Thoughts on STR,Airbnb vs LTR?

Question

• What are your thoughts on investing in short-term rentals, such as Airbnb properties, versus long-term rentals?

Ben Scarborough · Answer

When I began my REI journey, I was only interested in LTRs. However, as I was getting more and more familiar with running numbers on them, I kept finding that if you want the best bang for your hard earned money you have been saving up, you need to do MFH. As I started looking into MFH, I noticed you have to really grind to find a good opportunity, cause there is a significantly high demand for a decent MFH. During this period of research and running the numbers, I took a vacation to the smokies, and the energy in the area, the happiness you were surrounded with, and the SFH opportunities that were available were hard to ignore. As a result, I ended up only wanting STRs in my portfolio as each one I acquired continued to perform as good as or better than the revenue projections I was using... Additional STR advantages:- significantly easier to self manage- you can leverage 10% down if buying in a market you like to vacation to- you are providing an awesome place/experience for someone to spend their hard earned money on, so it is extremely rewarding.

Konstantin Ginzburg · Answer

STR: Cons: Less passive, less steady revenue, involves higher risk tolerance, may currently be facing more competition with a shifting travel market.

Pros: Higher revenue potential

LTR: Essentially the opposite of STR. An STR with a high occupancy rate will typically lead to higher monthly revenue but you might have to deal with months during a slow season where the revenue dries up. One strategy that I use is to anticipate these drop offs and place in a medium term tenant into the property until I know the season should pick back up so shifting between the two strategies on a seasonal schedule.

Sarah Kensinger · Answer

If you stay on the offense side of the STR market your profitable is quite a bit more...2-3 times more. The property is looked after better since it's professionally cleaned regularly and has to be in mint condition all the time to market well. There is no large turnover cost after a long-term renter has moved out, and no concerns of getting that monthly rent out of the tenant.

Eliott Elias · Answer

More risk. Short term rentals are a job, long-term rentals are investments.

January Johnson · Answer

Don't forget you're not limited to investing in the market where you live!  MANY people manage remotely - even STRs!

Michael Diossa · Answer

Excellent response! This definitely gave me a new perspective. Thank you for that

Eliott Elias · Answer

Not true. A property manager or "co-host" can not mitigate things that need the owners attention.

Jordan Tinning · Answer

@Eliott Elias STR’s can be passive if you have a manager in place.

Justin Hammerle · Answer

STRs much more location specific mirroring hotels - LTRs much easier to lease, less location specific.  I think we've gotten carried away with STRs to the extent we think they will be successful in every market.

Thoughts on STR,Airbnb vs LTR?

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