5 Benefits of Buying an Airbnb Property Over a Long-Term Rental

Airbnb investments are ideal for generating passive income. They are appropriate for you whether you are just starting out in real estate investing or have heard about them and want to learn more about their potential.

Airbnb rental property are an excellent choice for investors who want to diversify their real estate portfolio by investing in an Airbnb property but do not want to take on the responsibilities of a traditional landlord by leveraging Airbnb Property Management Company.

Having said that, here are some advantages that investors enjoy when operating short-term rentals:

1. Potentially Greater ROI / Return on Investment

Owning an Airbnb rental property with a high occupancy rate all year can generate more profits than renting the same property as a traditional rental. Remember that you’re charging rental rates on a nightly basis rather than a monthly basis.

Consider this: Let’s assume you purchase a condominium and get a long-term tenant who pays RM1,500 per month for it. If you lease the property to the tenant for a year, your income within a 12-month period will be RM18,000.

Now, let’s say you list the same property on Airbnb as a short-term rental for RM150 per night. Of course, you won’t host guests every night of the year. Assuming you enjoy a 50% occupancy rate, which is 182 days of the year, you’ll make RM27,300. This is more than you’d make from a traditional rental by about RM10,000.

Occupancy	Rate RM150	Rate RM170	Rate RM200
50%	RM27,000	RM30,600	RM36,000
70%	RM37,800	RM42,840	RM50,400
90%	RM48,600	RM55,080	RM64,800

Remember that these figures are merely approximations intended to demonstrate that short-term rentals can provide higher returns. They do not accurately reflect data from the housing market. If the property’s fair market value increases as a vacation rental, the amounts could increase. Depending on the taxes and property expenses, they might also be lower.

2. Diverse Tenant Portfolio

Traditionally, you would lease your property to a single tenant for an extended period of time. To do this is to put all of your eggs in one basket. While having a financially stable tenant who takes good care of your property can be advantageous to you, it can also be harmful if they don’t make their payments on time or do too much damage. Read more on in-depth comparison between Airbnb & long term rental.

You have the chance to regularly collect rent from various tenants when you have Airbnb rental property. A small portion of your total rental income is contributed by each visitor. It might not have a big impact if any of them cancels their booking or fails to pay. In other words, renting to several guests reduces the risk.

3. Possible Passive Income

Once you’ve bought a rental property and listed it on Airbnb, you can sit back and generate revenue whenever a booking occurs at your property.

Remember that an investing on short-term / Airbnb type property typically requires more upkeep and rendering hotel type services:

• Responding to inquiries on OTA platform (Airbnb, booking.com, etc)
• Managing reservations (coordinating cleaners, avoid double booking, pricing, and more)
• Welcoming guests upon check-in (handing over keys)
• Constant communication on guest wellbeing: Ensuring guests have a pleasant stay
• Cleaning the property following each check-out

These are just a few of the duties associated with managing an Airbnb property. At times, these tasks can be a bit overwhelming.

However, the best thing about these business model is that you can choose Airbnb management company to help you streamline the process and take care of these tasks. Some of the expert will in fact bring in more revenue by rebranding your Airbnb listing.

4. Minimal to No Wear and Tear

In a long-term rental property, the daily use of furniture and other amenities causes wear and tear. This situation is different in the short term, as guests typically do not stay longer than a few days or weeks. Because the property is not used on a daily basis, the wear and tear on it is significantly reduced. Furthermore, short-term guests are likely to spend the majority of their time outside and only a small amount of time inside your property. 

Additionally, keep in mind that you perform maintenance procedures each time a visitor departs. Early detection of problems makes it simpler to address them before they develop into larger ones. This isn’t the case with traditional rentals because you can’t constantly be checking on the property and because long-term tenants might not report problems.

Since the wear and tear decreases, your maintenance costs may reduce with time since there’s little to no work when fixing the property.

5. Flexibility

Many real estate investors purchase their Airbnb homes in addition to their primary residences. Airbnb rentals have the advantage that you can remove the listing whenever you want. When and how long visitors can stay at your property are entirely up to you.

This implies that you can take frequent vacations to enjoy the property with your family. The ability to use the property for personal purposes is a major advantage of purchasing a vacation rental over a long-term rental, whether you are an absentee owner who needs to use it for your vacation or a local owner who wants to host visiting family and friends.

Flexibility is also advantageous to you when it comes to your pricing plan for Airbnb. The weekly or nightly rates you should charge are not specified by Airbnb. You can set your prices as high or low as you like. However, you want to keep your rates competitive, having in mind other short-term rentals in your area.

Final Thought

Airbnb rental properties have become increasingly popular with both investors and renters. Investors love them since they can be very lucrative, while tenants prefer them since they’re more affordable compared to hotel rooms and other means of accommodation. If you’d like to take advantage of this blooming real estate investing strategy, be sure to do your homework before investing in short term Airbnb property.