Passive income investing is a great way for anyone to supplement their primary income, save for retirement, and even pursue financial freedom. The best part is: there is more than one way to do so. The following guide will walk you through two passive income options, Airbnb vs Vrbo and help you determine which might be right for you.
The main difference between Vrbo and Airbnb lies in property availability. Vrbo requires listings to be entire properties, while Airbnb allows owners to list shared rooms and spaces. Though both platforms are open to a variety of property types, ranging anywhere from apartments to treehouses, the availability specification has resulted in fewer listings on Vrbo.
While both sites offer relatively similar user experiences for property owners, there are a few features that make the platforms themselves different. Most notable, Airbnb has an intricate reviews system allowing guests and hosts to document the stay. Vrbo has a similar reviews option, though the verification process is slightly less thorough.
As far as listing a property goes, Vrbo requires owners to showcase at least 15 pictures of the home. Airbnb users can get away with as few as five photos while still appearing in mobile search results.
Another difference between the two listing platforms is the listing fee. Property owners using Airbnb can list their homes for free, but a 3 percent service fee is attached to each reservation. Vrbo, on the other hand, requires property owners to either pay an annual subscription or pay-per-booking. Annual fees on Vrbo are typically around $500, while the pay-per-booking option subtracts 8 percent from each reservation.
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Airbnb Vs. Vrbo: Which Is Better For Owners?
Airbnb and Vrbo both offer convenience and efficiency for homeowners; although, one platform could be a better fit depending on every owner’s personal situation.
There are a few factors to keep in mind as you search for the right place to list your passive income property. Will the property be listed year round? Do you have any existing short term rentals? Are you prepared to rent out the entire property? Read through the following pros and cons to help determine which listing platform is right for you.
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Airbnb For Homeowners: Pros & Cons
Airbnb is an attractive option for homeowners because of its widespread appeal among prospective renters. According to Airbnb, there have been over 500 million guest arrivals since the website’s launch. This means unprecedented access to tenants for homeowners and passive income investors, which could translate into consistent bookings and steady cash flow. The potential has even led some investors to start an Airbnb business where they own and operate multiple Airbnb rentals.
Another benefit to Airbnb is that it allows homeowners to create separate listings for each room or even partial rooms in a property. This feature can allow aspiring investors to bring in extra income while they are still getting a feel for short term rentals—income that can then be used to purchase their first rental property. Additionally, Airbnb does not charge owners a fee to create a listing. This benefit can help owners fine tune their listing without worrying about added costs.
There are a few potential cons for homeowners to consider. For example, due to the large size of the platform homeowners may face steep competition using this website. Those who live in popular markets may find it difficult to secure bookings in the first few months, especially as they work to build up positive reviews. A good way to get around this is to offer a discounted price for your first few guests. This will attract new tenants and hopefully land your first few bookings.
As a whole, Airbnb can be a great opportunity for beginner investors to familiarize themselves in short term rentals without making a big commitment. The platform’s many features are designed to help guests and owners alike rent properties with increased ease. This is a great fit for homeowners who are looking to dip their toes in the water before jumping into the world of short term rentals.
Vrbo For Homeowners: Pros & Cons
Vrbo’s target market is slightly different than other online listing platforms. Rather than focusing on quick travel accommodations, Vrbo has built a reputation around high quality vacation experiences. This is largely due to the requirement that listings be for entire properties rather than shared spaces. In fact, one of Vrbo’s main market points is the privacy tenants are offered. Many homeowners find this to be beneficial because it signals the opportunity to book great tenants, and at potentially higher list prices.
Many experts will attribute the success of Vrbo to the user friendly browsing experience. The website offers expansive search functions and round the clock customer service for guests. Homeowners can use this information to optimize their property listing accordingly and get more eyes on their home (and hopefully more bookings).
The biggest frustration homeowners may find with Vrbo is choosing between the two models available for listing fees. Owners can either select a pay-per-booking option, which starts at 8 percent per reservation; or pay for an annual subscription to Vrbo for $499. These costs can seem steep when listing your first rental property, and many websites will even encourage homeowners to use the pay-per-booking option for simplicity. In reality, homeowners should utilize a strong rental property calculator and decide based on their anticipated cash flow. One study found that if you are expected to make more than $7,000 in annual rental income the subscription will help maximize your profits.
Overall, Vrbo can be a great option for homeowners who are able to provide a traditional vacation experience. The website only requires an entire property be listed, but a few bonus features couldn’t hurt. If you operate in a popular tourist destination or have a unique property to list, it is worth considering Vrbo. Make sure you are thorough with your rental property calculations, and you may find this platform to be extremely profitable.
Short term rentals can be a highly lucrative investment opportunity, but property owners will need to put in some thought before the cash flow starts. Take a close look at Airbnb vs Vrbo before listing your property anywhere. While both sites are known to offer the same benefits—access to millions of potential tenants, rental income, and more—there are a few differences. Review the options and select a website that makes sense for your passive income portfolio.
We want to hear your opinion: which is better Airbnb or VRBO? Leave a comment below and tell us what you think.