Why do I prefer long-term rentals over short-term rentals?
I want to share with you today why I prefer long-term rentals over short-term rentals to build wealth.
My Portfolio Built with Long-term Rentals
For a couple of reasons, most of my portfolio today has been built with long-term rentals. Long-term rentals are nice because you can do your own thing, like have decent-paying jobs and good careers, and enjoy what you're doing. For me, it's more important to build wealth over the long term because that's the wealth that stays and allows you to go and live in Hawaii for a month or go and travel in an RV for a summer, and just that residual income is so important.
About Short-Term Rentals
When you list your properties on Airbnb, you're signing up to be a hotel; you become part of the hospitality industry. So you get people messaging you at 10 p.m. trying to check in, and they can't figure out the code to the front door, or they find a hair in the drain, or you're a hotel, which is cool. You can curate fun experiences for people, and you can cash flow a lot more.
For the last couple of years, Airbnb has been the coolest thing everyone's talking about, and you can make a lot of money with short-term rentals, but there are downsides to short-term rentals, like everything else in life, right?
If someone loses their job, they're not going to go spend a week in wherever on Airbnb; that's usually extra money that people have when they're on vacation or traveling somewhere for work. And these are all great reasons to own short-term rentals.
About Long-Term Rentals
What I like about long-term rentals is that it has been a tried and true, proven method of building wealth for average people for decades. You buy a good single-family house in a good area; it doesn't have to be great; you keep it up, maintain it, and rent it to someone who is going to stay there for 2–5 years or more. They'll take good care of the place because they live there full-time. If a maintenance issue comes up, they let you know about it. So you're able to jump on it.
But most of all, they're going to work every single day to provide a living, because we all have to do that; we all have to earn an income, and they need to stay somewhere, and shelter is one of our basic needs. So they're essentially becoming an employee for you, and you're able to provide a great quality of life.
Houses are so important to us; we even saw this once the pandemic hit, when your house became everything. People are working from home, and people are staying at home a lot more. And so now more than ever, renters and homeowners are all reevaluating what they want and where they live. And it's a great opportunity to be able to buy something with 20% down, maybe less, and then not have to worry about a lot of little things that could go wrong, or if the economy shifts and suddenly no one's traveling.
Real estate can be a great tool to build wealth and retire early.
Why do I Prefer Long-Term Rentals?
I prefer long-term rentals because they're predictable. People need a place to live; that's money they need to spend anyway. And if you can get good 30-year mortgages with fixed interest rates and payments that do not change every month, your overhead stays the same, and rent historically goes up every single year with inflation.
So if your payment is, let's say, 1500 bucks, it shouldn't change more than a few dollars as taxes and insurance change. Rent should go up, especially if you buy a good house in a good area. The probability that your rent will go up over the next 10 years is high which is pretty good.
But, regardless of whether you choose long-term or short-term rentals, I believe you will achieve financial freedom if you take action today!
So thanks for taking a minute to read. I just wanted to hop on here and give you my two cents as you guys are discovering everything that comes with investing in real estate.
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