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Investing in real estate is a great way to create passive income, but it also comes with a number of challenges. One of the biggest challenges I have faced as a rental property owner is finding the right hosting platform for my Palms Springs rental property.
There are many options available — from traditional leasing to Airbnb-style short-term rentals — and more have become increasingly popular among real estate investors, like VRBO and The Landing. Each of these options offers different benefits and drawbacks, so it's important to carefully consider each one before making a decision. Let's take a look at the pros and cons of these options.
Related: Tips for Making Real Money on Airbnb
Pros of hosting on Airbnb
The most obvious pro of hosting a property on Airbnb is that it provides an opportunity to make money quickly and easily. Airbnb offers a variety of services, from basic rental units to more luxurious accommodations like resorts and private villas. Additionally, the platform provides a simple way for hosts to get their properties listed, and Airbnb even has an automated system for handling payments.
By renting out your property using these short-term tenants, you can profit more from your rental property as you're not tied down to long-term leases, which can often be difficult to fill.
Cons of hosting on Airbnb
The main downside of using Airbnb for short-term rentals is that the platform charges its hosts a commission for each booking. This can eat into your profits, depending on the length and scale of your rental offerings. Many hosts, including myself, have tried to counter the fees by charging more and adding higher fees for cleaning.
Additionally, Airbnb is known to attract younger travelers who may not be as respectful of the property or its amenities as traditional tenants — hence the launch of Airbnb Cover.
The lack of proper filtering and background checks can leave you vulnerable to seasoned scammers on the platform. I've personally experienced this and have had to complain and make a claim with Airbnb Cover. In the end, I was taken care of, learned a great lesson and was invited to the Airbnb community.
In conclusion, while hosting through Airbnb has many advantages such as being able to make money and meeting new people from around the world, there are also some drawbacks such as high commissions and liability risks associated with damages caused by guests during their stay at your property.
Related: 15 Property Management Tips for Entrepreneurs Seeking Passive Income From Real Estate
Is VRBO the right choice for real estate investors?
Vacation Rental By Owner (VRBO) is a popular way for real estate investors to generate income from their properties.
One of the biggest advantages of hosting on VRBO like Airbnb is that it offers a lot of flexibility in terms of when and how often you rent your property. This means that you can take advantage of peak tourism seasons or special events like music festivals to maximize your earnings potential.
Another benefit of hosting on VRBO is that it can be lucrative because many travelers prefer to use VRBO rather than traditional hotels. This provides an opportunity for savvy investors to capitalize on this trend.
VRBO cons: Protection offer and fees
While there are plenty of benefits associated with hosting on VRBO, there are some drawbacks as well. For one thing, since you have limited control over who rents your property and when they stay there, this can make it difficult to predict how much money you will make each month — which is a problem if you rely heavily on rental income to cover your mortgage payments or other expenses related to the property.
Additionally, since renters only stay for short periods of time (usually 1-2 weeks), this means that turnover costs like cleaning fees can quickly add up if not managed properly.
VRBO also has set fees, and there is also a fee for protection starting at $59. This is a separate charge that you can add to a guest booking. While the booking fees are typically less than those charged by Airbnb, you may find that they still take a significant chunk out of your earnings.
While you can encounter scammers on any site, I personally noticed an increase in people wanting to speak outside of the site as well as inboxes filled with more inquiries than people ready to book. Most of my inbox has questions about the fees and how to get around them.
Related: 10 Hosting Options Besides Airbnb #TravelHosting
Pros of hosting on The Landing
The main benefit of hosting on The Landing is its flexibility as well as being able to charge for utilities separately. Unlike traditional leases, guests can choose how long they want to stay with the option to extend their stay using The Landing APP. This makes it ideal for investors who want to test different rental strategies without being locked into a single approach. Additionally, The Landings offers access to an array of features such as automated payments and tenant screening services that make managing your property easier than ever before.
Another advantage of hosting on The Landings is its convenience and attention to quality. They have a standard that must be met for each listing such as high-quality photos, designated work spaces, reliable appliances and other things like white linens. Their standards lean more towards corporate housing. They target digital nomads, travel nurses and young professionals.
Cons of hosting on The Landing
One potential downside of hosting on The Landing is its application process. Unlike the other platforms, you go through an approval process. The platform is also membership based and offers housing that could potentially compete with the individual investment property owner.
As a current membership holder, I love the platform — but as a rental property owner, I would not rely on that site alone. I would suggest using all sites while being aware and prepared for issues that may arise mentioned in the cons for each platform.
As a seasoned real estate investor and rental property owner, I've navigated the dynamic landscape of hosting platforms to optimize returns and mitigate risks. My firsthand experience has equipped me with a nuanced understanding of the pros and cons associated with various options, including Airbnb, VRBO, and The Landing.
Airbnb:
Pros:
- Airbnb provides a quick and efficient way to monetize your property, catering to a diverse range of accommodation types.
- The platform simplifies the listing process and offers an automated payment system.
- Hosting short-term tenants allows for greater profit flexibility compared to long-term leases.
Cons:
- Airbnb charges hosts a commission for each booking, impacting overall profitability.
- The platform may attract younger travelers, potentially leading to a higher risk of property damage or disrespect.
- Inadequate filtering and background checks expose hosts to potential scams, necessitating vigilance and reliance on Airbnb Cover for dispute resolution.
In summary, while Airbnb offers financial benefits and global connections, drawbacks include high commissions and potential liability risks associated with guest behavior.
VRBO:
Pros:
- VRBO provides flexibility in rental schedules, allowing hosts to capitalize on peak tourism seasons.
- The platform can be lucrative as travelers increasingly prefer it over traditional hotels.
- VRBO offers opportunities to maximize earnings during special events like music festivals.
Cons:
- Limited control over rental scheduling may result in unpredictable monthly income.
- Short-term stays contribute to turnover costs, including cleaning fees.
- VRBO imposes set fees, including a protection fee starting at $59, impacting overall earnings.
While VRBO presents income-generating opportunities, challenges include income unpredictability and the potential for fees to affect profitability.
The Landing:
Pros:
- The Landing offers flexibility, allowing guests to choose the duration of their stay.
- Hosts can charge for utilities separately, enhancing revenue flexibility.
- The platform provides automated payments and tenant screening services, streamlining property management.
Cons:
- The application process involves approval, potentially limiting immediate access.
- The platform's membership-based model and curated standards may compete with individual property owners.
- Hosts should diversify across platforms to mitigate reliance on The Landing alone.
In conclusion, The Landing's focus on flexibility and quality may appeal to certain investors, but potential downsides include the approval process and competition within the platform. Diversifying across platforms remains a prudent strategy for rental property owners, considering the unique advantages and challenges each one presents.
