Short-term rentals have become one of the most popular ways to make extra income on existing properties, especially for those who own property in tourist hotspots.
But last week, on radio talk show The Ramsey Show, Dave Ramsey told his listeners that using sites such as Airbnb or Vrbo to rent their homes is much more challenging than most assume, and that at the end of the day, it’s really not worth it.
The Ramsey Show
Hosted by finance author Dave Ramsey, The Ramsey Show is a popular podcast that helps listeners build wealth and take control of their lives. Ramsey takes calls from listeners, and then gives tangible financial advice.
And last week, one caller named Cathy, asked Ramsey whether or not she should buy property and use the popular rental site Airbnb to turn it into a lucrative short-term vacation rental.
Ramsey Said No to Airbnb
In response to Cathy’s question, Dave Ramsey told her in no uncertain terms that Airbnb is not the best route when it comes to financially stable real estate investments.
In fact, his exact words were, “You have a very good life. Don’t go screw that up with an Airbnb.” Ramsey went on to explain his reasoning, stating that using Airbnb or other short-term rental sites such as Vrbo are not worth the challenges they present.
How Does Airbnb Work?
Before understanding Ramsey’s response, it’s first important to know just what Airbnb is and how it works. Airbnb or Vrbo are short-term rental sites that connect property owners with customers looking for a place to stay.
In the past several years, these sites have been the center of several debates; some cities and states have completely banned them as they negatively affect businesses, such as hotels, and lead to a direct increase in monthly rentals for long term residents.
Airbnb as a Consumer
As a consumer searching for the perfect vacation rental, Airbnb can be a dream. Well-designed, clean, beautiful, and perfectly located homes and apartments are now available instead of just one-room hotels.
And even though Airbnb prices have increased by 36% since 2019, they are often still the more affordable option when compared to hotel rooms.
Property Owners Can Make Big Money With Short-Term Rentals
While Airbnb tends to be bad for an area’s economy but great for the customer, whether or not these short-term rentals are a good choice for property owners is still up for debate.
Some property owners have reported huge financial gain since renting their homes or apartments on Airbnb. With an average price of $200 per night in the USA, by owning a property in a tourist hot-spot, owners could make upwards of $8,000 a month, which is far more than they could ever get with long term renters.
If Airbnb Is so Lucrative, Why Did Ramsey Say No?
On The Ramsey Show, Dave Ramsey explained to his listeners that although the statistics may look promising, short term rentals through Airbnb are not nearly as convenient or lucrative as it seems on paper.
His first point was that many calculate how much a property owner could make if the home was rented for every night of the month, which is wildly unlikely. People’s vacations often fall during the same weeks of the year, and you’ll also struggle to fill the home during the weekdays. Finally, if you live in a tourist destination, the house will likely sit empty during the off-season.
Short-Term Tenants Will “Destroy Your Property”
Ramsey’s next point of contention with short-term renters is that they are far less respectful of the space than those who stay long term.
Airbnb customers will treat your home like a hotel and “they’ll destroy your property,” Ramsey told his caller. He also notes that it is likely these short-term renters are in vacation-mode, and you’ll therefore have to field noise complaints from your neighbors.
Cleaning an Airbnb Is a Full Time Job
Even if a few of the short-term renters don’t totally trash the place, it’s still a full time job to clean your home or apartment in between guests.
People expect Airbnb rentals to be as clean as any hotel, so if you have new renters every few days, that means deep cleaning the entire space several times a week. While you can choose to hire a professional cleaner, that’s money you wouldn’t have to spend for long-term rentals.
You’re Always on Call in Case Something Breaks
When running an Airbnb home, you need to ensure absolutely everything is functioning perfectly before guests arrive. That means spending money on light bulbs, toilet paper, fixing the leaky sink, or replacing the grout, all of which cost money that really adds up over time.
And arguably, the worst part about running an Airbnb is that you are always on call if your renters need you for something. Questions about where the towels are or complaints that the shower pressure isn’t enough will arise day in and day out.
The Stress of Short-Term Rentals Isn’t Worth It
Ramsey says that maintaining a short-term rental simply isn’t worth the stress it comes with. From responding to requests online before the guests even arrive all the way until they leave the home a complete mess, renting your home to short-term tenants will take up a ton of your time.
He explained his opinion clearly when he said, “This is not: ‘I’m going to just go to the mailbox and collect a bunch of checks. Airbnb is a lot of work.”
Short-Term Rentals Will Become More Costly in the Near Future
Finally, even if a property owner does decide the pros outweigh the cons for short-term renters through sites such as Vrbo or Airbnb, they could be refused the right to do so by their state government.
Because of the major issues these sites have caused, including extreme increase in long-term rental prices, cities and states around the country have started restricting which residences are eligible for short-term rentals. Even those that are deemed suitable will require expensive licenses and be forced to pay increased property taxes. So in the very near future, Airbnb may not be as easy or profitable as it once was.
