Airbnb vs. Long Term Rental Properties. Pro's and Con's!

Airbnb or Long Term Rental Property? I break down the Pro's and Con's to each one and explain how I would decide if I should put my property on Airbnb or rent it out Long Term.

CONTENTS OF THIS VIDEO

0:00 - Intro
0:33 - Use Airbnb (Not VRBO)
1:38 - Airbnb Pro - Revenue Potential
3:49 - Airbnb Pro - Easy Maintenance
4:33 - Airbnb Pro - Better Renters
6:55 - LT Pro - Less Work
8:27 - LT Pro - Consistent Cash Flow
9:16 - LT Tip - 1% Rule
10:17 - LT Pro - No Sales Tax
10:58 - LT Pro - Low Up Front Cost
11:22 - LT Con - Bad Renters
12:10 - LT Tip - How To Find Good Renters
13:47 - LT Con - Less Revenue Potential
14:56 - Airbnb Con - Not Passive
15:59 - Airbnb Con - Employees
16:32 - Airbnb Con - Inconsistent Revenue
17:34 - Airbnb Con - Guest Management
19:27 - Airbnb Con - High Up Front Cost
20:44 - My Analysis

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I have been running an Airbnb for 3 years. I also have 2 long term rental properties. I have learned a lot about the pro's and con's to running each type of rental property so I'm going to break it down for you.

I use Airbnb. The listed on both Airbnb and VRBO. I had gotten 10 bookings on Airbnb before even getting 1 on VRBO. Also, Airbnb collects and remits my sales tax and transient room (hotel) tax for me. VRBO collects the tax but then I would have to file and remit a sales tax and transient room tax. Even being a CPA, I don't want to worry about filing those tax returns. So, I list exclusively on Airbnb and let them do that all for me.

Airbnb Pro's:
Pro #1: The revenue potential is much higher than a Long Term Rental. You can charge a higher nightly rate when using Airbnb then you could by renting it long term. For example, my Airbnb will get my $1,712 for the month of May. If I were to rent it out long term it would only get me $600-$700 a month in rent.

Pro #2:
Airbnb properties are much easier to maintain. This is because you are in the property almost daily. You get to check on everything often. With a long term rental you are in the property much much less.

Pro #3:
Your guests treat your property like guests. With an Airbnb people don't feel like they own the place so they treat your property with respect. Airbnb has a two way rating system where you actually get to review your guest. This incentivizes people to be good guests.

Long Term:
Pro #1:
Long term renting is more passive then an Airbnb. You literally can hand the keys to someone and collect rent. With an Airbnb you are having to go to the property almost daily to clean and prep for the next guest. You also have to help the guest with anything they need. Long term renting you can simply sit back and collect rent.

Pro #2:
Long term renting brings consistent cash flow. You know exactly what you are going to get in rent each month. An Airbnb is much more cyclical, meaning you may have a lot of rentals in the summer and then low rentals in the winter. This means you need to plan and save money from your peaks season to pay bills during your low season. You don't have to worry about that with a long term rental.

Long Term Side Tip:
Find a rental property that will pay you monthly rent that is equal or greater than 1% of your purchase price. This will result in a very profitable rental property.

Pro #3:
No sales tax. With long term renting there is no reason to worry about collect or remitting a sales or hotel tax.

Pro #4:
There is low up front costs. When running an Airbnb you need to furnish your property. However, there is no such need with a long term rental property. You can simply buy the property and start renting it out as an unfurnished property.

Con #1:
Renters in a long term rental property may end up feeling like they own your property. This can result in unwanted renovations or changes and even property damage.

Finding good tenants:
1. Rent to someone you know
2. Back Ground checks
3. Call previous landlords
4. Ask to see their car

Con #2:
Less revenue potential. People are simply unwilling to pay a nightly rate for every night in the month for a long term rental. I had a 4-bedroom house that would get $5,000 a month if I rented out all 30 days in a month at my nightly rate, but there is no way I could charge that as a long term rental.

Airbnb Cons
Con #1:
Not as passive. Running an Airbnb can be a lot of work. You have to clean between each guest and make sure your guests are taken care of. This can result in a lot of work.

Con #2:
You may have to hire an employee. You will need a cleaner when you are out of town.

Con #3:
Revenue is cyclical

Con #4:
Renters can be demanding.

Con #5:
High up front costs. (couch, bed, sheets, etc.)

Видео Airbnb vs. Long Term Rental Properties. Pro's and Con's! канала Greg Acton, CPA