Everyone is searching for the best way to earn an additional income without too many risks and real estate investing provides ample opportunity. However, it is important to understand your options to decide what best suits your lifestyle. Here, we will take a look at rental properties, specifically Air BnB versus to buy and hold. Both property types have provided owners with substantial streams of income, and the deciding factor frequently boils down to personal preference and overall goals. Below we’ll explain the differences so you can decide for yourself.

Air BnB Properties

Air BnB properties have become quite popular and because they are oftentimes in prime tourist locations, rental prices can be on the upper end of the scale in comparison to buy and hold properties. Air BnBs offer people the option of a short-term rental and are much more sought after than even an extended stay hotel because of the options they offer. From individuals to families, AirBnb is a go-to choice because it gives the privacy of a home without a long-term commitment. They are ideal for visitors who want to experience an area whether for vacation, solitude, or assessing an area in hopes of relocating down the road.

With Air BnB properties, more involvement will be required. These properties must be furnished, stocked with certain amenities and maintained more frequently. From the higher rate of client turnover, cleaning necessities, and overall upkeep, they often result in more headaches. Also, because many of them are in high demand locations, you can charge higher rental rates in comparison to traditional rentals, although your upfront investment and ongoing costs will likely be more costly too.
The Air BnB market is still fairly new and undeniably a growing trend. It indeed offers income potential, but because regulations can vary widely on short-term rentals, occupancy rules, in addition to utility, landscaping, maintenance costs, and Air BnB fees, so be sure to conduct important research upfront if your preference is short-term high-end rentals.

Buy and Hold Properties

The buy and hold properties are a favorite of many investors as well. This type of real estate involves a purchase intended to hold on to for the long haul. It is the more traditional of rental properties whereas the investors/owners rent out the property, usually long-term, while they collect a monthly rental income as the property increases in value. In general, a good buy and hold property will result in a return on investment of around nine percent annually.

This strategy has several advantages for the novice and experienced investors alike. The property types range from commercial buildings and apartment complexes, to vacation rentals, multi-family properties, and move in ready homes. Most buy and hold properties will involve long-term leases or rental agreements meaning that you’ll experience quite a bit less turnover, and routine maintenance and upkeep is much less demanding than that of Air BnB properties. Also, with buy and hold properties there are typically tax advantages including deductions and write-offs.

Summary:

Regardless of the rental investment you pick, it’s important to realize the short-term Air BnB’s will require more attention than long-term rentals and you’ll need to decide if you’ll rely on a property management firm to handle the details or if you prefer to be directly involved.