You may hear from other real estate programs that the optimum method of cash flow is traditional long-term leases on buy and hold real estate. However the short-term rental model that Airbnb, Homeaway, Flipkey, and VRBO have pioneered is the true cash flow method that is taking storm and becoming a big competitor to traditional landlords. Here are some reasons why it’s in fact a better model for both the tenant and the entrepreneur involved.
1. Multiple Guests in One House = Bigger Cash Flow
With Airbnb investing, there is a bigger market for shared rooms, bunk beds, and an overall culture of communal shared living spaces. So in one house you can fit 12-16 separate people instead of just one family that could move out at anytime leaving you with no income for a couple months. In the Airbnb scenario, you have plenty of income from multiple payers so if a few people leave, they can be replaced easily through the online platform and you’re not left with an empty house in the meantime.
2. No Realtor or Property Management Fees
Since Airbnb investors already have an efficient online platform in place to fill your vacancies,, they’re able to avoid the costs of typical leasing such as Realtor commissions or fees for hiring a property management company. Usually you can have an onsite manager look after the property and fill vacancies, of you can do so yourself with minimal work. This can add hundreds to potentially thousands to your bottom line every month.
3. Lower Hurdles for Tenants to Move in
Because traditional landlords usually have stringent screening of tenants, such as high security deposits, background checks, credit checks, and proof of income requirements, and application fees on top of all that, it’s often difficult and time-consuming for the average tenant to find a place to live. Airbnb and other home sharing platforms skip all that in favor of a review system where hosts can rate guests and vice versa.
4. More Ways for Tenants to Pay
Typically landlords and their management companies require check or money orders for their rent every month, but Airbnb-type platforms offer credit/debit card payments for all their bookings. They offer the flexibility of paying daily, weekly, or monthly if desired. This gives the Airbnb investor more flexibility to work out rent payment with their guests and creates a culture where paying rent with a credit card becomes the norm.
So all in all those are some reason why the Airbnb investing model is better for both the Hosts and the guests and why it may eventually cut into the long term landord’s market share for meeting housing demand. It’s a great field with a lot of potential and we’re excited to see it evolve into bigger and better stages of growth.