Vacation rental or regular rental?

Should you rent out your home to a regular tenant or use it for a short term vacation rental?  What are the pros and cons?

Pros of vacation rental.

Pros of renting out your house to a regular tenant:

1.  Tenants sign a year long lease.  Once you have a tenant in place, you don’t have to worry about finding a new tenant for at least a year.  Sometimes, they renew for a second year, and so on.

3.  Steady stream of monthly income.

4.  If you are able to find good tenants, they increase the value of your property by maintaining it with their own funds.

5.  Don’t need to furnish the house or provide food.

Cons of vacation rentals.

Cons of renting out your house to a regular tenant:

1.  You must deal with the ABSURD California tenant landlord rules and regulations.  Don’t forget rent control!

2.  Possible eviction costs.

3.  Your must honor the lease period. So, if you want to live in your house, say, 6 months into the lease… too bad too sad!

4.  Once a tenant lives in your house they have ALL the rights!

5.  Headache of signing leases, etc.

Pros of renting out your house as a vacation rental on AirBNB and/or VRBO:

1.  Short term rental agreement.  I’ve never seen anything over 1 month (in my experience).

2.  More income!  Vacation rentals charge per day and are usually four times the cost of a regular rental.  For example, my friend Morgan owns a house of which the market rental rate for a regular tenant is about $3,500 per month.  3500 divided by 31 days = $112 per day.  I help her rent it out on AirBNB and VRBO for $480 per night.  It’s STEADILY booked.  You do the math from there!

3. AirBNB and VRBO collect security deposits and has tenants sign rental agreements, etc.

4.  The type of people who utilize AirBNB and VRBO are (in my experience) very sophisticated and take care of the property.

5.  Less liability when it comes to dealing with money since everything is done through the vacation rental websites

6.  Less liability when it comes to dealing with tenant landlord rules and regulations.  Plus, people are coming from out of state usually and don’t even know the rules and regulations!

7.  Get to meet a lot of cool people from all over the world!!

Cons of renting out your house as a vacation rental on AirBNB and/or VRBO:

1.  Sheets, towels need to be cleaned after every guest as well as bathrooms and kitchen.  Once a month do a full house cleaning (if needed).  Depends on each person.  Most of the time, people don’t even utilize the kitchen and are gone most of the time.

2.  Need to provide a few items like:  water, light food, beers, etc.

3.  People will be using EVERYTHING in your house.

4.  Quick turn over times.

Based on my experience, utilizing AirBNB and VRBO has been fun!  I love meeting new guests and sometimes you even get to hang out with them!  The return on investment far exceeds a regular tenant, plus you dont have to deal with the ABSURD California tenant landlord rules and regulations!

I fully manage AirBNB and VRBO vacation rentals here in Los Angeles, so if you need help, reach out to me at 310 623 2704 or shaneedele@gmail.com

Want to read more on this topic?  Here’s a good article for you:

http://www.investopedia.com/articles/personal-finance/032814/pros-and-cons-using-airbnb.asp?performancelayout=true

 

 

Posted by: emoss on August 4, 2015
Posted in: Uncategorized