Advantages of Airbnb Over Leasing
Some argue that the loose regulations for short term rentals like Airbnb ultimately drive up housing prices, and it’s possible they’re right. But it’s also worth understanding that for many homeowners, using Airbnb can be a better option than taking on long-term tenants. For one, you can make good money using a short-term rental platform service such as Airbnb. The flexibility is also attractive for someone who doesn’t want to lock into a long-term lease.
Airbnb is Lucrative
A few weeks ago, I met a gentleman who purchased a house about 10 years ago as an investment property. He had reached out to me about selling his property, and over the course of our conversation he said he’d rented out his house in a variety of ways– short-term, long-term and with Airbnb.
Airbnb was by far the most lucrative option. In peak season summer months, he gets upwards of $6000 per month for this furnished 3-bedroom house with basement; whereas leasing to long-term tenants, it would be in the $3,500 – $4,000 range. But it seems like this is pretty typical. A quick search on Airbnb today shows a similar house in the same neighborhood currently offered for $350/night in June. While a full month of occupancy is rare due to scheduling line-ups, even at ⅔ occupancy that comes out to $7000.
The extra money does, of course, require extra work and expense, and owners have to make sure their guests stay happy so they keep a positive profile. One owner I spoke with said that a typical turnover between guests costs $130 (cleaning plus linens) for his 3-BR, 2.5 bath house, and utilities (gas, electric, water and cable) come out to about $400. With just four turnovers, that’s nearly $1000/month out of pocket to keep the place running.
For many homeowners the positives are worth the work, especially since it allows them the flexibility to use the space if they want it — for example if they want to block off time for personal use if they have guests or family town.
Airbnb Offers Opportunity for Homeowners
It’s fairly clear that moving forward, Airbnb (and services like it) will be an important part of the housing picture in our region. In discussing the topic, it’s helpful to keep in mind the perspective of individual property owners — many of whom pay high mortgages to live in this expensive city — who could use the extra income and flexibility that Airbnb provides.
If someone buys real estate with the intention of renting it out as an investor, the Airbnb platform provides an attractive model. Property owners in many neighborhoods throughout the city are certainly working it to their advantage.
Questions about Airbnb vs. Leasing? We haven’t seen it all, but we’ve seen a lot. Contact Jess if you want to chat.