Many people are making a decent passive income by renting out their investment properties and holiday homes on short-term let platforms like Airbnb but before you go rushing to upload a listing, take a moment to consider the pros and cons of short and long term lets.
Short-term lets: The benefits
Profit – According to recent statistics, short-term lets can earn homeowners 60% higher profits than long-term lets. We estimate that a property that earns £1,000 as a long-term let, could earn three times that amount as a short-term let. You just have to look at nightly rates on platforms like Airbnb to see that there’s big money to be made.
Keeping life interesting – If you’re a people-person who enjoys meeting travellers from around the world, you are more likely to see the benefits of renting your place out as a short-term let. It will allow you to get to know a range of interesting guests and share experiences with them that could truly enhance your life.
Flexibility – The beauty of short-term lets is that as the property owner, you have control over when and for how long you want to rent out your space. If your situation changes for some reason, you can take the listing down or move into the property yourself. If you want to use your Airbnb for a family holiday over the summer, you can block out those days in your calendar. This kind of flexibility is not possible if you rent it out as a long-term let.
Short-term lets: The drawbacks
Being on call – If you’re renting your place as a short-let, you will need to be available to meet guests and respond to their messages 24-hours a day. Listing your holiday on websites like Airbnb means many emails and questions from guests – and refusal to reply promptly can damage your ratings and visibility on the site.
Constantly cleaning – Having new guests arrive each week means lots of dusting, vacuuming, and cleaning. There will also be towels and bed linen to wash on a very regular basis. If you’re not someone who enjoys household chores, you could hire professionals to handle this side of the business but make sure to set an appropriate cleaning fee to ensure that you cover your costs.
Trust – It’s harder to trust strangers with your space than a long-term tenant who has jumped through many reference checks in order to secure your property. In general, platforms like Airbnb are very good at maintaining a high level of trust between guest and hosts but at the end of the day, you are welcoming a stranger to stay at your home and as an Airbnb host that is something you need to be comfortable with.
Marketing is required – Short-term lets need to be promoted to new audiences due to the high turnover of guests. You will need to work on keeping your listing visible on platforms like HomeAway and Airbnb, as well as using other online marketing and social media tools to help people find you.
Legal issues – In certain places like London there are regulations in place that stop property owners from renting their place out as a short-let for more than 90 days. Always check the local regulations in your city so that you won’t get hit with fines or legal hassles if you choose to rent it out as a short-let.
Long-term lets: The benefits
Peace of mind – When you have long-term tenants you don’t have to worry about continually marketing your property. You can relax, knowing that every night the property will be occupied for an extended period of time. A much lower effort is required of you, as the property owner, than if it were to be listed as a short-term let.
Guaranteed income – Yes, there’s more money to be made when you compare nightly rates with long-term rates but there’s no guarantee that you will maximise your occupancy rates as a short-let. By having long-term tenants in the space, you have a guaranteed income that is locked in for the duration of the rental agreement.
Tenants who are invested – Long-term tenants are much more invested when it comes to taking care of your place. They know they are going to be living there for at least 6-months and in most cases, they will want to do all they can to ensure the property is maintained to a high standard.
Long-term lets: The drawbacks
Locked in – As we all know, life can take twists and turns. Being locked into a 12-month contract with a tenant is not always ideal if you’re faced with changing circumstances. Long-term lets don’t allow you to change your mind about occupancy, or invite your friends to stay in your rental over Christmas. That lack of flexibility can prove difficult for many owners.
Giving up control – When your property is a short-term rental, you have the power to enter the property once guests leave and do whatever you like in terms of maintenance and cleaning. With long-term tenants in place, you hand over that power and you’re at the mercy of those tenants in terms of how your apartment is cared for.
Calculate your potential short-term let income
Before you decide, why not use our free online calculator which will give you an estimate of your property’s income potential as a short-term let. You might be surprised by how much you can charge per night. You can also contact GuestReady for advice about your earning potential. We can assist with taking the hassle out of running a short-term let, so that you can just sit back and enjoy a steady income.