Short-term property rental platform Airbnb disrupted the hospitality industry when it debuted in 2008. Now tourists, friend groups and families could rent out homes, instead of single hotel rooms, when visiting Washington, DC, giving them a more authentic experience and feel for the city.
Now many long-term property owner in Washington, DC are considering switching to the platform when their tenant leaves. But is the possibility of high income worth giving up the stable monthly rent check? Perhaps, but there’s a lot more to consider than just the money.
Here’s everything you need to know and consider when you decide to either rent your property on Airbnb or to a long-term tenant.
Airbnb allows property owners to rent out homes and apartments to anyone for the agreed upon time. The platform’s user-friendly booking feature has made it easy for those young and old to rent out cool locations right in the middle of hip neighborhoods, closer to nightlife and transportation. Because they’re renting out homes and not just individual rooms, users have access to kitchens, which can help them save on a meal or two, and they enjoy a slightly more comfortable setting.
The flexibility of the platform may be its biggest appeal. In Washington, DC, Airbnb has become especially popular not only for vacationers, but also government workers who need short-term housing, reunions and bachelorette/bachelor parties.
The process for setting up an Airbnb does take some work with the city, but once you fill out the permits, you can list your property. You can set minimum time limits, such as two or three nights, to encourage more long-term rentals, and you can decide how much you want to charge per night.
A more traditional route, renting out a property to a long-term tenant remains popular in Washington, DC, as the demand for housing increases. With long-term rentals, tenants sign a lease with the property owner and agree to live on the property for a set amount of time, usually a year but sometimes six months. Every month, the landlord collects rent from the tenant.
It’s easy to see why this income stream stays so popular. Having regular income each month can be a major weight off any landlord’s mind. When you have a long-term tenant, you don’t have to worry about weekends when the property stands empty. There will be income at the first of every month.
The process of finding a good tenant can be much more involved than an Airbnb rental, and like Airbnb, you do need to go through the city for licensing before listing your property. You do need to market your property and vet potential tenants that submit applications. When they list references, you need to follow up and ensure they’re honest. Before a new tenant moves in, the property must also be cleaned and in good condition.
Airbnb vs Long-Term Rental: Comparison
When deciding whether to list your property on Airbnb or rent it to a long-term tenant, there are many factors to consider. While many landlords look simply at the income potential, that doesn’t tell the full story. You need to consider the time investment as well as the flexibility of either scenario.
Here’s a list of what you need to consider before choosing to list your property as either an Airbnb or a long-term rental property.
Both Airbnb and long-term rental properties do require a sizable time commitment.
Whenever a guest leaves your Airbnb, it is your responsibility to clean the unit and prepare it for the next guest. His includes cleaning the bathrooms, washing the sheets and tidying up anything left by the previous guests. As you get regular guests coming in every week, you can work with a cleaning service to do this work for you, but if you choose to do it yourself, it is a big, likely almost weekly commitment.
Long-term rental property owners may not be in charge of the day-to-day cleaning on the property, but finding a tenant, moving him or her in, responding to maintenance and repair requests and moving the tenant out will all take up a good amount of time, especially if you’ve never marketed a property or vetted a tenant. Some tenants are obviously a little more reliable than others, so you may also spend time tracking down rent payments and fixing things that the tenant breaks.
With long-term properties, however, you can save most of this time by hiring a property management company like Atlas Lane to take care of this work. Our professionals are experts at finding and vetting tenants, handling maintenance requests and ensuring tenant satisfaction.
Experts say the average rent in Washington, DC is about $2,000 for roughly 745 square feet. This, of course, varies depending on the property and amenities provided, but it’s a good benchmark to consider.
Airbnb’s data for Washington, DC is a little more difficult. With the coronavirus pandemic shutting down tourism, there isn’t much data to determine how much an Airbnb owner makes on average. But you can do the math on your own. If you list your property on Airbnb for $200 a night with a minimum of two nights, then you can estimate that you’ll make about $400 per weekend or $1,600 per month — but that’s assuming that someone books your property every weekend and there’s no guarantee of that. There is also the chance for that number to be higher if someone books during the week or for longer than two days.
In terms of flexibility, an Airbnb definitely wins over a long-term rental property. With Airbnb, you can take the property listing down at any time, no questions asked. If you need to live at your rental property for a while or make some serious repairs, then you don’t have to wait until a lease is up to access your property. Once the last Airbnb renter has left, the property is all yours.
Long-term leases do not allow for much flexibility. As a landlord, you cannot retake control of the property whenever you like, and you cannot drop by unannounced without a good reason. You can certainly make repairs to your property while a tenant is living there, but they will need to work with the tenant to decide on a time and date. You can’t access the property at any time until the tenant moves out.
Both Airbnb and long-term rentals have their pros and cons. It’s your job to weigh which factors matter more to you when deciding which option is best for you.
Need to talk it out with an expert? Contact Atlas Lane today to learn more about your options and how you can better automate some of the work.