Many of you already own homes in Jamaica or are in the process of buying a home and you may be weighing your options on how to best create income from your new home! While you want to create passive income from your investment, one size does not fit all. It’s important to understand your personal financial goals for your home and how you want to personally use the home.
[convertkit form=1996926My husband and I have rented our homes both long-term and on Airbnb at different times. There were various factors that went into these decisions and I would like to share with you some of the thought process behind choosing which option is best for your situation and needs.
Long Term Rentals (LTR)
Pros
- Minimal up-front investment for furnishings
- Setup of a LTR can be completed in one week
- Requires minimal management and tenant requests
- Steady, reliable monthly income
- Tenant is responsible to pay monthly bills like JPS, NWC and Flow.
Cons
- Monthly revenue is typically less than Airbnb
- You will not have access to stay at your home when you visit Jamaica
Short-Term Rental (STR)
Pros
- Monthly revenue is higher than a LTR
- You will be able to access and stay at your home when you visit Jamaica
Cons
- Initial investment in appliances, furnishing and decorating is more than a LTR
- Setup of an Airbnb takes 2 to 4 weeks (depending on where you buy your furniture)
- Requires a hands-on approach to Property Management and more frequent guest communication than a LTR
- Monthly income will fluctuate
- You are responsible to pay monthly bills like JPS, NWC and Flow.
Which is best for you?
If you quickly glance at the above pros and cons list, you would think a LTR would be better, but remember everyone has different goals and it is not always that cut and dried!
Below are some questions to ask yourself when you are considering whether to go with a LTR or STR.
- How often do I plan to visit Jamaica in the next year?
- How much money have I budgeted to setup or furnish my home?
- Do I have time to manage Airbnb guest reservations and communication?
- Based on my homes location, which option is in higher demand?
- How much do I need to make in one month to cover my mortgage and monthly maintenance fees?
Here are my two cents on the above…
If you plan to visit Jamaica more than twice a year, then Airbnb may be a better option for you so you have somewhere to stay. This could end up saving you money in the long run.
If you have limited funds after purchasing your home it may be best to start with a LTR. After a year or two you could always furnish the home and list on Airbnb.
If you have limited time and do not wish to engage with guests and manage reservations Airbnb may not be the best option for you.
Location plays into revenue and demand. It is important to research LTR and STR rental rates for comparable homes in your area.
The last point is VERY important. You want to make sure you understand how much you’re paying for your mortgage, monthly fees and monthly bills every month.
At the end of the day, both options have their advantages and disadvantages. It is important to weigh your options carefully before moving forward.
If you are struggling with deciding which option, LTR or STR, is right for you or you need assistance setting up/furnishing your home or managing it, schedule a 1 on 1 consulting call.
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