When deciding to Airbnb or permanently rent your granny flat there are a few factors which need to be considered.
Rental Demand
Assess the rental demand in your area to understand whether there is a steady demand for short term rentals, such as tourists or business travellers or if the demand is primarily for long term rentals, such as professionals or families. Understanding these trends can help you make informed decisions.
Rental Income
Comparing the potential rental income from Airbnb and long term rentals is an important consideration. While Airbnb rates can be higher per night it's crucial to note that occupancy rates might vary. To accurately gauge potential income take into account the average occupancy rate for short term rentals in your area and calculate accordingly. Additionally, it's important to compare this figure with the rental income you would receive from a long-term tenant. It's worth keeping in mind that short term rentals may entail extra expenses such as cleaning fees, amenities, and maintenance costs.
Management and Maintenance
Factoring in the level of management and maintenance involved is crucial when making a decision. Short term rentals generally require more active management since tasks like cleaning, guest communication, and marketing are involved throughout. Conversely, long term rentals may require less frequent attention but will require establishing longer lasting tenant relationships and addressing potential maintenance requests.
Property Type and Location
Thoughtfully assess the characteristics of your property and its location when considering rental options. Some properties may be better suited for Airbnb due to factors like proximity to tourist attractions, unique features, or being situated in a desirable neighbourhood. On the other hand other properties might be more suitable for long term rentals due to their size, layout or location in residential areas.
Risk Tolerance
Evaluate your risk tolerance as an investor. Short-term rentals can be more volatile, with fluctuations in demand and potential gaps in occupancy. Long-term rentals generally offer more stability, with consistent monthly income and longer-term lease agreements.
Personal Use
Consider whether you want to use the property for personal use occasionally. If you plan to use the property yourself for vacations or visits, Airbnb allows you to block off dates for personal use while still generating income when you're not there.
Ultimately, the decision depends on your financial goals, property specifics, local market conditions, and personal preferences. It can be helpful to conduct thorough research, analyse potential returns, and consult with local real estate professionals or property management companies who can provide insights specific to your area.