Airbnb Vs Renting
Airbnb is a short term rental marketplace where people rent out their properties or spare rooms to travellers in the area.
The returns are generally higher as compared to long term traditional rentals but at the risk of letting your property to total strangers.
….here is a head to head comparison of Airbnb vs Renting i.e. long term traditional rentals.
Airbnb Vs Renting: Airbnb Benefits
- If you are in a good location and property is set up correctly, it can get you dramatically higher returns compared to long term rental.
- There is no lock-in contract, and you can use the property for personal use whenever you wish.
- You can inspect the property very frequently during changeovers.
- Address issues in time – the guest or your cleaning team will let you know of any maintenance issues.
- The property gets cleaned very frequently, usually a couple of times in a week and will stay in top shape.
- Less wear and tear – a vast majority of guests will either be visiting the area for tourism or business; they will spend most of the time outside and stay less indoors.
- You may get additional tax benefits, for example, if you are in Europe and the property meets the conditions to qualify as ‘Furnished Holiday Let’, you can claim back property furnishings on capital allowances along with many more extremely lucrative financial benefits. See this link for tax benefits of Furnished Holiday Let in the UK. The is the strongest point when it comes to Airbnb vs renting in the UK.
- Airbnb Host Protection Insurance provides a landlord liability cover of up to USD 1 million for third-party claims of bodily injury, property damage or loss of earnings.
- Letting your property on Airbnb is not ‘Real estate’, it is ‘Hospitality’, and unless someone manages it for you, you will need to learn how to meet guest expectations.
- The income from Airbnb can be unstable, you may start on a very high note, but if it doesn’t meet guest expectations consistently or if the property is not looked after well, bookings can dry up very quickly.
- Airbnb renting regulations in your area may restrict your ability to rent your property on Airbnb all year around.
- More hassle – unless someone else is managing it for you, you will need to keep everything stocked up in the property, arrange cleaning, replace damaged items, pay utility bills etc. regularly.
- Another thing to consider in Airbnb vs renting debate, you will need to spend a lot of time messaging guests, send them details on how to get to the property, key handover and answer any queries they may have about the property or local recommendations.
- Although Airbnb Host Guarantee provides up to USD 1M protection, it isn’t easy to claim the loss and is always at the discretion of Airbnb.
- If you have a mortgage on the property, technically you should let the lender know about the change of use, and it doesn’t go down well with most of the big lenders.
Airbnb Vs Renting: Long Term Rental - Benefits
- Consistent and predictable earning is the number one advantage of traditional renting.
- You don’t need to furnish a long term rental property.
- You don’t need to worry about seasonal fluctuations or deal with customers daily and the hassle of arranging cleaning etc.
- The tenant pays utility bills.
- Almost no admin – once the tenancy agreement is signed, and keys exchanged, you don’t need to worry about advertising or answer booking enquiries.
- You can get a landlords insurance to cover accidental damages or deal with emergencies.
Long Term Rental - Disadvantages
- Traditional rentals generally tend to generate lower earnings than short term holiday rentals.
- You can’t change your mind and ask tenants to leave, move back in or use the property for something else.
- Less control over damages – you are at the mercy of the tenant to keep you informed of any issues which if left unattended may snowball into a disaster with time.
- If you get a problematic tenant or one that falls into difficulty and they don’t pay rent, the law often protects the tenants, and it can take time and money to get them out and retrieve the lost income.
Airbnb vs renting debate bottom line?
Airbnb is not for faint-hearted. If you are a very calculative personality and find it difficult to trust people, just stick to long term letting.
Airbnb is for risk-takers, you will need a great team and spend a lot of time to pull it off, but it is equally rewarding in the end.
Did I miss an important point in my Airbnb vs renting topic? Please feel free to comment below or if you have any other questions on Airbnb, properties or just to say ‘hi’ please don’t hesitate to drop me a message.