Airbnb vs. Long Term Rental? Which Is Better

Many people find it confusing whether to invest in an Airbnb vs. long term rental when they start in real estate investing. We just want to make good use of our money and put it into something that will bring us lucrative returns in the future. The decision becomes more difficult when we consider Airbnb long term rentals as a third and hybrid option on where to invest our hard-earned money.

Airbnb vs. Long Term Rental: What Is an Airbnb Rental?

Airbnb is a platform that connects people who are willing to share a space with guests for money. Basically, what you need to do is to list your room, house, villa, or even yacht on the website and wait for reservations. Airbnb rentals are considered a short term rental strategy because the properties are usually rented for up to one month only.

Airbnb vs. Long Term Rental: What Is a Traditional Rental?

Traditional rentals are one of the long term investment strategies. In traditional renting, a real estate investor buys a rental property in order to rent it out for at least six months, during which the tenants will pay rent on a steady basis agreed upon in the lease agreement.

What Are the Pros of an Airbnb Rental and the Cons of a Long Term Rental?

Airbnb = Adventure!: Well, if you are the type of person who loves to meet new people all the time, then this is for you. Since Airbnb rentals are based on short term stays, you can enjoy having a new guest every few days. On the other hand, with long term rentals, you will have the same tenants for a long time.

Flexible pricing: When it comes to making money, Airbnb is the way to go. Airbnb gives you the chance to change your pricing every time you wish to. You can either lower your prices or charge more depending on your situation and your goals. Once you have signed the lease agreement in long term rentals, you can’t change the rent, which means you will be getting the same income for the whole duration of your tenants’ stay, no matter how much you lose.

Host/guest reviews: After each reservation, both the Airbnb guests and the Airbnb hosts get to write a review. However, for you, as a host, Airbnb guest reviews are of great benefit. A good review will bring you more reservations along the way. It could also help you find the right tenants as hosts get to write reviews as well. Therefore, it can save you the pain of dealing with bad tenants. With long term rentals, however, there is a chance you will get bad tenants, which means you might get stuck with them for a long time. Though you can avoid this by running a background check on them before signing the lease agreement; still, you can’t avoid it completely.

Listing is free: Of course, everybody likes free stuff! That is exactly what Airbnb provides. You get to create an account and list your property for rent for free. The only fees that apply are the service fees on each booking. If you compare it to long term rentals, then it is called marketing, which costs money. You will have to do proper marketing in order to get your property rented out, so keep that in mind when going through your expenses.

What Are the Cons of an Airbnb Rental and the Pros of a Long Term Rental?

Hospitality: Well, if you are not that good with people, you might not want to rent your property on Airbnb. It requires dealing with your visitors directly, while in long term rentals you will only have to deal with your tenants when signing the lease and if any situation occurs.

No property management: You will also have to manage your property alone if you want to make the most money with Airbnb rentals. This also means you will have to invest a lot of your time in this. In traditional rentals, meanwhile, you have the option of hiring a property management firm to take care of your property for you. They are going to handle tenants, rent collection, and other operations related to your investment property. Therefore, you will not have to deal with your tenants unless a situation requires your presence.

Taxes: Tax is one of the major differences when comparing an Airbnb vs. long term rental. Taxes for Airbnb are different from other real estate investments taxes. You are basically paying an income tax that applies to every booking of your property. On the contrary, traditional rentals and residential rentals, in particular, are subject to tax benefits. These benefits apply to loan payments, depreciation, and other property expenses, which saves the investor a good amount of money.

Unstable rental income: Airbnb is seasonal sometimes. For instance, if you are renting your investment property that is located on the beach, then there is less chance to have it rented during the winter, which means that there are seasons when you won’t have guests and, therefore, rental income. The good thing about traditional rentals, now, is the steady rental income. When you rent out your property, you can sit back and enjoy an income for the whole duration of the lease agreement. As long as you manage your property the right way, you can maintain a positive cash flow that you can use to grow your business.

To start looking for and analyzing the best investment properties (Airbnb or long term) in your city and neighborhood of choice, click here.

Airbnb vs. Long Term Rental: What Is in Common?

Airbnb and long term rental properties share one thing in common:

Appreciation!

This is actually the only advantage that comes in common when analyzing an Airbnb vs. long term rental. Appreciation is basically the increase in a property’s market value over time, which means you will not only be making money in the short term but also in the long term.

When the time comes to sell the investment property, you will receive more than you initially paid for it when you purchased it. It applies to both Airbnb and long term rentals. So, if that is a concern of yours, you do not have to worry.

What Is an Airbnb Long Term Rental?

For real estate investors who can’t decide between an Airbnb rental and a traditional rental, there is a third option available to them called Airbnb long term rentals.

Long term Airbnb rentals allow tenants to rent a property for more than 28 days. Often, listings for this type of rental property would show a monthly fee instead of a nightly fee. Usually, the owner or landlord requires the tenant to make an advance payment for the first month, with a fixed fee for every succeeding month booked.

Pros and Cons of Airbnb Long Term Rentals

Given what we’ve already discussed regarding Airbnb vs traditional rental, you may ask, “Is Airbnb good for long term rentals?

Airbnb long term rentals are becoming the preferred option for a growing number of individuals, attracted by the constant flow of income from the rental properties. Once they find a tenant, investors (and owners) can expect a steady inflow of cash for a considerable period of time.

Regarding the marketing of the rental properties, Airbnb takes care of putting up your property for all prospective guests out there. The platform’s longstanding success and growing popularity are surefire ways to attract people who are looking for accommodation.

While it comes with a few benefits, there are some drawbacks to getting into Airbnb long term rentals. First, such types of properties may be subject to a different set of laws compared to their short term counterparts. Everything from eviction laws and rent controls can be interpreted and applied differently in the case of Airbnb long term rentals.

Second, owners may be compelled to change and adapt their Airbnb pricing strategy in order to attract tenants for long durations. Still, longer tenant stays may be enough to offset the lower long term rental rate and help provide a steady cash flow despite lean periods.

Things to Consider When Running Airbnb Long Term Rentals

Before going the Airbnb long term rental route, keep in mind a few things:

Check your local Airbnb regulations. Long term rentals are subject to local laws, which vary depending on what state, county, or city your property is located in. Remember that in certain states, guests who stay for more than 28 days are protected by local tenancy laws. Specifically, the landlord or the property’s owner will need a court order in order to evict the tenant for whatever reason they have. Just to be on the safe side, make sure to check the local laws in your location. Better still, seek the counsel of a landlord-tenant lawyer.
Get your guests to sign a rental agreement. A rental agreement that lists all the “house rules” serves to protect yourself and provide insurance against any issues in the future. Get your guests to sign the agreement and ensure that they understand the terms and conditions of their stay. You can include the rules in your listing description when you list your property for Airbnb long term rentals near me.
Screen your potential guests thoroughly. Since your potential guests, who may be total strangers to you, will be staying your rental property for a long period of time, it’s important to do a background check on them. By screening your future tenants thoroughly, you are likely to avoid those who could become problematic later on. If you’re undecided about accepting a certain guest booking, don’t do it and just find another one.
Offer monthly and weekly discounts. Airbnb guests who can avail monthly and weekly discounts are more likely to extend their stay. With longer bookings and fewer guest turnovers, you can expect a more predictable rental income and a higher occupancy rate.

Our Recommendations

We, on Mashvisor, recommend that you start with Airbnb rentals. It is one of the best real estate investment strategies, especially for beginner Airbnb investors. If you think carefully about all the pros that we’ve mentioned, then you will know for sure why Airbnb is so popular. Before making your final decision, consider also an Airbnb long term rental for a steady income stream. Afterward, you can go ahead and start by buying a house for Airbnb renting and proceed with listing it.

Find and analyze the best Airbnb investment properties right here on Mashvisor. To subscribe to our services with a 15% discount today, click here.

While you are buying a top-performing Airbnb property, make sure that you learn how to become an Airbnb host.

Nonetheless, we’ve presented two rental strategies (Airbnb vs. long term rental), plus Airbnb long term rental, so you get to analyze them and choose what goes better with your investment goals.

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Airbnb vs. Long Term Rental: Which One Is the Better Real Estate Investment Strategy for You?