How to Convert Your Airbnb Into a Long-Term Rental

Do you want a more consistent flow of income? Or spend less time managing your property and constant visitors? You’re not alone.

Penang recently implemented restrictions on short-term rentals on the island to combat over tourism and preservation of the neighbourhood’s livability. While tourism is on the rise due to a weakened ringgit, that trade off might feel like a slippery slope.

If your Airbnb hasn’t seen any bookings lately and you’ve had some trouble filling vacancies, it might be time to convert to a long-term rental for your future. Here’s a list of steps that you can take to make that a reality while considering a way to keep your options open with different rental lengths.

Long-Term vs. Short-Term Rental

Make sure you always assess your options and research the market so you know what the smartest options for your rental business will be.  

Both long-term rentals and short-term rentals have pros and cons. However, the state of the world today, we need to be prepared to adapt in order to make the most out of our return on investment. Location, financial objectives, and time are just a few of the variables that should be taken into consideration when switching from a short-term to a long-term (and vice versa). 

Always weigh your options and conduct market research about your specific property to determine the best course of action for your rental business.  

Benefits of Long-Term Rentals

When it comes to real estate investing, long-term rentals might just be able to work out for you and your financial goals. The following are some of the main advantages of long-term rentals:

• Cash Flow: You’re guaranteed to receive rent from your tenants for a fixed period of time (given that you’ve screened them first). This will give you a positive consistent cash flow from your longer tenancy length to pay for your property loan.
• Less Advertising: Once you get a tenant, you no longer need to advertise your unit. Compare this to short-term rental where you constantly have to attract new guests by advertising. This can also take the form of updating to trendy furniture every few months.
• No Utilities or Frequent Upkeep: Long-term tenants would typically cover utilities (as long as it’s specified in the agreement). They also take care of cleaning and basic maintenance, something you no longer need to worry about. 
  
  

Challenges with Short-Term Rentals

Competition is set to get tougher as Airbnb grows in popularity and more people invest in the industry. The drawbacks of short-term rentals have been made more apparent as the market becomes oversaturated. 

• Operational Tasks: Running a short-term rental successfully requires time commitment and effort, such as cleaning and communicating with guests. Even if you could hire a full-time property manager, the cost may outweigh the rental income.
• Seasonal and Timing Issues: If you’re relying on the local market, a lot of vacation rentals are only booked around holidays – this means you could be stalled on filling them the rest of the year. Tourism from overseas also has high traffic and low traffic seasons.
• Have to be Fully Furnished: Short-term rentals tend to compete with hotels for a quality short stay. Because of this, units have to be equipped with everything a guest needs while also looking stylish.
  
  

How to Transition Your Rental

It doesn’t matter whether or not you live close to the vacation rental you’re interested in converting to long-term. Many of the steps you can take to make that change can be done virtually. Or you can always find someone for property management.

Related read: Rental property management essentials

1: Familiarise Yourself with Traditional Landlord-Tenant Laws

Always do your research and make sure you know the basics of the rental laws in your area so you can always follow the law as a landlord. Review what you know and what is expected of you.

2: Research Your Local Competition and Market

Double check your potential profitability by looking at rental rates for your property.

You also want to make sure the pricing you set is comparable to the market, so research the rental amounts for the units in your building and your area. Analyse the local market trends and gauge demand for long-term rentals.

Take other factors into account for your price:

• Location
• Amenities
• Furnishings
• Target Tenant Demographics
  
  

3: Assess and Prepare Your Rental

Chances are, if your unit was an ex-Airbnb, it might need some changes to fully fit as a long term rental. Take the time to assess the layout and add in any missing components for value (e.g. washing machine). If you want to downgrade and sell some of the spare furniture, go right ahead!

Do a thorough cleaning and make basic repairs so your tenants don’t run into faults early on.

4: Write Your Tenancy Agreement

You need to draw up an official tenancy agreement, which you can get in a number of different ways. You can write it yourself, find a similar contract, or enquire from an agent. SPEEDHOME offers free lawyer-approved online agreements if you need one!

This is where you spare no detail, because the agreement is your first line of defence. Decide how long you’d like the tenancy to last.  Revise your rental policies and terms to align with long-term rental requirements. Establish clear rules regarding rent payment, maintenance responsibilities, including clauses for security deposits, utilities, etc.

Once you’ve done all those steps, list your property to look for a good quality tenant! Make sure you screen them and conduct background checks to verify employment and income.

Virtual Landlording is Always an Option for You

Most Airbnb landlords don’t live near their vacation rentals so it might be intimidating for you to make that change. Don’t let distance deter you from transitioning into a long-term rental however. Virtual landlording is the perfect answer!

With technology and services today, the whole rental process can be easily handled online. From property advertising and video tours to tenant applications and automatic rental collection. There are increasingly more easy and trustworthy ways to manage your rental investment.

To sum it up, converting your Airbnb into a long term rental can give you several upsides. This includes more consistent income, reduced operational tasks, and a stable tenant base. With the right strategies, you can maximise your return on investment. 

If you need help or have more questions, you can always reach out to us here on SPEEDHOME. Here you can find anything you need to manage your property all in one place.