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Special Feature

AirBnB vs Traditional Rental

4 August 2016

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With over 2,000,000 listings in 34,000 cities worldwide, Airbnb is gaining traction in Malaysia. What is Airbnb and what are the pros and cons of Airbnb renting vs traditional rental arrangements? Which is more profitable? Let’s compare the two in today’s article.

"Book homes from local hosts in 191+ countries and experience a place like you live there,”According to Airbnb, it was founded in August of 2008 and based in San Francisco, California, it is a “trusted community marketplace for people to list, discover, and book unique accommodations around the world — online or from a mobile phone or tablet”.

On Airbnb, you can easily find an apartment for a night, a luxurious mansion for a week, or a villa for a month for your overseas excursions regardless of budget and length of stay. As a landlord, you can also list your property on Airbnb in a breeze and start welcoming international guests to your otherwise unoccupied property.

With the market softening and rental rates reaching a plateau in recent years, Airbnb is gaining popularity in the country as an alternative income generator from investment rental property. Listing on Airbnb and renting your property on a short-term basis for vacationers offers advantages, but there are also some not so obvious drawbacks, which is also the case for traditional rental arrangements

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Traditional renting is a type of long-term lease that averagely lasts at least 3 to 6 months. One obvious difference when compared with Airbnb renting is that traditional renting will provide a more stable source of income. However, Airbnb renting generates higher rental yield in general

A long-term lease guarantees occupancy for a longer period. However, facing difficulties securing a long-term lease, you might want to consider Airbnb as an alternative. This reduces the hassle of repeatedly going to the marketplace to look for new tenants. In long-term lease agreements the responsibility for utility costs like electricity & water are also usually the responsibility of the tenant, not the landlord. In comparison, you would need to fork out more maintenance fees and also furnishing fees for Airbnb renting.

Stability is a strong point for traditional renting, but when you have a problematic tenant, that also means you’ll be stuck with the problem for some time. Terms and conditions are also more rigid for traditional renting. Whereas for Airbnb renting, there is more flexibility in changing the terms and conditions, and generally vacationers do not occupy longer than a month.

These are some key points when considering Airbnb renting and traditional renting for your property. Carefully weigh all benefits and drawbacks, and consider which option works best for you.