Air bnb vs a Long Term Tenant for First Investment Property.

[Nicholas Brosnan]

Good evening everyone! I have been looking into purchasing my first investment property and one of the many decisions I have to make is going for a single family home to rent out monthly or go for an Air bnb. Air bnb seems appealing because it could be used as a part time vacation home to use when it is not occupied. The returns could potentially be greater with an air bnb but I feel it is also more risky because it is not a monthly rent payment. Where as with a single family home would be a steady rent payment with some cashflow. The type of rental I choose will make a huge difference on the type of property (house, condo, apartment) and the location I end up going with. Curious if anyone has any thoughts or can help thank you in advance!

Nick

[Nathan Gesner]

Get two pieces of paper (or a spreadsheet) and crunch the numbers for both options. What will it cost to set each one up, operate them, manage them, etc? What benefits does each provide? Make a list of the pros and cons, weigh your options, and then choose the one that's best for your situation. What works for me may not work for you.

Keep in mind ALL the costs. A vacation rental requires furnishings, you pay the utilities, you mow the lawn, management typically requires more time/effort, marketing and taxes, etc. It also brings in a lot more money. It may also have a lot more vacancy, particularly in the off season.

I have a vacation rental that nets 50% more than it would as a long-term rental, even after paying for a property manager. And I get the benefit of using it when it's vacant. That's worth it for me.