If you are one of the thousands of Airbnb owners in Orlando, Florida, there’s a chance you may have wondered whether or not you should switch your short-term rental to a long-term rental. If you’ve contemplated this business decision, you’re not alone; at The Listing Real Estate Management, property owners seek our advice on this topic frequently.
Short-term Airbnbs and long-term rentals vary significantly in Orlando. Whether you should turn your short-term Airbnb to a long-term rental depends on a variety of factors, some of which rely heavily on your rental goals and preferred management style.
While every rental property owner is different, there are pros and cons to both short-term Airbnbs and long-term rentals. However, those seeking a stable rental income and long-term success may favor long-term rentals. As a professional Orlando property manager, I’ve laid out 5 benefits of long-term rentals to help make your decision more clear!
1.) Secure and Stable Income
One of the most significant benefits of long-term rentals is the security they provide. With a long-term rental, your tenant is committed to a lease agreement for an extended period of time — typically 12 months or more. Through the duration of the lease agreement, the property owner is promised a stable monthly income. There is no uncertainty in the amount of money the property will earn, allowing peace of mind and providing the ability to budget for any expenses associated with the rental property.
Rental properties come with a handful of expenses; a long-term stable income ensures all necessary payments can be made on time and in full, while also generating a profit. These expenses may include mortgage payments, HOA fees, maintenance and repair costs, property taxes, and insurance payments.
Many Orlando property owners favor short-term Airbnbs because of the pricing flexibility. Short-term Airbnb owners have the ability to adjust prices frequently, hiking them up during busy seasons, holidays, and events. While this method can generate a significant income for the time being, there is no guarantee of long-term occupancy or a stable income.
2) The Ability to Screen Tenants vs Unscreened Airbnb Renters
If you don’t want to be a participant of this Airbnb Reddit chain “What’s the worst guests you’ve ever had”, switching your short-term rental to a long-term rental may be the best decision for you. Let’s discuss why!
A common practice used to fill vacancies for long-term rental properties is tenant screening. Tenant screening is the process of vetting applicants to evaluate their credibility, financial stability, and likelihood of upholding the lease agreement to its full extent. Screening tenants is essential to ensure your lease is successful, profitable, and smooth. If your rental property is a valuable asset to you, you probably don’t want just anyone staying there. As an Airbnb rental, property owners lose the ability to fully screen tenants and ensure the legitimacy of the renter.
Failing to screen renters can lead to failed payments, property damage, neighborhood disturbance, and even legal proceedings. While screening tenants can take some time and work, placing a reliable tenant is well worth the extra effort.
At The Listing our in-depth screening process includes:
- Credit check
- Debt-to-income ratio check
- Nationwide eviction search
- Background check
- Income and employment verification
- Previous two years rental verification
As a professional property manager, I encourage Orlando rental property owners to prioritize finding the right tenant instead of the fast tenant, which isn’t always an option with short-term Airbnb rentals.
Airbnb Tenants
Airbnb’s vetting process is unclear and insufficient for rental property owners looking to rent to qualified tenants. According to Airbnb, background checks may be performed on guests in the United States, however, the process seems unclear. In this Airbnb help center post, Airbnb even goes as far as saying that you cannot rely on background checks alone. Unscreened renters can be untrustworthy and less cautious about personal property. If you’ve ever booked an Airbnb yourself, you know how easy it is; there is no screening process, employment verification, or income stability check. As long as you have an ID and a form of payment that goes through, you’re all set to book an Airbnb.
The lack of screening combined with the instant booking feature puts your short-term Airbnb property at risk of hosting a disruptive, destructive, or unreliable renter. In addition, being that there is no “lease agreement” put into place, Airbnb renters are typically more daring with their ventures and often take advantage of the lack of rules and regulations.
While Airbnb renters aren’t always troublesome, it is a risk you have to take. To avoid potential problem renters, legal implications, and property damage, I highly recommend converting your short-term rental to a long-term rental with an in-depth screening process and a lease agreement.
3) Long-term Rentals Do Not Have To Be Furnished
Short-term rentals with transient guests require full furnishings as guests will not be bringing their own furniture. However, if you are seeking long-term leases, your tenants will most likely prefer to bring their own furniture.
Short-term furnished rentals will have high turnover rates, tedious cleaning, and increased maintenance needs. Short-term rentals with frequent turnovers are subject to increased wear and tear as short-term tenants may be less careful about preserving the condition of the furniture.
Furnished rental properties lead to increased expenses and time commitment for the property owner. Furnishing a home is a significant expense in itself, but there are many additional costs associated with a furnished rental property. These costs include:
- Regular maintenance and repairs
- Cleaning and turnover costs
- Insurance costs
- Replacement costs
As a short-term rental property owner in Orlando, you’ll find that furniture is often damaged, broken, or stained, and you’re the one responsible for fixing it. If anything is damaged during your short-term rental, you’ll have to take the time to fix it either immediately during the rental, or quickly in between renters. In addition, unless your renter is honest and responsible, oftentimes tenants do not notify you of, or take responsibility for property damage.
As a long-term rental property owner, you won’t have to worry about the damage or expense of purchasing and repairing furniture. While this may not be true for every single renter, a majority of prospective renters have their own furniture or prefer to furnish the home themselves. Allowing your tenants to bring in their own furniture elevates their comfortability and can oftentimes lead to lease renewals and higher tenant retention rates.
4) Tenant Retention and Lower Vacancy Rates
Vacancies are a considerable expense, one that could affect not only your ROI but your monthly expenses and income. We all know that vacancies are inevitable at some point; the chance of your property being filled 100% of the time over multiple years is low. However, long-term and frequent vacancies can be avoided.
When property owners consider switching their short-term to a long-term rental, the one aspect that typically prevents them from doing so is the pricing flexibility. What many don’t consider is that while your property may be rented at an increased rate during peak season, those profits can be lost by long-term or multiple vacancies. With the uncertainty of sporadic short-term rental occupancies, many property owners experience the wonders of financial gain, and then the catastrophe of financial loss.
I advise all Orlando short-term Airbnb owners to consider the cost of a vacancy to understand the importance of long-term occupancy. Look at it this way:
- Say your property has a $1,500 estimated rental rate and a $1,250 per month PITI (Principal / Interest / Taxes / Insurance) mortgage, plus utility expenses. A vacancy can cost in terms of days on market:
- 15 Days = $750 in lost rent + $625 mortgage + $100 in utilities =$1,475
- 30 Days = $1,500 in lost rent + $1,250 mortgage + $125 in utilities =$2,875
- 45 Days = $2,250 in lost rent + $1,875 mortgage + $150 in utilities =$4,275
- 60 Days = $3,000 in lost rent + $2,500 mortgage + $200 in utilities =$5,700
Airbnb Occupancies vs Long-Term Rental Occupancies
As an Orlando property manager, I can tell you that even in the top tourist destinations in the world, many short-term Airbnb owners have experienced extended vacancies in the past few years. In 2023, Orlando experienced a 10% occupancy and 35% revenue drop in just one year. This report goes to show how unpredictable the short-term rental demand can be, even in a city thriving with tourism.
With long-term rentals, you don’t have to worry about when your next booking is going to come, how long it will last, and how far in-between vacancies you can expect the next renter. While your long-term rental may sit vacant when transitioning from one tenant to another, your tenants are locked in for 12 or more months. In this case, Orlando property owners earn a steady income and have the means to cover monthly expenses like mortgages or HOA payments.
5) Short-Term Rentals Are Highly Demanding and Time Consuming
If you are a current short-term rental property owner in Orlando, you can probably attest to the fact that short-term rentals can be highly demanding and a significant time commitment. Between keeping your guests happy for the time they are there, to ensuring your property is cleaned and turned for your next guest, managing a short-term rental is far from a walk in the park.
As a short-term Airbnb rental property owner, the looming effect of a possible 1-star rating creates a strong demand for perfection. Negative feedback from guests can deter future renters from booking your property and significantly impact the success and sustainability of your short-term rental. With that in mind, short-term rental property owners are typically expected to go above and beyond for their guests, providing everything from essential furniture and towels to niche kitchen supplies and smart tv consoles.
While you aren’t necessarily required to go the extra mile for your renters, Airbnbs owners tend to be more personalized in their approach to hosting. In our experience, most Airbnb owners are highly proactive in providing for and communicating with their renters. For example:
- Your guests may be staying a duration of one week. Within two days of their stay, the air conditioning stops working. Being that the weather is 85 degrees, it is essential for this problem to be fixed — if not, a negative review is likely on the way. While you may have other duties or plans, you must put in the effort to ensure your renters are with air conditioning for the remainder of their stay.
In addition, short-term rentals require more frequent maintenance and turnovers than long-term rentals. Short-term and long-term rentals both require turnovers in between tenants, but short-term turnovers are more frequent and more demanding. If your Airbnb is booked by 12 different renters throughout the year, you will be responsible for 12 full property turns. Unlike long-term properties that are empty at the end of a lease, short-term turnovers require cleaning and maintaining linens, towels, utensils, kitchen equipment, and furniture, on top of cleaning the entire house.
Advice From an Orlando Property Manager
As Orlando property managers here at The Listing Real Estate Management, we’ve had many clients make the switch from short-term Airbnb to long-term rentals, and the results are always positive.
If you’re looking to convert your property into a long-term Orlando rental, you’ve come to the right place! Our experienced property management team can guide you through the process of doing so, and align you on your successful long-term property management journey.
To learn more about how to convert your short-term Airbnb rental into a long-term rental, contact us today at The Listing Real Estate Management, and read our FULL GUIDE!
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