Condos offer a unique option to real estate investors. You can own a condo and use it to make passive income. One of the most common and popular ways to do this is to actually rent it out to someone else. The idea is, if you can pay $1,000 a month for a condo, and rent it out for $500, you will make $6,000 profit. Unlike with renting a home, you have far fewer expenses to cover and even if you need to cover repairs, they are broken down in the assessment.
The other advantage to this is that because most of them are affordable, you can buy more. Some investors rent out multiple condos and in fact, prefer renting and managing them to a home because it is a lot less work and responsibility owning a condo than an entire property. Your responsibilities as owner of the property are not relinquished simply because you are renting the property out.
Difference Between Renting & AirBnb
A new option has emerged for real estate investors and it has actually create a new generation of investors who now see condos as not only a great passive income option, but as a way to create a business that has minimal responsibilities. Imagine being able to rent out a condo to different people each week. Each week, they pay you $750 and you have a day or two to get the place cleaned before the next party arrives. Yes, it sounds more like a hotel and in a way that’s what it is.
The AirBnb style has made it easier than ever for people to find short-term options, especially for traveling. You can stay at someone’s home with them, you can rent a room in their house, or even rent the entire property if you want. This variety is as accommodating, and in some cases more, than hotels. The best part is the app which makes everything far easier including marketing, getting new clients, collecting payment, communication and more. But, it means you will not have long-term renters.
Things To Think About With Renting
There are many advantages property owners receive with long-term renting. You do not have to deal with new tenants each week, you have more consistency in who is living in your property and you also can usually get rentals passed with the condo board faster than with AirBnb. Some condo associations will not allow their units to be put on these apps. They will however, allow for the unit to be rented out.
This is something you want to research before you buy a property, and it includes properties that belong to homeowners associations as well. These restrictions can have an impact on your options and you need to know what the associations will allow and what they will not allow. You also want to look at the challenges that come with long-term renters, including if they struggle to pay and how things will go with transitioning them out.
Things To Think About With AirBnb
You are going to get your money with AirBnb because the app makes sure of it. You also are going to get to know a lot more about the people that are staying at your place. There are dozens of advantages that you have available to you with the app and another to think about is that you can also take advantage of popular times in your area like if you have spring break crowds or something like that.
Most weeks you can rent your condo out for $500-$750 as an example. However, during spring break, you can rent it out for twice that amount. That’s a major difference and the extra income is always appreciated. You cannot charge long-term renters with higher prices if they have agreed to a lease. You also have to think about the advantages the apps give you as far as being able to manage everything from your phone without having to be near the property.
Don’t Forget
As you review your options, it’s a good idea to consult with a realtor, especially if you are not sure what to do. Realtors know the local regulations, can help you get started or even give you advice on whether or not renting or selling may be the best option. Sometimes, if the monthly costs are going up too much, it’s smarter to take a profit than hope for passive income. Each property is different and that’s what you need to remember when doing your research. That’s why it’s valuable to speak with a realtor.
