Would you rather... (short term vs. long term rental)

Question

The ADW I remodeled on my property is nearly complete, and I am already getting enquiries for 1-year rentals, while my initial thought was to furnish and manage on AirBnB (I was prepared to put in the work).

Now, seeing that the market for a "tiny" house like the one I built is probably $100-150 a night in the touristy area where I live, would you rather... take $1200-1500 long term rent, or go the short term route?

The negatives of AirBnB over long-term rental:

- Self employment tax on income

- Lots of work managing communication, cleaning, issues, etc

- At the mercy of the review system...

- My neighbors may start to hate me!

- My dog is not a fan of strangers, the constant flow of random people by the side of the house will be a nuisance for sure (he'll bark his head off & I work a lot from home!)

The positives of AirBnb:

- Upside on income if occupancy rate stays strong

- Access to the property when I need it (can block off time when friends/family visit)

- I'll meet more people/fun factor.

What would you do?

Thomas S. · Answer

I personally would opt for the long term rental. I am not a supporter of short term rentals. They should not be allow in residential communities taking needed long term rental properties off the market. Short term business model is in all negative for the community.

Brian G. · Answer

@Marylin OShea this is a personal decision so it's not just about numbers, profit, etc. Personally I would go for the option that gives me the greatest return for the least amount of hassle/work but I'm a busy full time W2 employee and therefore I want investments that will be easy to manage and as passive as possible. In the end, you have to look at how much more the STR option will make you and how much it will require of you and see if it's worth it, etc.

Doug Pintarch · Answer

@Marylin OShea I am going to agree with the above long-term recommendations, and I am a short-term rental owner!  Were I in your situation I would go long-term. Less hassle and steadier income with that lease.  It's on your property so you can see it and make sure it's not being trashed and it sounds very residential so the neighbors wont start gathering pitchforks after 4 months.

Ours is short-term but it's at the beach...where there are many and the neighbors are used to it and the community loves tourists and their dollars.  We do the cleaning ourselves (3 hours one way) because I am paranoid about the place being kept nice and keeping my eyes on my investment as much as I can, plus it's fun.   :)

Theresa Harris · Answer

I'd also go for the long term rental.  Partly to avoid all the turnover and booking time especially if you work full time, but also you then don't have to worry about ratings and dealing with all of the people.  If you average 50% occupancy, you are not that much further ahead each month and that doesn't include all of your time, cost of furniture, bedding, cleaning, etc.

Wendy Schultz · Answer

It really depends on the location. As others have stated, it's a lot more work. If you're located in a residential neighborhood, I would opt against it. Not that it couldn't work but you could encounter some battles you may not want to fight. I own 3 short term rentals and manage others. The best place to do short term, in my opinion, is where there are other short term rentals and where it is traditionally a vacation destination. If you haven't already, check your local zoning and short term rental laws. In Miami Beach, they are literally kicking guests out of properties because people are running illegal Airbnbs. While I disagree that short term rentals aren't good for a community (think room tax revenues and tourist spend), I do think there are places where it's easier and sometimes it's about the path of least resistance!

Ali Boone · Answer

I think it's totally personal preference.

Marylin OShea · Answer

Thanks for all the replies! Good insights...

I am W2 AND also 1099 with real estate, trying to ramp up the latter before I ditch the W2 job.

Another thought I had was to do the short-term rental on my primary residence (with longer stays only -- the house would easily yield $2-10K per WEEK depending on the season (Naval Academy Commission Week, Annapolis boat shows, etc...) and move into the tiny house when my primary is rented...

Is anyone doing that?

Would you rather... (short term vs. long term rental)

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