Airbnb vs Renting: Make the Right Choice for Your Investment Strategy (2024)

FAQs

Is it more profitable to rent or Airbnb? ›

Airbnbs have higher potential returns but are variable and management-intensive, while traditional renting has more stable income but potentially lower returns. Location, demand, amenities, and local regulations influence ROI for Airbnb, while economic trends and property features impact long-term rentals.

Investing in Airbnbs can be a great way to expand your income opportunities. Though there is risk involved in Airbnb real estate investments, there are also sizable returns. Many investors see a return of 40% or more, which is far higher than the average percentage yield on a U.S. savings account of just 0.07%.

Airbnb doesn't allow properties to be rented out for more than 90 nights per year. If your limit for bookings is reached, Airbnb will automatically close your property until the end of the calendar year. In addition to 90 consecutive days, the 90-day limit also applies to 90 days spread throughout the year.

Airbnb can be more profitable than leasing due to higher nightly rates, but it also involves more work, expenses, and risks. Profitability varies based on location, demand, and management.

Furthermore, expect the return to be substantial if the property is in a good location and has a moderate to high occupancy rate - even if there is a tiny level of risk involved. According to AirDNA, investors in Airbnb often receive returns of at least 40% or perhaps even more.

While Airbnb can provide higher short-term rental income, this income can be less stable compared to consistent monthly payments from long-term leases. There may be periods of lower demand, impacting overall cash flow.

To become a full-time Airbnb entrepreneur, you'll almost certainly need to grow beyond offering just one property for rent. It may take three or even 10 rentals, depending on how often you can rent out your properties and for how much, to become financially secure. Growing your property portfolio is not easy.

Takeaways: Airbnb Full-Apartment Listings

For Airbnb hosts looking to make a living on the hospitality platform, full apartment rentals are the way to go. Rates for full apartments are significantly higher than those for single rooms and income after expenses ranged from $15,000 to $31,000 in our analysis.

Is Airbnb a good investment in 2024? ›

Airbnb is as popular as ever in 2024 and continues to grow and adapt to the needs of its hosts and guests. In the fourth quarter of 2023, Airbnb revenue was up 17% year-over-year at $2.2 billion. The key to your success as a short-term rental investor depends on numerous factors, including location.

An Airbnb short-term rental can be more profitable than renting out your property on a long-term basis. You set your prices and Airbnb nightly rates are usually higher than for longer rentals. According to AllTheRooms, an Airbnb host in the U.S. earned an annual average of $44,235 in 2021.

Investing in Airbnb can be an excellent source of passive investment income and is a great option for a beginner investor. But please keep in mind that not all real estate investment properties are Airbnb investments. There is a big difference between the two.

According to Airbnb, the average host earned $13,800 in income in 2021. If we apply that to our $200,000 single-family rental, you get an ROI of 6.9% In this scenario, you could make more money with an Airbnb compared to a rental. But what if it's an off-year and you only earn an investment gain of $8,000.

Key Takeaways. Renting through Airbnb could be more lucrative than renting to a long-term tenant, depending on your location. Your costs may be higher if you rent through Airbnb since you'll be expected to provide furnishings, keep the place clean, and pay utilities.

Airbnb can generate higher rental income. Though, this does come at a cost. Hosts need to ensure that their investment property boasts a great location, which might mean more upfront costs. Even with beachfront property, you'll only be able to generate more revenue if you go the extra mile.

According to AllTheRooms, an Airbnb host in the U.S. earned an annual average of $44,235 in 2021. But running an Airbnb short-term rental takes a lot more work and can be more expensive, with frequent cleanings, inventory restocking and more maintenance.

Hosts are paid out based on guest stays. Guests often find Airbnb is cheaper, has more character, and is homier than hotels. Risks of hosting include renting your place to rude guests, theft or damaged property, complaints from neighbors, and potential regulatory violations depending on your location.

In short: absolutely. Looking forward, the vacation rental industry is predicted to grow even more in the upcoming years. Hosting can be a profitable business with proper prep work and an understanding of how to budget your start-up costs.