Airbnb vs Renting: Which offers the best ROI
If you’ve recently acquired a new property and you’re not sure what to use it for, you might have considered Airbnb. This modern alternative to a traditional rental could offer various benefits, especially if your property is located in an area that’s popular with tourists.
In order to help you decide, we’ve outlined a few of the pros and cons of both. With the demand for rental homes up by nearly a quarter since last year, you can rest assured that there should be a market for your property, whichever way you choose to let it.
- Hosting on Airbnb: Pros and cons
The benefits of hosting your home on Airbnb could give you more potential to maximise your income. Since every administrative process is carried out via the Airbnb app, you won’t need to go out of your way to advertise your property or seek prospective guests.
You’ll also enjoy:
- Greater flexibility, with no long-term commitment as a host
- No lease agreement in place, meaning you can change your plans if you need to
- Higher income per month than long-term letting, especially during busy periods
- Airbnb host guarantee, which provides compensation in the event that the building or your belongings are damaged by an Airbnb guest
However, hosting on Airbnb does come with a few downsides too.
- Risk of damages from disrespectful guests
- Bookings aren’t guaranteed, unlike having a tenant sign a contract
- It requires energy and your own time, too
- Irregular income due to seasonal bookings and pricing algorithms
- Service fees, usually around 13% of the total booking cost. Although you don’t pay this, it might put potential guests off booking
- Renting on the market: Our take
Renting to long-term tenants guarantees a steady income that’s easy to track and predict. As rental prices increase in your area, you might also be able to raise your rent.
Another advantage is that you won’t be required to see new guests in and out on a regular basis. A lower guest turnover could be beneficial not only for your property but for your organisation and stress levels too.
Also, you won’t be under any obligation to furnish a rental property. While Airbnb guests can’t be expected to turn up with a sofa, you should certainly allow long-term tenants to fill the property with their own belongings – meaning you won’t need to risk yours either.
Although there are some downsides that come with renting your property out, it’s possible to protect it should things not go to plan. For instance, a relevant landlord insurance policy could potentially cover you if your property is damaged or unoccupied for a while.
Final thoughts…
Our verdict is that if you’re looking for a stable, long-term investment, signing tenants up and putting your property on the rental market might be the best approach.
Airbnb offers increased flexibility – especially to landlords with multiple properties in busy areas – but nothing guarantees a steady income like letting privately.
