Airbnb vs Renting Out Your House: Pros and Cons to Consider

Having a rental property today doesn’t mean you have to follow a traditional rental income path. You don’t have to collect monthly rent from tenants who sign long-term leases. There are options. Landlords today can look at a rental property and see it as an investment property. But they can also decide to turn it into an Airbnb rental.

There are plenty of reasons why you may want to compare Airbnb vs renting out your home. The biggest argument being over one billion guests, to date, have stayed in an Airbnb. That number shows demand, as well as the benefit of using a vacation rental site to get people into your rental property.

However, vacation rentals aren’t the obvious choice, and using your rentals as Airbnb properties may not prove more lucrative or easier than traditional renting. So, take a moment to compare, think about what’s important to you when it comes to a steady cash flow from your property and pick a side.

Do you want a rental property or an investment property?

When thinking about rental income, both Airbnb rentals and long-term rental properties achieve the same goal. They both bring in more income for you. What’s different is the time you have to commit to keeping the property in high demand.

A rental property has income potential because you’re attracting people who want to live there for an extended period. Long-term tenants see your property as their home, which means they’ll put time and care into it. They’ll sign a rental agreement and pay rent, so you’ve got consistent income coming in for at least a year at a time.

Using your property as a short-term rental is basically how it works with Airbnb, only your tenants’ attitudes are different. On average, Airbnb guests are going to see your property as a vacation rental. They’re not going to feel any responsibility to the place, so might not treat it with a lot of care. You’ll also need to furnish your rental and equip it with certain amenities. Guests expect their Airbnb to look a certain way after all.

These two rental strategies each offer a set of pros and cons, but what it really comes down to is how you see your rental. Is it a vacation home or a piece of real estate you want other people to consider home?

Pros of long-term rentals

The biggest benefit of long-term rentals is consistency. You’ll consistently get paid, so no irregular income. You’re able to create a consistent screening process for new renters, so hopefully no bad tenants. You’ll be able to tap into your local market to establish a competitive rental strategy, so consistent rental prices.

The second biggest benefit to a long-term lease is the lease agreement itself. There’s actually one to sign that establishes house rules and protects your rental properties and your bank account.

Need to know some other benefits that make it easy to lean toward long-term rentals? There are plenty, no matter the goal of the real estate investor.

Protection from market fluctuations

Renting your property long-term offers you protection from market fluctuations. It allows you to have a stable real estate investment strategy. When you rent long-term, you’re able to lock in a set rate for an extended period of time, which can save you money if the market gets dicey. As long as you have a lease in place, the tenant pays that rent for the whole term, even if comparable rents go down.

Reliable property value

Renting property long-term can also provide you with a more reliable property value. Because you’re not subject to the whims of the market, since this is real estate investing for a long period, you’re confident that your property will hold its value over time.

Long-term rentals are also generally better for cash flow purposes. With a long-term rental, you’re able to spread the cost of your mortgage over a longer period of time, which can make it easier to manage your finances.

Cheaper overhead

When you rent your property long-term, you also tend to have lower overhead costs. This is because you don’t have to worry about the cost of advertising or the cost of turnover, both of which is significant when you’re renting short-term.

You also collect a security deposit to address issues beyond normal wear and tear and don’t have to pay to furnish the home. These benefits don’t necessarily mean a huge profit when it comes to renting, but they can mean improved cash flow so you can begin making a little money sooner.

No seasonal fluctuations

Another big advantage of long-term rentals is that they’re not subject to seasonal fluctuations. With a long-term rental, you are confident that your rent will be the same every month of the year, which can make budgeting easier.

Better tenant screening

Because you’re not looking for tenants who are only staying for a short period of time, you can be more selective in your screening process. This can help you avoid problem tenants and make sure that you have good, reliable renters on your property. You’re able to take the time to run proper background checks, look into credit histories and even collect references from previous landlords and current employers. You have the ability to be more selective about who you allow to live on your property.

Fewer restrictions

Long-term rentals also tend to have fewer restrictions, when it comes to local laws than short-term rentals. This is because you’re not subject to the same regulations and zoning laws that apply to short-term rentals. As a result, property management is much easier, and you may have more flexibility in how you use your property.

Cons of short-term rentals

Although the company offers its Airbnb host guarantee to protect landlords like you, there are still a lot of negatives to using your property for short-term rentals of this kind.

More upfront costs to you

While you may have the ability for flexible pricing, bringing in more Airbnb income, you also have the potential of paying out a lot more. Damages are more common in short-term rentals.

You’ll also have the added cost of having to clean and restock or replace your property with certain items after each rental.

Seasonal vacancies

Airbnb hosts also suffer from the seasonal trends of the short-term rental market. Your property could sit empty a few months every year, or receive minimal bookings if there’s no good weather or a local attraction to draw in the people.

Local laws may work against you

Some cities also limit the number of days an Airbnb rental is available, forcing you to intentionally leave your property vacant at certain times during the year.

Advertising costs

In addition to all the time you’ll spend keeping your property clean and ready for guests, you’ll also put in a lot of energy to attract them. Marketing an Airbnb property requires a lot of work. You not only have to take high-quality photos but you should also change them each season to keep your property relevant. You’ll also work extra hard to write a property description since you must talk about why the home is a great place to stay and promote what’s around it to appeal to someone living there for only a short period of time.