6 Advantages of Owning a Turnkey Rental Over a Vacation Rental
A turnkey rental has a number of advantages over vacation rental properties. If you’re just getting started in real estate investing and trying to decide whether you should run an Airbnb or buy a turnkey rental, be sure to review the following advantages before you make your choice.
You Choose Your Residents
When you list your vacation rental on Airbnb, VRBO or another vacation rental site, you’re pretty much stuck with whatever resident you get. The guest gets to decide where they stay, not you. You have almost no control over who stays in your property. As long as they pay the money and aren’t banned for some reason, they get to use your vacation rental.
With a turnkey rental, you have complete control over who your tenants are. You can do background checks, establish minimum income requirements and even personally interview applicants if you want.
Lower Vacancy Rates
Vacation rentals have much higher vacancy rates. You might have a one or two night stay and then it sits vacant for three nights or more. Even if you enact minimum stay durations, you face vacancies in between each guest. Over time, those vacancies really add up. In a year’s time, if your vacation rental property is vacant for just two nights each week, that’s a 28% vacancy rate.
Turnkey rentals have some vacancy as well, but only in between leases. For the remainder of the time, you have rent money coming in on a regular basis every month. For a one-year lease, you can expect to have your turnkey rental be vacant for a month while you prepare it for the next tenant. That’s less than an 8% vacancy rate annually.
Lower Turnover Costs
Every time a guest vacates your vacation rental, it costs you either time or money or both. Turnover costs for vacation rentals include cleaning and sometimes repairs. The difference is that this occurs multiple times, sometimes as often as every other day. Even if you include this cost in the rate, you sacrifice price competitiveness by doing this.
Turnkey rentals require cleaning and maintenance, too, but usually only once a year, in between annual tenants. That’s a tiny fraction of what you have to spend for vacation rental turnover costs.
Appliances and Furnishings Don’t Need to Be Maintained
When you have a vacation rental, you have to keep it furnished and with working appliances. If a guest arrives and something’s not working, you’ll get that phone call and have to take care of it immediately. That can mean running to the store at night to pick up a new microwave or toaster. It can mean sending a repairman out on a weekend to fix the broken freezer.
With a turnkey rental, you don’t have to supply appliances or furniture. Your tenant brings their own refrigerator so they’re responsible if something happens to it. The turnkey is unfurnished, so you don’t have to maintain sofas and coffee tables, which can get damaged from hard use.
More Reasonable Expectations
Vacationers expect a higher level of service and accommodation when they stay in a vacation. They’ve saved for the trip and are on a vacation that they may only get once a year. They want to be treated well. That means everything has to be as perfect as possible in the vacation rental. Anything less may get you a bad review.
With a turnkey rental, expectations are more reasonable. Tenants expect a clean and safe place to live, but they don’t expect the royal treatment. You don’t have to supply a welcome note or complimentary condiments and paper towels.
As an Airbnb host, you’re faced with hundreds of competitors on the same site, all vying for the same business. This forces you to lower your rates to be competitive or to offer extra amenities in order to attract guests.
With a turnkey rental, your competition is much more within reason. Tenants usually have certain criteria that dictate where they can live and how much they can pay in rent. As a turnkey rental owner, you may have a handful of nearby competitors, but little more than that. You also won’t be forced to lower your rental rate in order to compete.
Owning a turnkey rental just makes more sense for serious real estate investors than a vacation rental. There are even more advantages to owning a turnkey rental over having an Airbnb or other vacation rental property. Find out what they are here.
And, to see what turnkey rental properties are available in Memphis, St. Louis, Cleveland and Birmingham, please visit MartelTurnkey.com today.