It’s no surprise that short-term rentals have been on the rise over the past few years. With companies like Airbnb and HomeAway increasing in popularity, more people are opting to use these platforms as both hosts and guests. Yet, despite the increased adoption of short-term rentals there remains those that are skeptical, often citing media stories of Airbnb rentals gone wrong. While these situations are few and far between, and almost always due to ineffective screening processes, the widespread reach of the media outlets reporting on them inevitably slows down adoption. That’s why it was refreshing when the Toronto Star recently posted a story of a couple who gave up being landlords to be Airbnb hosts and have never looked back. Just a few of the benefits of short term rentals compared to traditional yearly leases include less wear and tear, increased income, greater access to your property, and the end of nightmare tenants that won’t go away.
A lot of people are surprised when Airbnb hosts say that their home is experiencing less wear and tear than when they had long-term tenants. While it may not seem obvious on the surface, there are three main reasons for this. The first is that travellers coming into the city for a short period of time don’t usually spend too much time sitting at home. They are usually either visiting on business (i.e. primarily at an office) or out sightseeing. This is in contrast to long-term tenants, who on average will spend much more time per day living in the place. The second reason is that after each stay, a professional cleaner will work to make the home look and feel new for the next guest. In a long-term arrangement, many landlords leave regular cleaning up to tenants and are surprised at the end of the lease at the state of the property. Finally, Airbnb hosts are allowed to take security deposits from travellers in the case of damages. The result is that guests often take pre-caution and treat the home with extra care.
Perhaps the biggest surprise for first time hosts is the increased income generated from their homes. Even in the seasonal Canadian market, it is not uncommon for short-terms rentals to earn twice as much income as their yearly counterparts.
In a city like Toronto a nice one-bedroom apartment in the downtown core would typically rent for around $1600 annually. Assuming an average of 30 days a month, that comes to just $53 a night. On the short-term rental market, that same apartment may go for an average of $130 for the nights it is rented throughout the year. Assuming an occupancy rate of 80%, the average nightly income would amount to $105 – approximately double what the home was earning on the long-term market. Given these numbers, it’s no surprise more and more people are giving up being landlords to become Airbnb hosts.
So if more people are becoming Airbnb hosts (i.e. increased supply), won’t the nightly price go down as competition heats up? Interestingly, just as more people are hosting on Airbnb, the number of guests are increasing at an accelerated pace. In the summer of 2010, nearly 47,000 people worldwide stayed at an Airbnb accommodation. By summer of 2015 that had grown to 17 million, representing a 353-factor increase. Of the 50 million Airbnb stays that had taken place by summer of 2015, more than half had occurred in the last year.
The increasing popularity of homestay accommodations is partially due to travellers giving up hotels in favour of a more local experience at a discounted price. In big cities like Toronto, it is not uncommon for good hotels to charge over $200 a night. There’s also another segment of potential travellers who at those price points, would have previously opted to not stay overnight in the city, visit a less expensive city, or spend their money on other non-travel related leisure activities. A discount of $70 or more relative to hotels is often a deciding factor, especially when multiplied over a few nights. Anyone who’s familiar with Airbnb marketing campaigns knows they are often centred on the idea that the platform enables people to experience travel places they otherwise might not be able to afford.
Greater Access To Your Property
Perhaps the most underrated benefit of renting on the short-term rental market is the greater access you have to your own home. You can now check-in on the property or have your contractor perform maintenance without giving tenants advanced notice. But even better, you can book your own home on any given weekend or longer. If you have a family of four and live in the suburbs, why not stay the night in your two-bedroom apartment after bringing the kids to the baseball game? Maybe it’s your spouse’s birthday and you want a convenient place to stay after a day touring the city. Or maybe you have family visiting for a wedding and want to offer them their own place while they are in town. While you may only end up using your property a few times a year, it’s always nice to have the option.
No More Nightmare Tenants
Many long-time landlords can recount at least one story of a tenant experience gone bad. In the article published in the Star, the author recalls going through a handful of tenants, ranging from good to bad. She notes that even the good ones were never perfect, putting holes in the walls, indulging in hour-long showers, and leaving lights on when they were gone. The bad ones were complete nightmares. They would pay their rent late, smoke in the suite, and have fights in the middle of the night. The problem with bad tenants is the process of evicting them can be even more of a hassle than dealing with the issues they present. In a short-term rental, even if you pre-screen a tenant and they turn out to be less than ideal, you have the comfort of knowing it won’t be long before they are gone. With the public review systems in place, risk-averse Airbnb hosts can almost eliminate their odds of this kind of guest by only accepting those who have consistently demonstrated they are great to host.
The major downside to short term rentals compared to yearly leases is the increased about of work involved. Constantly replying to guest inquiries, cleaning, ongoing guest communication, check-in, and lockout support are just a few of the responsibilities of the Airbnb host. That’s why we created Guestable, a personal full-service short-term rental manager for Airbnb hosts.