Why Short-Term Rentals Aren’t a Sustainable Investment

When Airbnb took off, homeowners around the world began offering up their vacant spaces to temporary tenants in hope of making some extra cash. Since then, many competing companies have sprouted up with a similar platform, but plenty of individuals have strayed away from them as well, offering their vacancies through traditional advertising means. But, no matter how you’re getting the word out about your short-term rental, you should be considering some of the following aspects and re-think the importance your short-term rentals are going to play in your long-term investment strategy.

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Considerations for the Long-Term

If you’re currently offering up short-term rental arrangements or if you’re considering jumping on board to this hot trend, make sure you think it through first:

  1. Short-term rentals are dependent on travelers: The high rates of these rentals are justified only by their location/ease of flexible booking options and they are marketed towards tourists. Natural disasters, terrorism, and plenty of other economic changes could quickly stop travel plans in their tracks—meaning you’re going to suffer. After all, a vacation is an amenity, not a necessity, and any investment that depends on “wants” (travel plans) over “needs” (stable living arrangements) could falter.
  2. Short-term rentals cost too much: The artificially high rates these rentals charge are often values two to three times higher than long-term rental rates. Locals simply can’t justify that cost, and it can have a negative impact on the local economy. If you depend on this artificial, inflated income, you’ll find yourself in hot water when it stops coming in.
  3. Short-term rentals have too much competition. Airbnb was super exciting when it was first launched because it opened the doors for everyone to be a landlord. Despite plenty of horror stories, the few success stories that continue making their rounds online still has hundreds of people joining the platform each month—and that means even more competition to contend with.

Why Long-Term Rentals Are Better

It’s a fact. If you have a place to rent, you should be looking to locate a tenant that’s willing to sign a 6- or 12-month lease at a reasonable rate. Investors who keep tenants month after month and year after year earn more in the long-run and save on screening, cleanup, marketing, and turnover costs. These hidden fees are actually what put many short-term rental landlords in the negative once they look over all the expenditures that come along with renting out a space for a night or even maybe a week at a time.

Short-Term Rental Fees

The up-front costs include setting up a guest space and putting in the necessary security cameras, alarm systems, and a door lock/pin system that will allow your guests to temporarily access your home. Lacking any one of these things leaves you open to thieves, hijackers, and house crashers.

Even with the setup out of the way, many other things still need to be considered, and certain fees will be recurring after each and every visitor—like cleaning up the area and sanitizing as necessary. You’ll also need to consider stocking drinks/snacks and other necessities and amenities for your guest.

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In the end, long-term rentals are much more worth the investment. In addition to taking less legwork, they’ll also give you more peace of mind and a sustainable income strategy for the long-term.

Do you agree or disagree? What is your favorite real estate investment strategy? Comment bellow!