Short Term Rental properties like Airbnb’s are a byproduct of the 2008 financial crisis because they’ve been able to benefit from a Bull Market that’s lasted for over 10 years.
Sadly, even though Short-Term rental properties are common in the rental marketplace of 2020, they are highly overrated, especially for these reasons:
Reason #1 – The Business Model Hasn’t Been Truly Tested Yet
Yes, even though we’ve had vacation rentals for years, Airbnb’s and other similar short-term business models have not been “tested” yet.
With the onset of CoronaVirus, short term rentals are being increasingly tested by the day as the threat of this virus has prompted many people who were booking stays in short term rentals to cancel their vacations due to fear of Covid-19 exposure.
Reason #2 – Not Enough Competition in The Short-Term Rental Marketplace
Even though Airbnb may be the “go-to” website for booking short term rentals, this isn’t necessarily a good thing because it means that owners either have to be on Airbnb, or their rental properties will not get the exposure that they need to generate money for their owners.
Reason #3 – High Regulatory Risk
Last of all, but most important, another reason why short-term rentals are overrated in 2020 is that this industry faces a high risk of regulation from city, state, and local governments.
The increased regulations imposed on short term rentals have a lot to do with the rental housing shortage that states like California are facing right now.
Many cities and states are pushing back against short term rentals and Airbnb because of the obvious fact that if most of the rental properties on the market are short term, those properties eat up the supply of long-term rentals and this leaves a rental housing shortage.
What’s the solution to the problem? Short term rental properties are here to stay but if you’re looking for stable income from your investment properties you should consider investing in long term rental properties.
By investing in long term rental properties, you can expect consistent monthly income because the average lease is either month to month, six months, or one year. This means that you can grow a portfolio of investment properties without having to spend a lot of time and effort keeping your rentals occupied.
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