Running a long term Airbnb business is a great and simple model that helps ensure you book enough days to earn a profit.
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Even though Airbnb is primarily focused on providing short-term stays for tourists, not all Airbnb hosts can get the most out of their investment property. And it’s not about how good your rental is compared to the competition on the market; sometimes, it’s pure luck.
One guest leaves a mess and you lose a whole day to clean it up—who knows, maybe somebody didn’t book your rental because they were arriving that day and you couldn’t accommodate them. Another guest cancels the booking too soon, and you can’t fill the rental immediately. These small things can add up, and your whole month can be in the red.
What can you do about it? Make a couple of compromises, and try to attract Airbnb monthly stays. You may have to charge a bit less, but with each day of the month booked, that doesn’t really matter.
Interested whether this is the right strategy for your Airbnb rental? Read on, and this guide will walk you through what long term Airbnb is, if it’s right for you, and how to attract guests who stay for longer than a week.
How Does Long Term Airbnb Work?
Long term Airbnb combines the best of two worlds—the price range of short-term Airbnb and the constant scheduled payments of the traditional rent. Sure, you will probably end up giving your long-term guest a discount, but with 28 days or more booked, you’re still making a lot of money. Not only that, you don’t have to worry about cleaning and housekeeping.
What Type of Guests Would Rent a Long Term Airbnb?
But why would tenants rent out Airbnb long-term rentals for longer than a couple of weeks? Most people use Airbnb and other short-term rental platforms when they’re on vacation, and it rarely extends for more than 14 days. If you need to live in a city for a longer period of time, you usually find a long-term rental and sign an agreement.
Airbnb long-term guests are a bit different. They’re digital nomads, seasonal or short-term workers, or students. They often need to stay in town for a couple of months at best and don’t want to take on a long-term responsibility in a place they don’t want to be in after a few months.
When a person only needs to stay in one area for a couple of months, be it to finish a local contract or to work remotely from a scenic location, they don’t want to sign a lease. Typically, lease agreements are signed for a period of six to 12 months at a minimum. Finding a host who will be okay with a two-month stay can be hard, and subleasing the apartment when you no longer need it can be even harder.
That’s why many renters like that prefer to just rent an Airbnb instead of dealing with the drawbacks of long-term renting. This creates a perfect opportunity for Airbnb hosts to turn a profit. So if you don’t know how to invest in real estate, going to long term Airbnb can be a good mix of the two most prominent rental strategies.
Pros and Cons of Running a Long Term Airbnb
There are no golden formulas when it comes to the rental market or business in general. All solutions, long term Airbnb renting included, have their downsides and benefits. Let’s inspect a list of both to see if shifting focus on long-term guests is right for your rental.
Long Term Airbnb Pros
These are some of the benefits you can get from running a long term Airbnb rental.
Little to No Work on Your End
An Airbnb business is attractive due to its high daily fees, but there’s another side to it. Before a guest moves in, you need to communicate with them, make sure you can meet to hand over the keys, tidy up your rental, and go through a checklist of home essentials. With 20 days out of the month booked, this turns into a full-time job.
When you rent to just one person, you only need to do the onboarding once, and you’re free to do your day job or enjoy your life.
Relax and Earn Truly Passive Income
When renting an apartment to multiple short-term guests, you’ll have to juggle a lot of things. Considering that these types of tasks have no defined schedule, and you’ll be doing something at your rental at least semi-daily, you’re getting yourself into a perfect “flexible schedule” job. Flexible, in this case, means you’ll often find yourself trying to fix a leaking sink or getting the keys from an apartment at 11 PM on short notice.
The income from a long term Airbnb is mostly passive, save for an odd maintenance job. You won’t be communicating with your long-term guest that much, and the initial onboarding only has to be done once. It turns your Airbnb long-term rental into a perfect passive income source.
Lower Maintenance Cost
The daily fee for an Airbnb in a typical neighborhood of a large city is surely alluring. However, not only are you not considering the amount of work you have to do as a host to earn that reward, but you’re also not considering the expenses.
Apart from paying for regular cleaning, you may need to pay extra if the guest makes a mess. Replacing broken furniture and decor can hit your wallet hard, and these things happen more often than you’d think.
Long term Airbnb rentals allow you to keep maintenance costs at a minimum—the guest will typically either do the cleaning on their own or will compensate you for hiring a cleaner.
No Parties
The worst that can happen to an Airbnb rental is someone renting it out for one day, throwing a party, and leaving the mess for you to clean up. Add to that the fact that the neighbors will likely complain about the noise, and you have a portrait of the worst guest imaginable.
That will never happen with a long-term guest. They’re not interested in getting thrown out because of a neighbor complaint. They also typically have little interest in parties as they tend to be older and are staying due to work, not a vacation.
Long Term Airbnb Cons
The list of drawbacks is slightly shorter, but long term Airbnb rental does come with a couple of things that can be a problem for you.
Lower Nightly Income
The whole point of higher nightly fees in Airbnb and other short-term rentals is that a guest stays for a short time and covers all the costs of tidying up an apartment before and after them. With longer stays, this logic cannot be applied, so most guests will expect a discount.
Thus, your nightly fee will probably go down for a long-term guest, but the monthly income will increase because your rental is fully booked, and you don’t have to pay for cleaning and other regular maintenance.
Risk of Payment Default
This problem rarely occurs, but it’s still great to keep it in mind. Airbnb charges for stays under 28 days upfront. However, if a guest stays for more than 28 days, they’re charged monthly. If your long-term guest happens to not be trustworthy, you may have problems with getting payments up to default.
4 Tips for Running a Successful Long Term Airbnb
Do you think that finding a long term Airbnb tenant is right for you? If less hassle and a fully booked rental sound appealing, let’s take a look at what you can do to attract long term Airbnb guests and how to run the business successfully.
Set Up Discounts
Finding a perfect Airbnb tenant is a lot about luck, but even with luck on your side, you’re not getting anywhere if your listing isn’t welcoming for long-term guests. Apart from allowing longer stays on the app, Airbnb suggests giving discounts for bookings over a month. It’s a good idea to give even weekly stays a small discount to attract guests who want to stay longer than a couple of days.
How would you know if you set the right discount that will not lose you revenue? It’s arbitrary and depends more on what you expect to get from your rental. The easiest way to calculate what discount you should give is by looking at your average occupancy rate.
For instance, if, on average, you book 20 days out of 28 each month, the occupancy rate is 71%. At this rate, if you offer a 29% discount and book 28 days, you won’t be losing a dime. Especially considering the fact you don’t spend time and money on onboarding new tenants.
If you offer a lower discount, say 20%, the rental is going to be even more profitable than with short stays. Find an optimal discount amount, and both you and your tenant are going to be winning from the transaction.
Prepare for a Comfy Long-Term Stay
A person staying at your place for three days will probably use the rental to sleep through the night and will be off the next morning to have a cup of coffee in a restaurant. Someone who lives in your rental for three months will probably spend a lot of time inside the house. You better accommodate that.
Furnish Your Airbnb for Long-Term Guests
One of the most important things you can do in 2022 is to set up a comfortable working space. With over 5 million people in the US working remotely at least some of the time, the odds are your tenant is going to have to work from home sometimes.
Doing this can be as simple as having a sturdy desk, a comfy chair, and an outlet close enough to plug in a laptop charger if the battery needs to be charged constantly. Having it close to a window and furnished with a desk lamp is perfect. It doesn’t seem like much, but it’s odd how many rentals don’t have that.
Another thing you can upgrade in your rental is the relaxation zone. A long-term tenant will need more than just the bed to relax in after a long day of work. A comfy couch and a TV they can connect to can make your rental a lot more appealing.
Since tenants are going to be staying for more than a week, they’re bringing a lot of their clothes and other possessions with them. If your rental only has one small dresser, it’s not going to cut it. Consider furnishing the rental to allow more storage space.
What a traveler isn’t going to take with them is a mop and a set of dishes. That’s why a good long-term rental must have all the cleaning and cooking supplies. Having a bread cooker in the kitchen is probably overkill, but your goal is to have a bit more useful kitchenware than a pair of forks and a dull knife.
Consider Allowing Pets
The last thing you can do to attract longer stays is to consider allowing pets in the rental. Many hosts are against having an animal that can do all kinds of messes in the house. But the main concern is that you’ll have to spend time cleaning that mess and lose the next tenant in the process.
If the rental is booked for two months, that becomes less of a problem. Besides, it can be a factor that makes or breaks the deal for a long-term guest—imagine living in another city for two months and not taking your cat.
Choose a Rental in the Right Area
Getting the conditions right is crucial. But you won’t be able to get any clients at all if you purchase a rental in the wrong area. In real estate, location is everything.
For a long term Airbnb place, you’re looking for an area where there’s enough inflow of new residents, but not as much as to make long-term renting inefficient. The idea behind this is pretty simple.
If the Airbnb occupancy rate is really low in the area, it’s going to be hard to find clients at all, and it’s going to be better to focus on traditional rent. If it’s high and the prices are good, the odds are this area is popular with tourists and it’s best to stick to the ordinary short-term renting as you’re not losing any revenue.
In an area with 50%-70% occupancy rate and fairly decent nightly fee, you can start thinking about long term Airbnb rentals. In an area like this, you can keep the level of revenue that you’re getting with short-term renting by giving a 20% discount.
How to Find Properties That Match Your Strategy
But how do you find properties that match this request? The easiest way to do this is by using Mashvisor’s Airbnb analysis capabilities. This platform provides access to rental comps based on millions of listings all over the US.
What’s even more important for an investor planning to deal with Airbnb, Mashvisor provides Airbnb data analytics including average occupancy rate and cash on cash return in most counties.
You can start your search by finding towns with a property price range that suits your budget and narrow down the search with a heatmap.
Mashvisor’s heatmap allows users to find profitable areas fast.
With Mashvisor’s heatmap, you can quickly sort areas in a town or a city by applying various filters. In our case, you’ll most likely want to take a look at areas with high Airbnb cash on cash return, cap rate, and average occupancy rate.
Once you have a couple of rentals on your radar, you can estimate the rental income from all of them with Mashvisor’s Airbnb calculator. In case you want to switch from short-term to long-term renting with a property you already own, you can enter the data into the calculator to see what income you can expect.
The Airbnb rental income calculator helps investors choose the right strategy.
In case you’re just planning to purchase a rental to use with Airbnb, you can find the seller’s contact information on Mashvisor and use the platform to contact all the sellers and finalize the deal.
Mind the Laws in Your Area
The last thing you need to take care of to make sure your Airbnb business runs smoothly is the legal side of things. In some states, requirements are different for short-term and long-term rent. You have to obtain a different type of license if you’re switching to long-term renting, and you may have to sign a lease agreement.
Figure this out before you let a long-term tenant in, and you’ll avoid trouble with the authorities.
Is Long Term Airbnb Worth It?
The problem with the traditional Airbnb model is that it’s not perfect for making a passive income. When you have to deal with three or five groups of short-term guests during a month, it becomes a side-job because of all the chores you have to take care of.
Renting out a house long-term through Airbnb lets you have a stable income you don’t have to work for and your guest to rid themselves of long-term responsibility. But the final decision of whether to switch is purely financial. Do a quick calculation on whether you can hit your financial targets for the month with a monthly discount before you decide.
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