If you’re thinking of renting out a property on Airbnb, ask yourself, do you want more flexibility in renting out your property? If your answer is yes, Airbnb is certainly an option for providing so. Airbnb gives you the ability to rent out your property based on your schedule and needs.
Maybe you’ve realized you don’t use your basement all that much and renting it could provide an extra income. If you can’t imagine living with other people part-time, consider renting out your property while on vacation. Making an income while on vacation could be easy to get used to once or twice a year.
If you are not thinking of renting out your home and have a separate property, you also have the ability to determine when the property can be rented out and in all cases, payments are made up front. Whether it is a room or an entire house, Airbnb provides a platform where you can advertise and manage your property all on one platform.
There are clearly many pros and cons for renting out a property with a one-year lease as oppose to possibly renting out the property for a couple days per month. Break it down for yourself:
- Scenario A: I’m just renting out a room and want to simulate a hotel business to save the cost of hiring someone else
- Scenario B: I don’t have the time to manage an entire house on my own so I will hire a property management company
Whether you fall into scenario A or B, or the mixture of the two, Airbnb can still work for you because it based on managing one your terms and your own pace.
Will It Make Me More Money?
Investing in a property for renting it out on Airbnb diversifies your work. It will mean simulating a hotel business and getting to know and accommodate different customers. This is a chance to physically watch your investment develop and be in control of your ROI. While Airbnb may be a cheaper option than a hotel for customers, it is not cheaper than renting an apartment with a one-year lease.
A one bedroom apartment in the D.C. area can cost $1,500/month or $50/day. If that one bedroom apartment was rented for $80/night on Airbnb for just 20 days out of the month, that brings in $1,600 – more than the monthly rent. It is a matter of working hard to create the potential of bringing in $600 in 4 days.
Related: Real Estate Investing: Traditional vs. Airbnb Investments
Some Lifesavers
Managing an Airbnb does inflict extra costs than an ordinary rental property and does mean having to be on call. However, if done strategically, Airbnb can still be more cost-effective than leasing and have several advantages. Your facility is unlikely to be as worn out compared to having renters living there daily. After all, the Airbnb renters are on vacation and may not use every nook and cranny in the property.
1. Airbnb relieves you of the cost of advertising. Using its platform to post pictures, content, and have a rating system only costs a 3% host service fee for each booking. That is all it costs to use Airbnb.
2. The property should not require the same transforming recovery as a leased apartment. If there are short-term rentals in high demand, then you will constantly be maintaining the property which is an easier approach than an entire renovation.
3. Airbnb offers Host Guarantee property protection, which reimburses you up to one million dollars in property damages.
4. Lockitron – this app allows you to lock and unlock your door for specific visitors without having to be physically present. This app saves you from the hassle of working in check-in time and could be used as plan B.
5. Manage it yourself – you do not have to hire someone to do the cleaning, shopping and other chores. After time, these chores may become routine-like and economical to just do them yourself.
6. It does not have to include everything – yes, every little detail can go far in promoting your property and in keeping your customers happy, like a blow dryer. However, if your financial situation does not allow you to include everything and embellish your property, it is not necessarily a deal-breaker for renters.
Related: 6 Must-Have Real Estate Investment Tools
Lastly, before you decide if you should buy a property to rent it on Airbnb, definitely understand the benefits of using Airbnb to look from your renter’s POV. Based on your location, you can understand what type of short-term rentals people are looking for and work based those findings.