Managing an Airbnb property has its benefits along with several challenges. With recent world events like COVID-19 impacting the rental vacation industry, plenty of people may be wondering if setting up and listing their property on Airbnb is even worth it.
Traveling is limited for the moment, particularly due to concerns about spreading the virus. However, with the number of people getting vaccinated, the hospitality industry is starting to see a boom in travelers looking to rent out places to stay.
Operating an Airbnb rental business can help supplement your finances. Running one can be rewarding, but there are risks associated with it. In a post-pandemic world, people have become far more cautious with renting out their property to strangers. However, with traveling starting to rise again, Airbnb needs new hosts to meet the increasing demand for short-term rentals.
At least, according to the CEO of Airbnb, Brian Chesky has even commented that they have never seen such a rising demand in the company's entire history.
If you are interested in setting up your own Airbnb property, now may be the time to do so with the growing number of travelers. However, you should weigh the pros and cons that come with it.
Let’s break down whether it is worth your time to manage your own Airbnb property.
Higher revenue potential
One of the many benefits of running a short-term Airbnb property is earning more rental income compared to traditional property leasing.
Traditional rental properties tend to have a fixed price to them, while Airbnb hosts are permitted to adjust their pricing whenever they feel like it. It’s considered an acceptable business method, and on average, you are going to make more money renting out your property on a nightly basis than on a monthly basis. This is why so many landlords have turned to Airbnb hosting to earn more compared to a more traditional long-term rental approach.
This is even more true if the rental property is in a popular resort or vacation destination, or if your place is located in an area that gets lots of traffic during seasonal periods.
High involvement with guests and property management
Airbnb property owners can get more involved with their guests if they wish to do. Some owners may decide to simply lay back and enjoy the passive income provided by their short-term rentals.
However, in some cases, other homeowners may decide on a more hands-on approach.
Think of it this way, if you were to go for a more traditional rental, the tenant occupying your property will barely have any contact with you. That hardly leaves any opportunity to earn extra revenue outside of the rental. However, an Airbnb property owner can offer additional services to potentially earn more income.
Some of these services include offering breakfast, laundry, transportation, tour guides, golf carts, or access to pools or spas. This gives you the opportunity to boost your income and reinvest that income into the property.
Furthermore, if you're the type of person who wants to have more involvement in every decision, from rental problems to routine maintenance work, then managing your own Airbnb property is the ideal choice.
Best of all, this allows you to meet new people and make personal judgment calls when vetting guests since you can screen them personally.
When it comes to long-term rental properties, the owners will usually lease out the property for at least a year.
On the other hand, Airbnb hosts gain far better control over exactly when and for how long a person can rent out their property. They retain total control over the property’s schedule, and occupancy times are diminished.
Dealing with guests
When it comes to traditional renting, you generally lease out the property for the same tenant for a year. With vacation rental hosting, you can see a turnover of several guests in less than a few months. That is if you decide to go for a short-term rental business and not a long-term one.
Having an excellent guest turnover causes you to get a more diverse listing of guests that you can host at your rental property. Hosting a wide range of people also enables you to meet and interact with all sorts of people from all walks of life.
Of course, there might be times when you need to deal with guests who are not the best type of people to deal with. Fortunately, with a short-term rental, you only have to deal with them for a short amount of time.
Becoming an Airbnb property owner ensures you don’t remain stuck with some unsavory tenants for months on end. Even if you do manage to get stuck with some particularly terrible guests, they will be gone after a few days. Additionally, you can leave a review of the guest's behavior and alert other fellow hosts about the way they acted on your property.
Another excellent benefit of managing your own Airbnb property is the free listing provided to you by the platform. People who sign up as a host for Airbnb are not required to pay to list their properties on the platform. They also have the option to host a profile, write a description of the property, upload images of the property, and more to attract people to their space.
Furthermore, by using Airbnb, owners receive the marketing benefits and resources integrated onto the platform. That means you won’t have to worry about spending any extra money trying to set up advertising campaigns to spread awareness about your property.
The Airbnb algorithm handles all of that, especially if you manage to set up a quality listing on the site.
Protected from damages
Property damage can occur at times, whether accidental or intentional, keeping your property secure is critical. Airbnb provides a Host Guarantee program that protects up to $1 million in damages to covered property in the rare event of guest damages. That can provide owners peace of mind that if something were to get damaged by a guest, Airbnb will assist them in covering it.
The cons of Airbnb hosting
Now let’s go over some of the cons of managing your own Airbnb property.
While the market has been affected by the pandemic in the past year, the market remains very competitive. If anything, the market is going to become even more competitive with the number of people eager to finally get out of their homes and travel to places they’ve been dreaming of for quite some time.
It is also crucial to keep a close watch on what the competition is doing to get ahead of you. Doing so allows you to remain aware of the marketing strategies they are employed to boost their listing on the platform. However, this could be time-consuming, and you may not be able to offer similar services like them for several reasons.
While there is a chance of you making more profit off your house as an Airbnb host than as a long-term rental, there are no guarantees. If anything, it’s unlikely you're going to start seeing returns immediately. If you want to see results, you need to keep working hard and refining your management strategies where they need adjustments.
One of the many benefits that a traditional landlord has is the certainty of knowing how much rental income they will make each coming month. That helps them manage their cash flow planning, especially with people who are on a tight budget.
Hosting on Airbnb may cause your income to be more sporadic and less dependable. Your April Income could be twice as high as your August income. Generally, it could take somewhere between one to three years for Airbnb property to become profitable enough.
One of the many cons of needing to manage your Airbnb property is having to deal with property damage. Unfortunately, property damage is a common occurrence for Airbnb owners, and it is a significant risk for hosts.
While most of your stays may be damage-free, there are going to be times when you get something that trashes the place.
While Airbnb Host Guarantee Program does offer up to $1 million for property damage protection, it doesn’t cover everything, such as pets, rare artwork, jewelry, and cash.
Time and effort
Managing a vacation rental takes up a lot of your time. If you are unable to manage several various tasks at once, you may struggle to maintain your listing.
Operating an Airbnb property requires tons of attention, and you need to make sure you're willing to handle the consistent flow of work you need to put in to keep it running. Unless you can afford to pay someone to manage the cleaning for you, you need to sweep the floors and do the laundry for your next guest.
While Airbnb has designed its platform to make it easier for hosts to rent out their property to travelers, there is tons of work involved when it comes to managing a short-term property. Responding to inquiries can consume a lot of time, and you may need to be close to your property to check up on guests.
Not to mention you have to do a lot of manual work like putting together attractive SEO worthy descriptions. Fortunately, you can outsource that or use a content marketing company to help you out with that aspect.
Another issue you need to deal with when managing your property is difficult guests. These guests may have over-completed requests or even go out of their way to throw unauthorized parties as your rental. Furthermore, they could potentially break or damage things in your property, by accident or on purpose. Fortunately, situations like these tend to be quite rare, and it's possible to prevent them from booking with you by charging a security deposit. Plus, Airbnb allows hosts to review their guests as well, so if they have a history of doing such things, you could easily turn them down.
As an online service, Airbnb has a way for people to leave behind reviews of their experience with the property they stayed at and the host. That means you're going to be dealing with potentially receiving some terrible reviews every once in a while. That shouldn’t be too much of an issue if you're primarily receiving positive reviews, but dealing with customer complaints can be draining.
In some rare instances, one overwhelming negative review could potentially ruin your whole Airbnb hosting experience. It’s one of the reasons why you need to remain meticulous about providing the best possible service.
Adhere to regulations
One of the things you need to concern yourself with is the regulations you need to deal with when setting up an Airbnb listing. Different cities and zones tend to have complex Airbnb regulations and restrictions imposed on them.
The property will be subjected to regulations unique to the city or neighborhood it is based in. The restrictions from these regulations can vary from mild to moderate, depending on how often you are permitted to host guests and how many guests you can host at a given time.
Furthermore, if your property is a part of a homeowners association, you need to check up with them before listing your property on Airbnb. If their bylaws have specific regulations against short-term renting, you could be fined or worse for not following the rules.
Finding out more about these regulations can take up a good chunk of your time. If you need assistance with looking up these regulations, you could always contact places like Topkey to help you manage all of these regulations.
Airbnb has its ups and downs when it comes to self-management. Depending on your circumstances, self-managing could be an amazing way to maximize your earnings.
While it’s possible to outsource your management, keep in mind that you are sharing a piece of the pie with others, so you won’t be raking in the whole pot. Take the time to consider your options and see if you are capable of managing your short-term rental property on Airbnb.
If you decide to manage an Airbnb property, check out our services to assist you in getting started. Topkey provides plenty of set-up services that can help you get started, from registering your property to comply with local tax authorities to setting up a bank account and debit card for all your expenses.