Should you list an entire home or just the a room or a small area of the house? How does each effect your Airbnb income?
Generally speaking, there are three types of listings on Airbnb: shared room, host-present “private room”, host-absent “entire place.” Here, you can find out the pros and cons of renting out a private room versus the entire listing.
The pros and cons of renting out the entire house
If you have a property in a booming, touristy area, you might want to turn it into a vacation home rather than a traditional renting property. This might boost your Airbnb income, depending on the property’s location. But of course, like everything, there is a set of pros and cons attached to this type of Airbnb real estate investing.
- Higher Airbnb income from cashflow: when renting out the entire place, you’re obviously able to charge more for the stay.
- More renters: Most vacationers want some privacy when it comes to traveling. So, depending on your location, you might be able to attract more travelers (from families, friends, and even business trips).
- More passive Airbnb income: You’re not living in your property and are receiving passive income. (With that being said, you’ll still need to manage the property, probably even more so than in traditional real estate investing).
- More regulations: You really need to check with the city’s laws and regulations on short-term regulations in general, but especially with “host-absent” listings. In most states, there are more regulations and license requirements for this type of listing, rather than “host-present” listings. Also, in New York, this type of listing is illegal.
- Potential rowdy vacationers: Occasionally, you might meet some rowdy vacationers, who will bother neighbors, destroy some things in the apartment, or cause you some general headaches. So, make sure you’re able to manage the property well and choose the right guests.
- Depleting affordable housing: With this type of listing, you might be depleting the affordable stock of housing. The house you’re renting out to vacationers could be rented out to long term tenants, who are looking for a permanent, affordable residence.
The pros and cons of renting out a private room
If you have an empty area or a an empty room in your house, you have the option to list it out on Airbnb for vacationers and travelers to occupy it from a single night to a couple of weeks. This strategy also has his advantages and disadvantages.
- Less regulations: This type of listing is easier when it comes to registering and licensing, because the hosts are present in the house. When the host is present, neighboring people tend to have less problems with the renters.
- Doesn’t deplete affordable housing: single-rooms do not have as much of an impact on the availability of housing affordability. On the contrary, Airbnb hosts renting out a bedroom usually use this as a means to help pay the rent or mortgage.
- More competition: this type of listing is more prominent. So, depending on your location, you might be running into more competition. No fear though, just make sure you keep up with good reviews by excelling in customer service.
- Less Airbnb income: Considering that you’re just renting out a small area of the house, the listing might be cheap (especially if you have more competition in the area), which might mean that your Airbnb income and cash flow are less than what it would be when renting out the entire house. There are factors involved, like location of the house, service provided, etc. but this is usually the rule of thumb.
- Less passive Airbnb income: When you’re on site of your Airbnb listing, you have to keep a good balance between giving the renters privacy and being hospitable. So, this means that you have much more contact with guests, compared to them using the entire property in your absence.
Related Article: The Ultimate Guide To The Airbnb Investment Property
A word of advice
Hopefully, the lists of the pros and cons of each type of listing has given you the difference between renting out the entire house or just one room. At the end of the day, the strategy has to be based on your personal and financial goals. If you’re looking to truly invest in real estate, clearly, renting out an entire property is the way to go. However, if you’re simply looking for some extra cash or a way to pay off the mortgage earlier, renting out a private room can be the most effective strategy.
Use Mashvisor’s data and Airbnb rental comps to get a better idea of how much Airbnb income other properties are making.