Will a short-term rental or long-term rental be a better investment?

With the onset of 2020 and the outbreak of COVID-19, our world was thrown upside down in all regards. The real estate industry was particularly effected as a part of the "great reshuffle". Many home owners took this opportunity to travel the world or at least the country, staying at Airbnb's or other short-term rental properties while simultaneously renting out their own homes in a similar fashion. 

As the long-term effects of the global pandemic begin to settle, we've continued to see benefits within the short-term rental market. However it must be taken with a grain of salt and is not necessarily a guaranteed slam dunk.

Below I'll outline some of our findings from the past year of hosting via Airbnb and VRBO as a simple Pro & Con list in comparison to more traditional long-term lease properties.

Short-Term Rentals (aka Airbnb, VRBO, HomeAway)​

Pros

• Consistent professional property cleaning & maintenance
• Professionally staged photography
• Potential for higher gross revenue
• Able to cancel contract at anytime

Cons

• Rough wear & tear from travelers & pets
• Tenant screening done by host sites, not as thorough as typical renter screening
• Inconsistent / non-guaranteed revenue
• Time consuming marketing, communication and coordination of property cleaning/maintenance

Long-Term Rentals 

Pros

• Consistent revenue
• Thorough Tenant Screening
• Low-touch communication for most high-quality renters and rental homes

Cons

• Wear & tear on property & lawn with long-term use
• Locked into terms of contract

As you can see, there are positives and negatives to either rental option.  We manage a variety of options to allow diversification in our own rental portfolio, and recommend this as a great option for most other real estate investors.  However, you own personal time and aptitude for risk will play a big part in which option to pick from. We are always available to discuss these specifics to find the investment option best for your lifestyle and property.