Many landlords and property investors have balked at the idea of utilizing Airbnb to generate income. This is due to the fact that many landlords have purchased properties that they prefer to lease on a long-term basis. Short-term rentals can seem scary and unreliable at first glance. Airbnb is a common platform that homeowners use to rent out their properties. Like any variety of ‘landlording’, there are ups and downs. Revenue tends to fluctuate, unlike a traditional rental unit where the monthly income is already predetermined and predictable. How many landlords are using this strategy?
In 2016 Airbnb garnered $1.6 billion in revenues while in 2019, they made over $4.7 billion. What this means is that Airbnb's popularity and the concept of short-term rentals are still gaining in popularity and use. Therefore, landlords are highly encouraged to take advantage of Airbnb to increase their revenue when it makes sense to. Here are several impactful reasons that you should consider Airbnb for your ]rental properties.
1) Increase Cash Flow
One of the major advantages landlords stand to gain by adding Airbnb to their investment strategy is that it can help to generate more income than a typical long-term rental. A well-kept and furnished listing that has been photographed in a good location has the potential to generate incredible profits. Statistics show that a well-managed property can produce 2-3 times more income than a long-term rental, depending on the location and demand.
Landlords that start experiencing huge increases in rental income may want to become a full-time professional real estate company. Technology is not going anymore. More travelers and short-term rental seekers will continue to use platforms like Airbnb to book rentals with ease. Most landlords who use Airbnb evaluate the expenses of hotels within the area to determine how much they should charge their guests. Determining the price comes with experience. Seasonality can affect short-term rentals. However, if you make your rental unique enough to draw interest, the demand for your bookings with increase.
2) Minimal Upkeep
When you offer a long-term rental unit, chances are that the tenant will cause some wear and tear on the property. In most cases, when tenants leave a property, they tend to leave broken furniture, appliances, and other trash within the apartment behind. You - as the landlord - have to take care of this, which usually means removing it yourself or paying someone to handle it. When you provide an Airbnb listing, you don't have to conduct an abundance of upkeep for free. In most cases, you'll be able to add an additional charge of $100-$200 to the nightly rate for cleaning expenses.
Operating a large-scale portfolio of short-term rentals sounds cumbersome at first. Fortunately, thanks to technology, automation, and property management companies, you can streamline the processes of managing your units. Typically, Airbnb guests are well-behaved as long as you provide the proper guidelines on how to take care of the property. Guests understand that this could be your home and respect that. Ideally, an Airbnb wouldn’t have to be repaired as frequently as a unit that you have long-term tenants in.
3) Diversification
The pandemic exposed how vulnerable the rental and housing market can be. Hundreds of thousands of Americans got evicted during 2020 as a result of being unable to pay rent, due to the numerous lockdowns that were initiated. In some instances, tenants were granted a reprieve which shielded them from being evicted for a certain period of time. Unfortunately, many tenants took advantage of this loophole and failed to pay rent for several months. As a result of this, many landlords experienced a drastic decrease in income.
On the flip side, Airbnb saw accelerated growth, as more and more people decided to rent Airbnb rentals as opposed to going to a large crowded hotel. When it's all said and done, a landlord is an investor. Like any investor, you need to diversify your assets so that you can reduce your overall risk of losing revenue. Airbnb gives landlords an opportunity to diversify their assets.
End points
Providing an Airbnb rental can help to generate additional cash flow in a relatively short period of time. As opposed to waiting weeks or months to get a new tenant, landlords can generate income faster, by using Airbnb. Even though revenue tends to fluctuate when it comes to providing short-term rentals, in the long run, they can generate 2-3 times what you would get from providing a similar long-term rental unit.
If you live in an area with high demand for travelers and short-term rentals, consider turning your rental property into an Airbnb. The platform makes it simple and easy to manage your guests and your house. There are tools you can implement to streamline the process and get the most out of your rental portfolio.
Comments(1)