Pros and Cons of Airbnb & Short Term Rental Hosting

The Pros and Cons of Airbnb and Short-Term Rentals

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It’s important to consider the pros and cons of Airbnb and short-term rentals when deciding whether or not it will be a good fit for you. When Airbnb first started out, its mission was to offer home sharing, either a shared space or a private room in someone’s personal home. In the beginning, it was a completely foreign concept. Vacation rentals were the first short-term rentals, but Airbnb introduced an entirely new idea. Have strangers come and stay in your home? That’s crazy!

Fast forward to 2018 and many Airbnb hosts are paying their rent or mortgage and earning profits by sharing their homes with travelers. There are still a lot of people that are nervous to let strangers into their most intimate space: their home. Whether it’s a vacation home, your spare bedroom, your living room, or an apartment over your garage, there is money to be made on Airbnb. Like every investment, there are pros and cons of Airbnb for hosts.

What Are the Pros and Cons of Airbnb Hosting?

Pros of Running a Short-Term Rental

If you have a spare room in your house, the pros of Airbnb hosting are pretty cut and dry. First, you’ll make money in a fairly passive way, especially if you aren’t doing the cleaning yourself. Depending on your market, this could be a substantial amount of money. Some hosts that do rental arbitrage, that is hosting short-term rentals in a home that they themselves lease, actually make enough to pay their entire rent and more. Secondly, you’ll get to meet a bunch of interesting people, and maybe even make friends with them.

If you have or are planning to buy a vacation home, second home, or investment property then considering turning it into a short-term rental could be a very wise choice. Short-term rentals typically generate much more gross revenue when compared to a traditional long-term tenant. Depending on your market, you can easily take in over double the rent or more. In our market, our houses make over 5 times the monthly mortgage payment every month in peak season.

A lot of professional hosts don’t mention it, but hosting is often a fun and rewarding experience. Hearing guests praise your hospitality can do a lot for your morale. Being a professional Airbnb host is an accelerated crash course in being a landlord.

Cons of Running an Airbnb Rental

While there are many pros and cons of Airbnb rental, and the list of cons is a lot longer than the pros. Does that mean the cons outweigh the pros? Absolutely not! While this list will be long, it is by no means comprehensive, and aspiring hosts should not be discouraged. We simply want to prepare you for things you may face in your journey to Superhost.

Stranger Danger – Damages, Liability and Squatters

If you’re planning on sharing a room in your house, or even just a shared space, you must reduce the risk of damages, liability and squatters. It’s important that you realize that it will be up to you to screen each person. Airbnb has a few options in place to help screen potential guests, but you may end up with some unpleasant guests. This is just part of the business, and there are pros and cons to being hosts. Luckily, as you become a more experienced host, you’ll quickly discover when to turn a guest down.

If you are renting out an entire listing, you won’t have to deal with your guests directly, but they’ll be under less supervision. They will most likely damage things, get hurt, or even refuse to leave. While you run a similar risk with a long-term rental, the odds are greater you will run into this problem with Airbnb because of the volume of different people coming in and out of your listing. Luckily, there’s the Airbnb’s Host Damage Protection, as well as commercial insurance policies, and for other platforms, security deposits may have your back. At this time, Airbnb does not support security deposits and offers Aircover instead.

A Superhost’s Burden – On Call Day and Night

Sometimes being a professional Airbnb host feels like you are on-call 24/7. Guest inquiries, questions, comments, and complaints will all be directed at you. You will be asked for discounts, complained to about everything under the sun, and silently question how some people made it past grade school. It will probably cause you to have flashbacks to the time you worked retail during summers in high school. However, there are ways to mitigate stress!

You can use a co-host or a management service, and you can automate a lot of the common messages and questions. As you start to learn, you’ll know how to get the nasty reviews removed, and how to have professional Airbnb host etiquette. Your House Rules will become ironclad, and you will win all your Resolution Center disputes.

A Logistical Challenge

When compared to long-term rentals, there is a lot more work when it comes to filling the calendar for a short-term rental. You’ll need to be consistently marketing, and making sure your prices are current and competitive. You’ll need to be diligent in syncing calendars across multiple booking platforms to avoid double bookings. It will be necessary to coordinate with multiple vendors, especially a cleaning service. You’ll also need to make sure you have all the necessary local permits in place.

Short-Term Occupancy Tax and Hotel Taxes

The last of the pros and cons of Airbnb, a lot of municipalities will see your Airbnb business as being similar to a hotel. So, they will probably want a cut of the action. It’s not uncommon for most markets to have a transient rental tax or short term occupancy tax of over 10%. Typically, stays of a month or longer are not subject to these taxes. However, if you allow someone to stay in your Airbnb listing that long they may gain tenants’ rights and refuse to leave.

Our Experience

There is no better example of the pros and cons for hosts than Sueprhosts’ personal accounts. We recently wrote about our past year of hosting and all the crazy things that happened.

What are your thoughts on pros and cons of Airbnb? Let us know in the comments.

About the Author Kevin Kelsey

Originally from Connecticut, Kevin moved to Los Angeles in 2013 and worked his way up to becoming an editor on award-winning reality TV shows. Kevin owns 4 short term rentals in Southern California and founded AirHost Academy to help other hosts improve their business.