Should You Rent Your Airbnbs for Long-Term Stays? | Things to Consider | Tim Hubbard

Is your calendar starting to look a little empty? Hopefully not. But if it is, I'm sure you've thought about offering long term stays if you're not already. But. But long term stays aren't for everyone and they're not for every property. So this week I want to break down the pros and cons to having long term guests. Welcome to Short Term Rental Riches. We'll discuss investing in real estate, but with a specific focus on short term rentals. Quick actionable items to acquire, manage and scale your portfol portfolio. I'm your host, Tim Hubbard. Welcome back to the Short Term Rental Riches podcast. We're here this week talking about some of my favorite type of guests. And those are the ones that stay for a really long time, but they pay a nightly rate. Now, not all long term guests are created equally, so I want to talk this week about the pros and the cons. Let's start with the pros. Well, the pros to having long term guests is that we can have a higher occupancy, but that doesn't mean we necessarily make more money. That is a whole episode on itself. How to calculate to know if we should be offering long term stays or if we should be offering long term discounts. So I don't want to get into that one on this episode. I just want to talk about the pros and cons. But just know if your occupancy goes up. If you have 100% occupancy doesn't necessarily mean you're making more money, but it definitely is nice to have that high occupancy. And we can get that from a whole different range of guests. A very common one is to have traveling nurses. In my experience, they've been excellent, excellent guests. They usually stay for an average of three months. They usually travel by themselves. Their companies usually pay for their rent, so they're very easy guests to have. And if they're paying our nightly rate, then we're going to be making a lot more too. But there's some other types of guests that you might find staying longer as well. Those could be people traveling for work, corporate travel, maybe someone displaced in their home and they happen to live in the city. Maybe they had a fire at their home or they're rebuilding, or they're moving to a new city and they're doing new construction. So there's quite a few different types of guests that are going to want to stay at your property long term. And this also happens to be Airbnb's fastest growing segment our longer term stays. So along with having potentially higher occupancy, we can also have lower expenses. Right? So this is pro number two, we don't have to pay for as many housekeeping turns if we only have one a month, for example. So if your average stay right now is three or four nights and you're doing all those housekeeping turns, but you can get someone in for a month, well then obviously your housekeeping expense is going to be lower, but so is just the management overall. You're going to have less messages, very likely you're going to have less operations. It's just going to cost a little less to operate and it's going to be a lot easier to do yourself. If you're looking at managing your properties yourself versus having a professional property manager. Number three, pro number three, it's going to boost your search rankings if you have a property, and this goes for Airbnb, but very likely all of the online travel agencies that advertise some sort of long term stay. If you have a property that's available, let's say for a minimum of two nights and you cap it at a week long reservation versus that same property that has a minimum of two nights but has no cap, or it has a cap of 30 days, well, Airbnb is going to like that property a little better because it's going to be open to more potential guests. They're going to have a better probability of booking it because it's going to meet more people's potential requirements. So you do get a little boost on Airbnb search rankings. Number four, pro number four, no transient occupancy tax. Now check with your local jurisdiction. It's very possible that if you have a guest staying with you for 30 days or more, that's most cities definition of a short term rental. 30 days or less is usually considered a short term rental. So if you're over that, then a lot of times you don't have to pay transient occupancy tax. And what if that tax is 12% or more? You know, it could be less, it could be more. But make sure you factor that into your equation. We'll get into that more in another episode calculating that. But that's a big thing. You might not have to pay that tax. Number five, pro number five, you very likely don't have to deal with regulations as well. In most cities, short term rental again is considered 30 days or less. So if you go over that, they are no longer a short term guest and you can rent as a short term Rental. I would more call this like a midterm stay, but you can get around those regulations sometimes. But make sure to check with your city. Now number six is kind of like a bonus one. But a lot of times when you have longer term stays, those are the type of guests that are going to come back to your property. If they're working on some sort of corporate project that takes a while, maybe a couple years, and they've already stayed at your property and they had a good experience, well, they're going to come back to it because it feels like home and that's what we want. And I have a lot of guests that do this. So it's a really, really good thing to be able to have longer term stays in your properties, but not always. Right? So let's get into the cons and there are several cons I mentioned at this. But just because your occupancy is higher because you have a long term stay, does not mean that your revenue is going to be higher. In fact, when our properties, when my portfolio is doing well, we don't offer long term discounts because even though I might be at a lower occupancy, even down to like 65%, I could still be making more money than if that property was booked up at 100% with a long term discount. So you really gotta factor that in. But you could potentially have lower revenue if you're offering longer term stays with a discount. Tenant laws. So you might be able to get around the short term rental regulations if you have those in your city by offering a stay over 30 days. But, but then you enter into the landlord territory and your tenants, they shift from being guests in most jurisdictions to being tenants and that means they have a legal right to be there at that property and that means you have a whole new set of laws so you gotta make sure you check that out. And this is different depending on every state you're in. Some states are much less landlord friendly than others. So one thing we do when we get a long term stay is we send out automatically via program called Sign Now I've talked about that in a prior episode. Go back and check that out if you haven't already. But this goes out automatically to any of our guests that have stays 30 days or more. It's a lease, It's a lease for the property, but it's easy for them to digitally sign and it just protects us a little more. So that's a really big one. When someone shifts from being a guest to a tenant, you gotta make sure that you're aware of that in your local laws. Number three on the con side, wear and tear. Now you might be saying, Tim, that sounds off because if I have more guests going into my property and leaving my property, well then they're probably going to be messing it up more. It's going to be getting more use versus someone just staying there for a month. But not necessarily. If you've been in the real estate world for a while and if you have long term rentals, you know, sometimes we get someone staying at our property and if we're not checking in on the property all the time, they could have animals in there that weren't allowed. They could just be really dirty or not take care of things. And if you don't find out until 30 days later, well, then there's going to be more wear and tear. So you may want to consider putting in your lease if you have people staying more than 30 days, that you have a housekeeper come once a week or every two weeks, so you can kind of check in on the property, make sure they're taking care of it. So I know that one kind of sounds weird, but that wear and tear builds up. I know some of my long term rentals, sometimes a tenant leaves and they weren't taking care of it the property like we thought they were and it's a really big expense versus the short stays where someone leaves and maybe they scuff a wall needs a little bit of paint or they break a couple wine glasses or something like that. So you can potentially have much more wear and tear that you don't actually know about until you get into that property. Number four on the con side, if you have your own housekeepers or someone that you're contracted with and they're only cleaning your property once a month or every two months, it's going to be pretty hard to keep them motivated. Right. If you've got multiple properties and you're trying to scale and you've got one housekeeper that's handling all these, but you only have one, five, even ten cleans a month, that is not enough to keep them really motivated to stick with you or to be involved as much in your property as maybe you want them to be. So keep that in mind if you're trying to hire your own housekeepers. Of course, if you work with a professional housekeeping company, then this one's not really going to apply too much to you. Number five, on the con side, it's less reviews. If you've got a brand new property that you're trying to get top dollar for we've got to have at least a good fair amount of reviews, I'd say three or four and good reviews before people are really trusting this property over maybe another one. And so if you're renting a really long stays, you're probably not going to have very many reviews and you might not get as much visibility for your long term stays as you otherwise thought. So those are some pros, those are some cons. And one little extra thing I want to add in here that we've seen, it's a little scammy, is that some people might try to book your property for a long term stay 30 days and if you do have that long term discount on there, then they're getting a good nightly rate. But then they might try to cancel it during that stay. Maybe they only stay for a week and your cancellation policy allows for them to cancel after a week with no penalty. Well then they got your monthly rate but only stayed there for seven days. So if you are offering long term stays, you want to make sure that you check your cancellation policy and make sure that someone can't kind of squeak by you and try to take advantage of your rates. So those are pros and cons. I personally love long term stays. A lot of my properties are set up to attract long term stays. So they have great working areas, they have super fast Internet and they've got all the amenities you need for a long term stay. So those are the pros and cons. There is a whole nother set of things that we need to look at though if we actually want to offer long term stays or if it actually makes sense for us to offer long term stays. And that all comes down to the numbers, but it's something that we can calculate. I want to get into it in a future episode so. So stay tuned. Hope you're enjoying the podcast. Remember, you can check out all of our past episodes, a lot of our resources and tips@str riches.com and until next time, I hope you have an amazing, wonderful day. Ciao. If you're looking for a ton of free resources, well you can check out the links in the show notes or head to our website restmethods.com where you'll find free guides, house rules, and my ebook on finding the best short term rental properties. Thanks for tuning in.