As a first-time property manager stepping into the world of private real estate, the choice to Airbnb or rent out your new investment in the long term can be daunting. Seasoned property managers, real estate agents – and sometimes even the people you find yourself at dinner with – tend to have strong opinions on which is a better investment.
But when it comes to making your own choice between a long-term rental (LTR) or a short-term rental (an STR, like Airbnb), there’s plenty to consider. What’s the financial forecast of your new venture? And how much time are you willing to spend on maintenance and management?
An online search will tell you that the long-term renting vs. Airbnb debate is certainly in full swing, with plenty of property gurus and Jane Does alike proclaiming you should put your eggs in one basket – and they’re usually quick to list their own reasons why. But putting it simply: not all pros and cons are made equal.
We’ve taken a closer look at the facts that matter when it comes to setting up and managing a rental property, and when it comes to profitability, the story is clear: an Airbnb is going to be a better financial investment than a long-term rental.
To get a better sense of why that is, let’s look a little deeper.
Is Airbnb the same thing as renting?
On the surface, buying or leasing a property and turning it into an Airbnb might seem like a fairly similar investment to running an LTR. But in terms of their requirements and their profit margins, they’re certainly not twin ventures.
The costs associated with maintenance, security, tax and more for an Airbnb are calculated very differently than for an LTR.
Similarly, different factors affect your income from each investment – from dynamic pricing that responds to demand, to the property type’s susceptibility to general wear and tear.
What is Short-Term Rentals (STR)?
STRs are rental properties that cater to short tenancies – usually ranging from a few days to a few weeks. Income from STRs is typically higher than it is from LTRs, largely due to dynamic pricing options that maximize profits during peak seasons, and the potential to charge a higher nightly rate.
Platforms like Airbnb, Booking.com, Vrbo, and Google Vacation Rentals have become almost synonymous with the concept of the STR, and are among the most popular platforms for property managers to advertise and manage their properties online.
However, many more online platforms exist for STR booking and management, including aggregate websites where potential tenants can compare properties across several platforms.
What is Long-Term Rentals (LTR)?
Turning a property into an LTR involves leasing the property for extended periods – typically anywhere from six months to a year or more per tenant.
LTRs offer more stability, as the risk of non-occupancy is lower, but less flexibility, and sometimes less opportunity for hands-on management and regular maintenance of the property.
The monthly income from an LTR is lower on average than it is for an STR (where higher nightly rates typically amount to more rental income over a month than the typical range for an LTR), and LTRs do not benefit from dynamic pricing.
Let’s take a closer look at the pros and cons of each:
Pros of short-term rentals and renting out
| Short-Term Rentals (STRs) | Long-Term Rentals (LTRs) | |
| Rental Income Potential | Potential to charge a higher nightly rate, especially in cities and tourist hotspots, with the added benefit of dynamic pricing in peak seasons and when demand is high. | Income can be more steady and predictable as a result of longer tenancies. Less fluctuation in revenue. |
| Property Control and Flexibility | Greater control over your property. Pause your listing for personal use or when you are away. Ability to inspect the property more regularly. | Some control over property occupancy and maintenance. Limited flexibility once a lease is signed. |
| Security | Higher security with frequent guest turnover, reducing the risk of vandalism or squatting. Shorter tenancies and added cover mean problematic tenants can be managed. Added financial security due to guests paying upfront. Benefits from guest screening. | Rent is typically guaranteed for the lease duration, however, risk of non-payment is higher. Standard liability, with fewer added protections compared to STR platforms. |
| Maintenance | Frequent guest turnover allows maintenance issues to be addressed more readily. Regular cleans also help to maintain the condition of the property. Guest damages can be covered and reimbursed. | Often less hands-on. Guests are typically responsible for organizing end-of-lease cleans. |
| Tax Benefits | Typically eligible for more tax benefits than LTRs. Supplies, maintenance, and management fees are often tax-deductible. | Some tax benefits, limited mostly to mortgage interest and property taxes. |
Cons Short Term Rentals and renting out
| Factor | Short-Term Rentals (STR) | Long-Term Rentals (LTR) |
| Time Investment | Requires more hands-on involvement in guest management and cleaning. However, cleaning and management can be outsourced, or streamlined using host management tools online. | Somewhat time-intensive, but typically less so during a tenancy. |
| Income Variability | Occupancy and pricing respond to seasonality and demand, which can lead to periods of low occupancy and higher income variability. | No option for dynamic pricing, which means income does not increase with demand. Higher risk of non-payment. |
| Maintenance | Potential for regular wear and tear due to high guest turnover. | Longer periods without inspections may mean issues go unnoticed, leading to more substantial maintenance requirements when tenants move out after a long-term lease. |
| Security | High guest turnover can pose a security risk without adequate cover. | LTRs may involve dealing with problematic tenancies over longer periods. |
Considering the big picture – from the time you’ll spend managing your property, to the limits you might face on how you’ll use it – is important.
You want a viable investment that also aligns with your lifestyle – and the choice between an LTR and an STR is also somewhat dependent on your willingness to be involved in managing the property.
But it’s also important to note that these big-picture questions are not just about making sure your investment aligns with your lifestyle. The differences between LTRs and STRs also factor into what’s more profitable.
Airbnb or renting a property out on a long-term basis both make demands on your time – but using online management tools, which are becoming increasingly popular, can end up saving you a whole lot of it (and time is money, so they say).
So, lifestyle preferences aside for a moment: is Airbnb or renting more profitable?
Airbnb is more profitable
If you want to answer the ultimate question – Do you make more money renting or Airbnb leasing? – it can be wise to follow the herd.
A significant number of property managers (more than 60%) leverage online travel agencies such as Airbnb, Booking.com, and Vrbo to advertise and manage their short-term rental properties.
These platforms not only streamline the booking process, but also provide varied levels of cover, increased security options, and an accessible platform that makes it easier for tenants to find and book properties.
As of 2024, Airbnb remains one of the most popular platforms for property managers, with the number of hosts worldwide now surpassing five million.
Booking.com is another major player in the short-term rental market, reporting 29 million total listings. Vrbo, part of the Expedia Group, reports more than 48 million users.
If your goal is to maximize the profitability of your investment property, Airbnb is the way to go. All points considered, Airbnbs (and STRs in general) typically offer higher returns than LTRs. This is especially true for properties located in tourist hotspots, or in cities with a high demand for business travel.
Forbes reports that Airbnb hosts earn approximately $14,000 a year on average. However, this number can vary significantly depending on the property’s location. Airbnb Newsroom data suggests that hosts in highly competitive markets or those offering premium listings might earn as much as $30,000 per year – and even higher.
Average ROI for holiday lets vs. renting out in the UK
| City | Long-term rental (monthly revenue) | Short-term rental (nightly revenue) | Short-term rental (monthly revenue) |
| London | $3,000 | $200/night | $3,600 (at 60% occupancy) |
| Amsterdam | $2,500 | $185/night | $3,300 (at 60% occupancy) |
| Barcelona | $2,200 | $180/night | $3,240 (at 60% occupancy) |
| Paris | $2,700 | $210/night | $3,780 (at 60% occupancy) |
| New York | $3,500 | $250/night | $4,500 (at 60% occupancy) |
| Los Angeles | $2,800 | $220/night | $3,960 (at 60% occupancy) |
Flexibility
Rental income from an Airbnb vs. rental income from an LTR definitely aren’t cut from the same cloth. One of the key advantages of STRs as compared to LTRs is that they benefit from dynamic pricing. In peak seasons, STRs can bring in more than double the revenue of LTRs located in the same area.
“During quiet periods, think November through to the end of February, I make 1.5 times more on a short-term rental than what I would from a long-term let. During peak season, I make 6.5 times the rental income. That’s huge,” Superhog CEO, Humphrey Bowles, says.
Airbnb, Booking.com and Vbro offer dynamic pricing tools, making it easy for hosts to optimize rates in line with demand. In contrast, your income from an LTR is fixed for the duration of the lease. For properties in major cities and tourist areas, not having the benefit of dynamic pricing makes a significant difference to overall revenue.
Short-term tenancies allow more time for your personal use of the property, too. Bowles explains: “The extra cash I make from short-term renting means when I have friends to stay, we can pop them in our cottage for a long weekend without really noticing the drop in income compared to long letting.”
Strategies for maximizing revenue
Income from an Airbnb vs. renting income for long-term leases tend to look different largely because they depend on different factors.
Does your property feature a balcony with unobstructed views of the Seine? Is it located on a quiet street, or near a train station? Does it cater to young holidaymakers who will be making themselves at home, or business travelers who are just passing through?
STRs can be lucrative investments, however, their success is very much dependent on strategy, planning, and careful management.
Revenue fluctuations, cleaning costs, and utility expenses can affect your estimated budget significantly, and failing to account for them can affect the overall profitability of your property. Research is important, too. Doing a bit of extra reading can help you find out where to maximize your income and minimize spending. And understanding tax regulations in your area can be a good place to start. “Short-term rentals can offer unique tax advantages,” says Bowles.
When you’re looking to increase your income, it’s often more helpful to focus on increasing occupancy rates rather than just your average daily rates (ADRs).
Spending on the property initially (think: flashy new amenities) might feel like the way to go if you want to attract more tenants, however, over-optimistic spending can be a pitfall for many STR hosts who are just starting out. It’s important to account for everything from tax hikes, to minor damages, and even your own rent or mortgage payments – safely giving them a wide berth in your budget.
Time spent managing the property: Airbnb vs renting
Time investment can be a critical factor when choosing between STRs and LTRs – particularly when you are managing an investment property (or multiple properties) alongside full-time work, family, and other commitments.
Managing an STR does call for more hands-on involvement than leasing an LTR, as you’ll more likely need to communicate with guests, arrange cleanings, and handle bookings on a regular basis. However, property management software can streamline this process. Superhog’s online tools not only help automate guest screening, but also provide damage protection.
For long-term rentals, your involvement is typically limited to collecting rent and addressing occasional maintenance issues. Using a real estate agency can also mean that several duties are outsourced to a property manager, leaving you with more time on your hands.
However, taking a step back from your property can amount to more time-consuming and costly issues to deal with in the future. During a tenancy, maintenance issues can be overlooked, or may not be communicated to you – which means they might not be addressed until the tenant has vacated. Over time, small issues can snowball into larger problems – which take more time to fix.
Liability: Airbnb vs. long-term rental
Your liability for issues like damages or injury can look very different depending on whether you’re managing an STR or an LTR. Renting out your property in the short term could put you at higher risk of damage or liability claims, however, platforms like Airbnb offer robust protection.
The nature of short-term stays may mean that holidayers don’t always treat the property with the same level of respect as they might afford to a property they’re living in on the long term. STRs have a higher guest turnover than LTRs, and on paper, more people at the property might look like it equates to more accidents.
However, platforms like Airbnb offer robust liability protection to help mitigate risks. Airbnb’s AirCover provides a comprehensive protection plan for hosts, including $1 million in liability insurance and in damage protection.
Superhog provides additional layers of security, including damage waivers and guest screening.
For property managers responsible for multiple houses, comprehensive guest verification and damage protection services are essential for running things smoothly, and staying on top of expenses.
Wear and Tear
A common concern among property owners is the potential for more wear and tear as a result of frequent guest turnover in short-term rentals. But as Bowles explains, “Frequent turnover also means that any maintenance issues are likely to be addressed promptly.”
STRs managers have plenty of strategies available to them for protection against damages. For damages that aren’t covered by traditional insurance policies, Airbnb’s host guarantee offers additional protection. On top of this, Superhog gives property managers the option to screen and vet guests before a tenancy, as well as covering damages that exceed the limits of what Airbnb can cover.
Superhog also allows hosts to include a damage waiver fee in the total booking cost. This fee provides cover against significant damages or losses caused by guests. This added security can become a major selling point to guests in its own right.
LTRs might see less frequent wear and tear, but when tenants move out after a long lease, maintenance costs can be hefty. After the standard repainting, and replacement of carpets, any damage that has accumulated over the long tenancy needs to be addressed.
What’s riskier?
If playing it safe is more important to you than maximizing profit, you might be wondering: if I want to minimize risks, should I rent or Airbnb?
One of the key advantages of managing an STR is that you won’t have to deal with problematic long-term tenants. With guest screening and vetting options now readily available for STRs, it’s unlikely you’ll have to deal with difficult tenancies at all. “Owning a short-term rental offers greater control over who stays in your property,” Bowles says. Additionally, “guests typically pay upfront,” he explains – making the risk of non-payment lower in STRs.
Long-term rentals can lead to issues with problematic tenants, unpaid rent, and property damage that accumulates over time. Short-term rentals, while requiring more management, offer protections and flexibility that can mitigate these risks. The ability to vet guests, adjust pricing, and maintain the property regularly often makes short-term rentals a less risky venture.
Which strategy is better for your rental property?
In answering the Airbnb vs. rental property question, this is Bowles’s take: “There is a reason so many landlords have jumped on the short-term rental mega bus. And there is a reason so many will continue to do so. The demand for living like a local exists – whether it’s tourists, business travelers, digital nomads, or simply those looking for a change.”
Choosing between short-term and long-term rentals depends on various factors, including the property’s location, your financial goals, and how much time you’re willing to invest in property management.
Both short-term and long-term rentals come with risks, too. But after considering all of them: is Airbnb better than renting?
“Yes, the short-term rental industry has its challenges, but the benefits are substantially worth it,” Bowles says. And these challenges, particularly those around security and wear and tear, are becoming increasingly manageable with the increased availability of host management tools. Guest screening, damage cover and further protections are more comprehensive than ever, making Airbnb and STR hosting the safest and most efficient it has ever been.
Today, more and more hosts are migrating to platforms like Airbnb to rent their properties in the short term – many of them with the addition of comprehensive cover. If maximizing income, maintaining flexibility, and reducing tenant-related risks are your priorities, there hasn’t been a better time to follow the STR herd.
