Airbnb has been the poster child for “disruptive innovation” since it was founded in 2008. The online marketplace has made it easier for many property owners to rent out spare rooms and make some extra money when long-term tenants were nowhere to be found. Today, 2 million people stay in an Airbnb on any given night.
Plenty of real estate investors have made the move from traditional leasing to Airbnb. But this move may not be right for everyone—there are a variety of risks, costs, and rewards that come with using this platform.
If you’re interested in working with Airbnb, you’ll need to do your homework to make sure the work is worthy of your time, money, and energy. There are plenty of pros and cons to listing an Airbnb real estate investment—weigh them equally before you make the move.
Pro: The Potential to Make More Money
Let’s say you have a property in Austin, where renting out a two-bedroom house could generate up to $2,500 each month. Renting out that entire home on Airbnb could easily net between $70 and $200 each night. (And I’m talking about any old night—not a night during SXSW, ACL, New Year’s Eve…)
It could take less than two weeks to make $2,500 from an Airbnb listing. That kind of math is what draws many real estate investors to the platform—they don’t have to fill up their property with guests every day of the month to make more money than they would with long-term renters.
Con: More Maintenance
Of course, there is more to renting out an Airbnb than sitting back and watching the money roll in. After each stay, which could be just one or two nights, you’ll need to clean the property to return it to a state ready for new guests.
Before each stay, you’ll also have to field questions from guests, ranging from instructions on how to enter the property, to where to park, or to how to activate and deactivate an alarm system, among others. You’ll also need to stay up to date on any events going on in your area to make the most of seasonal pricing, and then reset prices after those dates to keep your rates competitive.
Overall, Airbnb requires a more hands-on approach compared to renting out a space to long-term tenants.
Pro: You Don’t Have to Buy Property to Get Started
You can start earning money off a property that you don’t own by renting it out on Airbnb. If you search online, you’ll see dozens of videos from investors who leased or rented out a property and, with the owner’s permission, then rented out the property on Airbnb. These owners typically have multiple properties and just need someone to fill it with tenants, making them primed to work with Airbnb.
There are plenty of monthly expenses, however, that come with this plan. First and foremost, you’ll likely have to pay the owner some sort of rent or monthly fee for using their property. Most owners will also want to know that you are regularly cleaning the place and have proper insurance. If you can consistently fill the property with tenants, though, you’ll be able to recover all of those expenses before the month is over.
Con: More Expenses
Even if you own a property you list on Airbnb, you may find yourself spending more than you would on a property with long-term renters. Tenants bring their own linens, toiletries, and cleaning supplies. Airbnb guests don’t. Tenants may be willing, or required, to pay for utilities and wifi. Airbnb guests won’t. (And heaven forbid the property doesn’t have wi-fi!)
Some Airbnb owners even make food, beverages, and other amenities available upon arrival to create a more memorable experience for guests. If you’re not budgeting for these expenses (on top of professional cleaning services and insurance), you might be surprised at the end of the month by the amount you’ve spent on creating a top-notch guest experience.
Pro: Bad Tenants Come and Go
Enforcing a three- or seven-night minimum stay can help to reduce costs of preparing your Airbnb for new guests. Even if you decide to go this route, your tenants will mostly be short-term guests, as the average Airbnb stay is less than one week. While this may create some inconsistent cash flow, it can also reduce the risk of having bad tenants staying in your property long-term.
Even if a tenant complains or has loud parties, you won’t have to worry about them being late with rent payments or running down the property until their lease expires. If you’re particularly worried about bad tenants, you can always review a guest’s profile and ratings before you let them book.
Con: Bad Reviews Can Make or Break a Guest’s Decision
A single bad Airbnb review could make potential guests hesitate before booking with you, especially in a highly saturated market.
Fortunately, Airbnb has a double-blind system that requires both guests and hosts to leave a review before they can see what the other party had to say. If there is a dispute, both parties can communicate before any final reviews go public. The website gives hosts two weeks to complete this process—if ignored, the review will automatically go up on Airbnb for future guests to see.
If you don’t stay on top of reviews, a bad one may make its way onto your listing. But with proper maintenance of your listing, both online and offline, you can bounce back from a single bad review within a few weeks.
There’s a lot to consider before you put your property on Airbnb. Reach out to a local legal services provider to discuss potential issues with listing your property on Airbnb in your city.
Have you had success or struggles renting out your property on Airbnb?
Let us know your experiences in the comments below!