There are many investors who swear by property as the soundest and most stable investment that you can make. Everybody needs a place to stay and can either buy a place or rent it. Renting a property has been a go-to investment option for many years. Then came Airbnb and changed the game.
Instead of going for long-term rental agreements, people started to buy properties and follow the Airbnb plan. The question remains as to which one is the better strategy.
Property Management
When it comes to property rentals, how much money you make is not the only measure of success. The time you put in to make your money is vital and has a major impact on the return on investment of your property. With Airbnb, you must compete with thousands of other properties and presentation is everything.
You could make use of an affordable property management firm, but even then, you cannot guarantee that your time will not be swallowed up. When it comes to long-term rentals, management firms like APM Property Management have years of experience and know-how to get people into your property. All that is required from you is the odd signature. Their services are all-inclusive and effective.
Seasonal
Airbnb properties are extremely seasonal, which means that there will be longer periods of time where your property is vacant. With long-term rentals, your income is steady, and you can be sure of generating a fluent income for at least six months.
There is no need to worry about the seasons as someone will take up a permanent residence. Although you might not make as much money as with an Airbnb, your income will be stable. That removes a lot of administrative work when trying to budget. Airbnb revenue generally comes in bursts, meaning that the total income for a season needs to be stretched over a period to cover any maintenance costs.
Maintenance and upkeep
An Airbnb requires a lot of money upfront. The property needs to be maintained and furnished before you can rent it out. Long-term properties also require general upkeep, but the initial costs are not as severe. An Airbnb’s general upkeep is also higher than a long-term property as everything needs to be kept in pristine condition all the time.
This does not mean that long-term properties do not need to be maintained. However, your maintenance schedule is not as intense. Good tenants also take care of the garden and the property as a whole. All you need to worry about is emergencies that are not a regular occurrence.
Looking at the taxes
With any rental property comes income tax, but an Airbnb property generally incurs a much higher cost. In the US, you must pay both federal and state taxes on your income and then there is the occupancy tax that could also loom.
Traditional rentals also have a tax component, but there are much more tax-deductible expenses that you can claim. In either case, though, hiring a tax practitioner can save you a lot of trouble in the end.
Legal aspects
As Airbnb and short-term rentals become more popular, more legal rules and laws are developed. Not only are new rules made, but they differ from state to state. With traditional rentals, the rules and regulations have been streamlined.
There are no new regulations and if there are changes to the laws, they are generally minor adjustments and amendments to the current laws. This makes traditional rentals much more predictable, which means there is less chance of slipping up somewhere.