Why Alcove is Better for Renting Out Your Properties than AirBnb

Alcove Team ยท 6/8/22

Why Alcove is Better for Renting Out Your Properties than AirBnb

Airbnb.com took the world by storm when it disrupted the travel and hotel industries. Just ten years ago, it was much more difficult to rent out extra rooms in your home and generate passive income.

Renting through AirBnb made it easy for landlords to make extra money through their trusted platform.

With new technology like AirBnB, a whole new wave of property management has arrived. However, AirBnB and short-term rental sites similar to it sit on one end of the rental spectrum when it comes to renting out properties. In this article we will list some reasons why renting through AirBnB might not be for you.

Risk-Reward of Short-Term Rental Sites

Short-term and vacation rental sites like AirBnB might generate more income than traditional renting, but the workload and risk is much greater as well. With a marketplace like AirBnB, landlords and investors will still need to provide essential services to their tenants like cleaning and maintenance, and the risk of high turnover does not bode well for consistent cashflow.

Additional risk of the AirBnB or short-term rental model is that in many city jurisdictions, operating a live-out business is illegal.

The city of Atlanta recently passed regulations noting that AirBnB hosts cannot own more than two short-term rental properties (STRs), and if they do, one must be their current residence. They have also imposed additional fees and taxes associated with operating STRs. The enforcement of this begins September 1, 2022.

While you can read up on your own city's regulations surrounding this, be weary of the risks if you're considering platforms like AirBnB, VRBO, HomeAway, or others.

Traditional Renting = Cashflow

The other end of the rental spectrum is traditional renting, where you self-manage or hire a property manager for your properties. Going this route means that sourcing tenants, dealing with leasing, turnover, maintenance, and more will put a larger dent in your pocket and your time.

This strategy is less risky, for obvious reasons, as you can be selective to your rental population. Additionally, homeowners will experience decreased turnover because your tenants occupy the space for longer periods of time.

With traditional renting you generate less income than AirBnB, but the benefit is that you also de-risk the income. Traditional renting allows more consistent cashflow with this method.

Alcove's Per-Bedroom Model

While traditional renting still encompasses most of the rental space in the US, there are new modes of income for investor-owners that balance both the high reward of AirBnB and the lower risk of long-term rentals.

Alcove sits in the middle of that rental spectrum.

With Alcove's model, you will lease your home out by-the-bedroom on per-bedroom leases. You can generate above market returns through per-bedroom leasing (over 15% NOI increase on average), while also de-risking your assets from high turnover due to longer retention periods of tenants.

Compared to self-management, Alcove does all the heavy lifting of sourcing quality tenants, furnishing the space, and providing essential coliving services on top.

All that said, renting on the Alcove platform is less work overall, but with the added upside of higher returns.

Alcove is better for renting your property as an investor-owner because you will see:

  • Increased market returns and NOI (AirBnB generates above market returns for landlords as well, but the occupancy is much lower due the ephemeral nature of travel)

  • Decreased turnover and longer tenures (high-retention that averages on 15 months per tenant means more consistent cashflow and less work overall)

  • Decreased seasonality (AirBnB sees decreased web traffic during certain seasons compared to others, because we rent long-term you won't be facing seasonal trends)

Learn more about how Alcove can get your property leased up quickly.

Meet with our partnership team (partner@alcoverooms.com) to discuss much rent you can generate above traditional renting: https://alcoverooms.com/homeowners