3 Reasons Long-Term Rentals SUCK… Airbnb Instead

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What's up guys, it's James here and in today's video, I'm going to talk about my top three reasons why long term rentals suck and why you should consider Airbnb being instead of investing in properties for short term rental, rather than investing in long term rentals.

Now, before we dive into this, if anyone is interested in scheduling a call to talk with me about how I can help you to actually get started investing in short term rentals, then I highly recommend that you click the link down below and you schedule that call, we'll get on a quick 15 minute chat, talking about where you're at what your goals are, and see if there's a way I can help you.

If you're interested in investing in short term rentals and buying some short term rental properties. to reap some of the rewards that I'm going to talk about in this video, then I'd highly recommend scheduling that call with you, because I can almost certainly help you to reach your goals much more quickly and much more easily than going it alone. So I hope you're asking, I highly recommend you check out the link in the description to schedule that quick chat with me.

Now, that being said, let's jump right into the meat of it. Let's talk about number one, my first reason why long term rental suck. And that is minimal cash flow. Now, everybody knows you know, if you if you've got some experience in real estate, there's a few different ways that you make money on your real estate.

Generally, those are going to be through your cash flow, meaning how much money do you make each month from your rent, minus your expenses, your income minus your expenses, that's going to be your cash flow, your expenses being the cost of your utilities, if you as a landlord are paying them, the cost of your mortgage, your insurance, your taxes, those sorts of things.

Now, with short term rental properties, it tends to be exceptionally high cash flow, you know, we can break even on our expenses within sometimes even as little as two months out of the year, and then be cash flowing 3040 $50,000 a year on a property we bought for $500,000. Now, in long term rental land, that is absolutely unheard of. in long term rental, a lot of markets you're seeing actually negative cash flow. And in some markets, you're seeing positive cash flow, but usually you're looking at maybe 100 or $200 a month, if you're buying that property for let's say $500,000.

Now, the real advantage of making your money through cash flow, because there are like I mentioned other ways to make money in real estate, one way you can make money is by building equity in the property paying down that mortgage over the years. And that is great. That's all well and good. The other ways through appreciation.

Now generally, you're going to be able to bank on a stable two 3% appreciation, you know, each year in a relatively stable market. And sometimes you are going to hit the jackpot and you're going to get even more appreciation. And that's great as well. That's a nice cherry on top. But the problem with making money through equity and through appreciation is it's really hard to actually access that money.

So you can't live off that money. And even worse, it's really hard to take that money be constantly reinvesting it into growing your portfolio and reaping the rewards of that compounding effect that you get with the right investing strategy. So of course, yes, you can at times access capital, you can get a home equity line of credit credit a HELOC, you can refinance the property, get a bigger mortgage on it.

But at the end of the day, it's much more challenging and much more efficient to access that capital than to access capital that you gain through cash flow. When that money is coming in through cash flow, it's literally money that is in your bank account. It's not tied up in the equity that property it's easily accessible. And by that means it is easily investable means you can take that money and use it for a down payment on the next property and very easily recycle it into growing your portfolio.

So minimal cash flow is one big reason why long term rentals just frankly suck. In order to hit those bigger cash flow numbers, you need to have a way bigger and way more expensive property or you need to do something else, which would be investing in a lower tier market. And that brings me to point number two, which is that long term rental investing is actually pretty high risk. And what I mean by that is of course it's pretty stable. Of course real estate investing is tried and true. But with the wrong type of property, you actually have a very low margin for error.

If you're using a long term rental strategy, especially if you're doing it in single family home purchases not multifamily, then you're going to be dealing with a much lower margin for error, meaning that if something goes wrong at the property, it can very quickly eat up that minimal cash flow that you do have. If the property sits vacant, it can very quickly and easily eat up that minimal cash flow that you do have. And by doing that, it not only you know takes money away from you sure, but it also then delays your ability to get to get to that compounding that hockey stick curve.

So every time that you have that, you know $5,000 hit Because the roof goes, not only is that slowing things down taking money away from you sure, but it means that it's that much longer I like to look at in terms of time, right? That means that it's six months or 12 months longer before you hit that hockey stick growth in your portfolio, because again, you have a very small margin for error with long term rental properties, because you're only making in a year, what we can oftentimes make in a month or two months with a short term rental property.

So because of that, because of the short term rental property, you know, in another video on this channel, later this month, I'm going to be breaking down exactly how much money I made in the first three months of having my short term rental property live. And this is a property that we bought for just over $500,000. And that on long term rental would generate about 25 $26,000 per year.

Now, we made that in the first month on short term rental. So now we've just got this huge, huge margin for error, we're now with our investing, if we make some mistakes along the way, if things happen, we have the buffer to deal with those. So you just have a way lower risk and way higher margin for air with short term rental. And I know that's really counterintuitive. A lot of people see short term rentals being really risky, when in reality, the opposite is actually true, if you're doing it the right way.

Now, the third reason that I find that short term rental is way better, and that long term rental sucks is tenant problems, you will not believe the number of people that you speak with, if you start talking to long term rental investors even just look here on YouTube, the other videos, everyone's talking about the evictions they have to go through everyone's talking about the tenant problems they inevitably have, if you talk to real estate investors, they'll always tell you if they've been in the game for a while, it's not a matter of if you have a tenant problem, it's a matter of when you have a tenant problem.

Now, I don't know about you, but I didn't want to spend half a million dollars on something or several $100,000 on something and then have someone be able to stay in that property legally and steal it from me for a period of time, and me not have the legal right to go and take that property back from them. That is just absolutely crazy, right.

And so just from a purely investing standpoint, I'm not talking about any of the ethics behind I'm not talking about the social responsibility of landlords, I'm just talking about, hey, we look at this from an investing standpoint, show me another investment that you can make for hundreds of 1000s of dollars, that someone else could just come in and steal that away from you. And you would have limited legal recourse to take it right back, you have to wait several months go through a whole lengthy process, just to take that investment back that is rightfully yours.

So that's really crazy. That is a challenge. Having tenant issues like that is not something that a lot of people want when they get into real estate, and they're looking for passive income right.

Now, of course, with short term rental, you have additional problems, additional challenges with gas from time to time. But the nice thing is that you ultimately have a lot more control over mitigating those issues, dealing with them resolving them, they're usually getting resolved within one or two days as opposed to three to five months.

Now the other really nice thing is that you can actually outsource dealing with those problems, because you have such a high margin in short term rental investing, with long term rental investing, you tend to be doing it yourself, you know, all the property management, whatnot, because there's just very little margin to pay a property manager or short term rental, there's tons of margin to be able to easily pay a property manager to take all that headache completely off your plate.

So then if you put on the cap of an investor, rather than getting emotionally attached to this property and wanting to know everything else about it, you can just put on your investor hat and look at it purely as a financial investment that you've made.

So now suddenly, you have someone managing that investment for you, and not is when you have truly passive income. So that is the beauty to me of short term rentals. That's three of my top reasons why long term rental sucks. And this is not an all encompassing list. There are a whole bunch of other reasons I'm sure you can think of some of you do, feel free to share them in the comments down below. Why should long term rental sucks

Now, again, it's not to say that you should never invest that way in your portfolio. But these are just a few of the main differences between short term rental and long term rental and why in my mind, short term rental plays a really big role in anyone's portfolio, it really should at least.

So if you want to start adding short term rentals to your portfolio or if you want to get started investing in real estate and actually purchasing properties or in a cash flow 3040 $50,000 a year for you actually putting that profit in your pocket, have control be able to reap the rewards of this type of investment that is drastically underutilized and under leveraged right now, then just click the link down below in the description schedule a quick 15 minute chat with me and I'd be happy to talk to you about how we can make that happen, what your goals are and let's put a game plan together for you to actually achieve those so you can be off to the races.

So again, just click the link down below to sign up Real quick call with me. I would love to chat more and see how we can help you to grow your short term rental investing. And as always, I am very aware that a lot of you guys that are watching this video are not yet subscribed to the channel. You're not subscribed here, what are you doing, make sure you hit that subscribe button so you can stay up to date with the channel. We post two new videos every single week. I would love to stay in touch. I would love to hear from you and continue to have you be a part of this growing community we have here on YouTube.

So I'm really excited about just make sure you click that subscribe button. If you got value from this video, click that like button, give it a thumbs up it really does help me out a lot. I'm really trying to grow this channel and every single like really does help out a tremendous amount. So all that being said, I hope you enjoyed the video and I'll see you in