In a recent episode of his show, financial guru Dave Ramsey cautioned against purchasing properties for the purpose of turning them into short-term rentals on Airbnb. Ramsey explained that while it may initially seem like an attractive way to generate passive income, running a short-term rental property can quickly become a nightmare.
According to Moneywise, Ramsey compared owning a property on Airbnb to running a small business or a hotel. Property owners are responsible for keeping the space clean, making repairs, and being readily available to renters for emergencies or inquiries. Additionally, short-term tenants can be more careless with the property compared to long-term renters, potentially leading to damage and complaints from neighbors.
Instead of venturing into the unpredictable world of short-term rentals, Ramsey suggests considering real estate investment trusts (REITs) as an alternative investment option. REITs are mutual funds that invest in real estate properties rather than stocks. This allows investors to indirectly own a portion of commercial real estate while avoiding the hands-on responsibilities associated with managing rental properties.
While Ramsey acknowledges that there are many reputable REITs available, he advises investors to exercise caution and thoroughly research their options. Some REITs rely heavily on debt to acquire properties, which increases the risk for investors.
By opting for REITs over Airbnb, investors can potentially enjoy the benefits of real estate investments without the hassles of property management. This alternative approach may offer a more secure and stable investment opportunity for those looking to grow their wealth in the real estate market.