbnb properties have shown that they can generate more profit for landlords than traditional rent. Airbnb rentals are marginally higher in price because of the services that come along with it. The most important reason of profit though, is that Airbnb rentals are flexible for its users, owners and renters alike. It is always easier to find someone who is visiting your city for five days to rent your flat rather than finding someone to rent it for one year. This limits vacancies.
Related: 6 Reasons For The Growth Of The Airbnb Investment Property
- Airbnb has a global appeal in big and expensive cities around the world. People are no longer willing to pay the expenses necessary to stay in hotels since the emergence of Airbnb and short-term rentals. In big and crowded cities, Airbnb can charge an amount that could generate a year worth of traditional rent for owners in two or three months only. That’s because the prices in these cities are not cheap but they are way cheaper than hotels for travelers.
Related: Best International Cities for Airbnb Occupancy Rate
Easy and Cheap
- Investors who own traditional investment properties will find the switch to Airbnb easy. The difference for you as an owner of a property is listing your property on Airbnb and providing the services required attracting customers to your property. That is not difficult and is easily manageable despite the higher turnover of tenants in Airbnb flats. Services in Airbnb rentals are primary, like shampoos, fresh towels and clean sheets.
Importance of the Location
- Investors who already owned investment properties in central locations in cities like Chicago, Los Angeles and San Francisco will testify that listing a centrally located property on Airbnb equals lots of profit. When Airbnb was introduced, for these investors it was like waking up to find a gold mine. They have generated so much profit from Airbnb rentals just because of the location of their property. Travelers look for central location all the time unless it restricts them financially. Investing in a central location for Airbnb is a must if you have the means for it.
Related: The 6 Best Cities For Airbnb Investment
Creativity and Ingenuity
- Airbnb rental properties give you as a landlord the opportunity to be creative in your marketing approach to attract tourists or travelers. The competition on Airbnb is fierce to say the least, because of how easy it is to be on the platform for homeowners. Understanding tourists to give them what they need will give you more appeal when users book their rooms or houses. This is one area in which traditional renting doesn’t address – interactions with tenants and meeting new people on a regular basis. Through those experiences you become a better host and more adaptable to different cultures of renters.
Related: The Future of Vacation Rental Investment Properties
Managing short-term Airbnb investment properties is not as passive as traditional investments and does inflict more costs on an investor, but the rewards are huge. Airbnb owners in major cities have admitted to doubling their rental income after becoming hosts on Airbnb. In the less major cities, an increase in rental income has also been a formality for Airbnb owners due to its flexibility. Being able to reduce vacancies and increase rental income are two major incentives that should be considered seriously.
An easy way to figure out if a traditional or Airbnb investment property would be more profitable is by using Mashvisor’s data. The analytics show the better strategy depending on the area, including the Airbnb occupancy rate.