The Pros and Cons of Short Term Rentals
Short-term rentals, or vacation rentals, have become a popular way to earn extra income. More and more people are choosing to rent out their homes on a short-term basis instead of using them for traditional vacations. There are pros and cons to both choices, so it is important to weigh the options before making a decision. In this blog post, we will discuss the pros and cons of short-term rentals in order to help you make the best decision for your situation.
PROS
1. Great Earning Potential
The first pro of short-term rentals is that they can be a great way to earn extra income. If you live in a popular vacation destination, you can easily make hundreds or even thousands of dollars per month by renting out your home on a short-term basis. Generally short term rentals can make a lot more than long term rentals! This can be a great way to supplement your income or even become your primary source of income.
2. Meet New People
If you like to socialize, another pro of short-term rentals is that they can be a great way to meet new people (if you are doing it at a property you live at/use too). If you enjoy meeting new people and hosting guests, then short-term rentals on your property may be a great option for you to make some extra cash. You will have the opportunity to meet people from all over the world, while also doing a variation of the very powerful 'househacking' strategy!
(PS. this is 100% something Mau would like, and 100% something Josie would hate... hahah)
3. Flexibility
Having a short-term rental gives you a lot of flexibility. Every decision is up to the owner. They can adapt the nightly rates depending on the time of year, type of property and demands of the city. They can also set a minimum-night stay for higher demanded dates such as the weekends, holidays and special events.
You can outsource and automate pretty much everything too so you can really benefit from high income and high flexibility.
CONS
1. Lot of Work
A con of short-term rentals is that they can be a lot of work. If you decide to rent out your property on a short-term basis, you will be responsible for cleaning, stocking, and maintaining the property in addition to managing bookings. This can be a full-time job in itself and may not leave you with much free time if you choose to do it all yourself. The good news is most (or all!) this can be automated or delegated. We use detailed checklists for cleaning, have great cleaners, and delegate many tasks to virtual assistants. We probably only spend 30-60 minutes a week working on our Airbnb, and we make about 4 or 5 times the profit compared to our long term rentals
2. Disruptive to community
Another con of short-term rentals is that they can be disruptive to your neighbourhood if not managed properly. If you live in a quiet neighbourhood, you have to be careful to avoid loud noises and parties from your guests. You may find yourself dealing with noise complaints and other issues that can be disruptive to your everyday life. Airbnbs can also contribute to housing shortages if there are too many in certain areas.
3. Lack of income predictability
A short-term rental property doesn't bring in an identical amount of money throughout the year. Occupancy rates and price per night vary depending on seasonality, so you can't count on a fixed monthly income as you would with long-term tenants. Your costs will also be much higher than with a long term rental (think internet, utilities, supplies, etc). Short term rentals are much more susceptible to seasonal vacancy, guests canceling, restrictive bylaws and market saturation or excess competition. This all leads to an unpredictable market.
In Summary...
The decision of whether or not to rent out your home on a short-term basis is a personal one. There are pros and cons to both choices, so it is important to weigh the options carefully before making a decision. We hope that this blog post has helped you better understand the pros and cons!
Do you have any experience with short-term rentals? Am I missing something? Share your thoughts in the comments below!
If you have any questions, please feel free to contact us. We would be happy to help you make the best decision for your situation. We also coach people who want to start their own Airbnbs! Thank you for reading :)