The Pros and Cons of Listing Your Property on Airbnb: Is it Worth It?

So, you’re debating whether to join the short-stay revolution and list a property on Airbnb.

And who would blame you? There’s been a whole lot of coverage in the news lately about how lucrative the short-term rental market can be. But before you make the final call, it’s important to weigh up the pros and cons of listing your property on Airbnb — as opposed to renting it out long term. Here are some of the key ones.

Note: For the purposes of this post we’re assuming that you’re letting out an entire property, rather than a room in your own home. However, many of the following points would be relevant in either case.

Pro: High income potential

The biggest and most obvious pro for would-be Airbnb-ers is potential financial reward. By all accounts, making your property available on the short-term rental market is highly profitable — more so than if you were to rent it out long-term. However, this largely depends on the location. If you own a house or apartment in a popular holiday destination, or where demand is likely to be high for ancillary reasons (for example, if the property is close to a major hospital and you’re likely to receive bookings from temporary staff and the families of those seeking treatment), then your income potential is probably good.

Start by obtaining a couple of long-term rental appraisals and research the rates charged by similar properties to yours on Airbnb. You’ll soon get a feel for which option is likely to provide the better financial yield.

Pro: Low service fees

Airbnb has quite a complex fee structure overall, but from a host’s perspective you’ll pay the platform a relatively modest service fee of around 3% of each booking. It’s also completely free to get started on Airbnb, so that’s a tick in the pro column.

Pro: Fast pay-outs

Another of the big benefits of letting your property on Airbnb is the speed of pay-outs. You’ll generally receive payment from the company within 24 hours of a guest checking out. Monthly payments are the norm for long-term rentals.

Pro: You can veto bookings based on reviews

You don’t actually have a lot of say over who stays in your property when it’s advertised on the short-stay market (more on that shortly). But one control lever you can pull is to refuse a booking based on the guest’s review status. If they have poor reviews or no reviews at all, you can err on the side of caution and reject the booking.

Pro: You can block out dates for friends and family

Something that you absolutely can’t do on the long-term rental market is set aside periods for yourself, friends, or family to use the property. If your property is rented on a short-stay platform like Airbnb, you can simply block out the dates you want the property left vacant for your use.

Pro: Free insurance

Regardless of whether your property is rented on the long or short-term markets, having appropriate insurance cover is paramount. According to Canstar, landlord insurance can cost anywhere from $1,500 to $5,000 a year for a house (depending on where it’s located) and from $300 to $700 a year for an apartment. Not every policy covers short-term rentals, so read the product disclosure statement (PDS) from your chosen insurer carefully. Airbnb provides a level of free cover for hosts known as Air Cover, but it may not be sufficient to cover the cost of a serious incident. Seek professional advice on what insurance cover is appropriate for your situation.

Con: Inconsistent income

This is the big one for potential short stay hosts. Ask yourself how long you could sustain the property financially if you only received a small number of bookings — or worse still, if there was a serious market downturn — no bookings at all. If you had to drop your rental price significantly to attract more bookings, how would that affect your financial position overall? The potential returns from a long-term lease may look less appealing on paper, but you can generally rely on receiving a set amount of rental income each month — making it easier to budget and meet your fiscal obligations.

Con: Utility bills

When renting your property to long-term tenants, they become responsible for most of the utility costs. You will have to pay those bills yourself as a short-stay host. Yes, they’re tax deductible for the period your property is available for rent each year, but they’ll still have a direct impact on your cash flow.

Con: Lack of control

While it’s free to list your property on Airbnb, you don’t actually have all that much say over what happens from there. In fact, your financial security lies in the hands of an unseen algorithm. How many users will Airbnb show your property to? Where will it rank compared to similar properties? Will it appear in the majority of searches? The listing of a home for long-term rental is usually far more transparent.

Earlier we also mentioned the lack of control over who stays in your property short-term. There’s a huge reliance on guests using the Airbnb platform to do the right thing, and no one (such as a traditional property manager) is doing reference checks. Yes, reviews give you some indication of a guest’s personality and reliability, but reviews can be manipulated. Just sayin’.

Con: Time requirement

Unlike a standard long-term tenancy where you’ll be ‘hand’s off’ for much of the time, a short-stay business requires you to be very much ‘hands on’ — potentially on a daily basis. You’ll need to spend time and money creating a memorable guest experience, including furnishing and maintaining your property, monitoring your Airbnb listing, managing bookings, writing reciprocal user reviews, and the list goes on…

Con: Cleaning costs

Which brings us to the all-important topic of cleaning and changing linen — another of your responsibilities (or costs, if you choose to outsource it) as a short-stay host. Yes, you can charge the guest a cleaning fee. But the general consensus among the hosts we spoke to is that what you can charge (and still remain competitive) won’t cover the actual cost of cleaning.

Con: Wear and tear

With guests checking in and out of your property on a constant basis, it’s inevitable that there will be wear and tear on the furniture, fixtures, and appliances. While most guests will do the right thing, not everyone will treat the accommodation with respect — and you may not even become aware of a problem until many weeks (and guests!) later. With a long-term tenancy, this problem is significantly reduced.

Con: Increasing levels of regulation

And finally, as the Airbnb business model matures and legislators come to grips with its impact on the housing market as a whole, it’s likely we’ll see increased regulation of the platform’s use. Where it lands in Australia remains to be seen, but Victoria has already introduced a 7.5% levy on short-term accommodation bookings — due to take effect in 2025.

This post was published thanks to Di Jones Real Estate.

Do you have any suggestions to add to our list of the pros and cons of listing your property on Airbnb? We would love to hear from you. Please leave a comment below.

The information contained in this story is general in nature and does not constitute professional advice in any way. We make every effort to ensure this content is accurate, but we do not guarantee it. You should do your own research and seek the advice of professionals before acting or relying on any of the information provided in this story.

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