Whether you already own a rental property or are looking to get into real estate investing as a way to grow your wealth, you may be asking yourself this question.
Should I use the property as a long-term rental or try short-term rentals on a website like Airbnb?
The flexibility of scheduling bookings, setting your own prices and monitoring tenants has made the AirBnb avenue very attractive – especially for more millennials. If you own a seasonal rental, such as condos on the Florida beaches, or apartments in popular downtown areas, you will be able to adjust your pricing to match the seasonal demand.
If you decide you want to rent your property out on AirBnb, there are a few things we recommend considering or researching further.
Does Your Homeowners Insurance Allow It?
Even though Airbnb includes Host Protection Insurance and the Host Guarantee Programs to provide coverage to hosts, it is vital to talk to your homeowner’s or renter’s insurance agent to see if coverages change when you are using your home as a short-term rental.
You wouldn’t want to find out after you have an issue that you won’t be covered.
AirBnb runs a limited background check on users who provide their full legal names and dates of birth, unfortunately because not all users provide that information – including guests who are traveling with the users, AirBnb cannot guarantee guests are free of criminal records.
You will want to consider your key system for guests. You will need to consider adding additional methods of entry, whether it’s changing a key code after each guest, or having a co-host who can assist with letting guests in and out.
There are some simple alterations you can make to your unit to keep it and your guests safe. This, along with respecting your guests’ privacy, is key to a successful Airbnb. The safety and comfort of your vacation rental should always be a major priority.
Higher Turnover Rates
These types of rentals also have more risk associated with them regarding occupancy. Although you may find the payoff is worth those risks.
Higher turnover rates of AirBnbs will mean more maintenance, cleaning fees and services fees that will pull from your overall profits. If you plan to manage the cleaning and maintenance between renters you will save some money – but not necessarily any time. Hiring a cleaning team to have on call might be a wise choice if your rentals are longer than a week. If you want to keep your host ratings high, it will also be important to offer additional perks to your renters, such as water bottles, snacks and hygiene essentials.
What is Your Plan for Property Management?
Check with your management company to see if they manage short-term rentals but be prepared to pay up to 5 times more than what you pay for traditional rental management.
Many property managers charge between 8-12% of the monthly rent for long-term rentals, but short-term rental management can range from 25-40% or more of your gross income. And that doesn’t include other costs like cleaning or yard maintenance.
Preparing Your Property-You want your property to be desirable to potential guests, so make sure you prepare accordingly.
Clean regularly- Every time a guest checks out, you should do a deep cleaning of the property. Here’s how to prevent messes in your rental.
Decorate accordingly-Having an inviting and cozy vibe is essential to ensuring guests’ enjoyment. You want to create a neutral, aesthetically pleasing environment that is comfortable. Make sure to stock bathrooms with toiletries and provide guests with fresh linens and towels.
Furnish the property-This includes: furniture, bedding, dishes, and some consumables i.e. condiments, some paper products
You will also need to plan for the replacement of these items over time. And re-stocking of some items for each new guest you welcome!
Up for the Challenge?
Do your research and think hard about what matters most to you at this point in life. Is the extra money worth the extra time and effort required?