Buying real estate is a common path to wealth, as property values tend to appreciate over time. Even better, you can have other people pay the mortgage by housing them in your property. While that rule remains the same, some real estate investors are trying to decide whether they want to use long-term rentals or list their properties on Airbnb instead.
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Here’s why some experts believe in the long-term approach over short-term rental platforms.
For the full picture, find out some reasons Airbnbs can be better than long-term rentals.
You Save a Lot of Time With Long-Term Tenants
Holden Andrews is the founder of Helpful Home Group, a real estate investment firm that makes it easier for people to sell their homes. He is also a real estate investor who currently has four long-term rentals. He said long-term tenants are more stable, while with Airbnb, you’re essentially operating a hotel business that requires more hands-on work.
“I will take the trade-off of having lower cash flow each month for the easier management,” he added. “When you’re operating a long-term rental, as long as the tenant is good, it is more set it and forget it, and the game is stacking them over a long enough time period, so you can either live off the cash flow from the properties or use the equity you’ve built to do other things, like move into apartment buildings or commercial real estate.”
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More Legislation Can Restrict Airbnb Investors
Holden also mentioned some recent legal issues that have already impacted Airbnb hosts. While some cities are more friendly toward Airbnb investors than others, momentum is shifting toward more restrictions.
“The government is probably not going to create legislation that makes long-term rentals illegal, while in many areas in the U.S. and the world, there is legislation that is being made about Airbnb and short-term rentals,” he explained.
He pointed out legislation in Mexico City that requires property owners to limit short-term rentals in their apartments to six months each year. And in the U.S., many homeowners associations (HOAs) restrict people from renting out their homes.
A city that allows Airbnb listings today may prohibit or limit them within the next three to five years. That development would slam the brakes for Airbnb investors and force them to sell or look for long-term tenants.
Long-Term Housing Will Always Remain in Demand
Matt Hutchinson is the director at SpareRoom, a leading roommate matching service. He said demand for Airbnbs can fluctuate quite a bit, while long-term rentals have more stable demand.
“Long-term rentals … provide stable housing and are less vulnerable to sudden legislation changes, as well as ensuring consistent demand and support housing availability for local residents,” he said. “Additionally, in the event of another global pandemic, long-term rentals are also likely to help you avoid empty properties.”
The COVID-19 pandemic was a rare event that is likely to not take shape in the future. However, the pandemic demonstrated how quickly people can change their behavior. Sharp changes in consumer behavior around travel can lead to fewer Airbnb listings getting filled. Meanwhile, long-term rentals have more stability.
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This article originally appeared on GOBankingRates.com: 3 Reasons Long-Term Rentals Are Better Than Airbnbs
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