An Airbnb is a job, not an investment
This is the big one. Managing one Airbnb is more work than managing 25 long-term rentals. I'm not exaggerating.
A long-term tenant signs a lease, pays rent every month, and calls you when something breaks. An Airbnb has a new guest every few days. That means cleanings and turnovers, restocking, guest messages at all hours, reviews to protect, pricing to adjust, and something getting broken or worn out all the time.
If you buy an Airbnb, you're not buying passive income. You're creating a job for yourself. That's fine if you want the job, but go in knowing that's what it is.
It's not as profitable as people think
Everyone sees the nightly rate and does quick math. Then they forget about cleaning fees, platform fees, utilities, internet, supplies, furniture that wears out, empty nights in January, and their own time.
Across my own units and what I see around Buffalo, a well-run Airbnb typically nets something like 10 to 20 percent more than the same property would as a long-term rental. That's real money, but it's a lot less than most people expect, and you earn it with significantly more work.
You leave more money in the deal
To get a unit ready for guests, I usually spend $15,000 to $20,000 on furnishing: furniture, beds, linens, kitchen gear, decor, smart locks and photos. That money doesn't come back when you sell. Furniture doesn't hold its value, and it wears out faster with a new guest every few nights.
So on top of your down payment and closing costs, you've got more cash tied up in each unit than you would with a long-term rental. That eats into your return.
Pick houses with a lot of bedrooms
If you're going to do it, buy bigger. One- and two-bedroom units don't work well as Airbnbs here, because they're competing directly with hotels. A couple or a solo business traveler can just book a hotel room.
Where Airbnbs win is groups and families: wedding parties, Bills weekends, sports tournaments, families visiting for the holidays. They want three, four, five bedrooms under one roof, and a hotel can't give them that. That's where the demand and the better rates are.
When an Airbnb does make sense
- It's actually your vacation home. If you'd own it anyway and use it yourself, renting it out the rest of the time to cover costs makes a lot of sense.
- You live right next door. If the Airbnb is the other side of your double or the house next to yours, managing turnovers and problems gets a lot easier.
- You want the work. Some people genuinely like hospitality. If that's you, it can be a good business. Just treat it like a business.
For everyone else, especially people building a portfolio, I usually recommend long-term rentals. They're simpler, they scale better, and you keep your evenings.
Still thinking about it?
Read my full guide to buying an Airbnb in Buffalo for the rules, insurance and setup costs to check, or send me a property and I'll tell you honestly whether I'd run it as an Airbnb or a long-term rental. You can also run the long-term numbers yourself with my rental calculator.
Written by James Wangelin, associate real estate broker with eXp Realty. Figures are my own experience and general observations, not a guarantee of results.
Airbnb or long-term rental?
Send me the property and I'll tell you what I'd do.