Pros and Cons of Managing an Air BnB Rental
As with prolonged wellbeing, the fundamental driver of sustained wealth appears to be self-awareness. Every individual’s choice of investments and asset management strategies should reflect her/his lifestyle, interests, and priorities to ensure long-term success. If you are a landlord or property manager who has considered getting into the short-term rental market (via marketplaces like Air BnB and VRBO), this post will highlight some of the key factors you should consider when deciding if it will coincide with your lifestyle and expectations or not. Many blogs and websites have weighed in on this subject; this post summarizes some of the information we found most useful.
The pros of providing units in the short-term rental market are these:
- Arguably the most appealing and popular aspect of renting an Air BnB or VRBO (Vacation Rental by Owner) space is that a unit posted in the short-term market can make as much as two or even three times the monthly profit that it would make in the traditional, long-term rental market (i.e. units with 9+ month leases). Note that the existence of the opportunity for increased profit doesn’t necessarily mean that every property owner who transitions to the short-term rental market has a glowing success story (many factors influence their success… or failure). Interestingly, a Forbes.com article indicated that some of the places where Air BnB rentals are most valuable relative to the price of the asset (i.e. the building) are mid-sized, midwestern and east-coast cities rather than the relatively expensive housing markets in larger, coastal cities.
- Another benefit of using short-term rental mediums like Air BnB is that the process of documentation is paperless and your digital user interface is provided by the marketplace so your sleek marketing platform is “built-in”. This might eliminate the need for an independent website.
- Finally, an advantageous element of Air BnB or VRBO is that you have relatively increased flexibility and can remove your property from the rental market quickly to respond to a family emergency or a well-deserved vacation — a Youtube video from a short-term rental expert, STR University, includes a few more details about this point. The increased flexibility also gives property owners the chance to capitalize on exciting local events by adjusting the price of their spaces to correspond to spikes in the demand of local real estate.
The cons of supplying units in the short-term rental market are these:
- One of the main drawbacks related to short-term rentals is higher maintenance and service expenses. From the very outset, posting a unit on Air BnB will require a landlord to furnish a rental space that would’ve otherwise been rented out empty — the residents usually provide their own furniture in long-term arrangements. This landlordology.com post mentions the importance of taking compelling photos to market units — so, new Air BnB renters will have to invest in a quality camera, if they don’t have one prior to creating an Air BnB account. Keep in mind that guests’ alternative to renting a unit through Air BnB is staying at a hotel so many of them expect the quality of the space and service to, at least, be comparable to a hotel stay.
- Another point of concern for short-term rental businesses is that they are riskier because a landlords’ ability to maximize profit is dependent upon her/his ability to turn around units quickly, likely in a matter of days or less, and attract subsequent guests.
To circle back to the introductory bit about lifestyle and self-awareness, Air BnB seems most fitting for landlords who are meticulous, sensitive, extroverted and who enjoy being actively engaged with their guests/residents. It appears to be less appealing for property owners who prioritize simplicity, intend to be passively involved in property management, and who hope to minimize management and maintenance time and expenses. It is noteworthy, though, that there are property managers who specialize in short-term rentals just as there is property manager focusing in traditional rental spaces, so a landlord could, potentially, get the best of both worlds and have a quality short-term rental without being directly involved in the hustle and bustle.
Thanks for reading. Understand yourself, live well, and discover wealth. Tune in next month for another post from the WorkMand community. If there are any important considerations that we missed or concerns that we didn’t address, please, send us a message with your response to this post.
This was a guest blog post by Dionne Alkamooneh. Thanks Dgriffo!
You can complete a renovation, remodel or maintenance project online — post today!
Sources:
https://www.youtube.com/watch?v=JftWQbAAJkI
