For many Australians, buying an investment property is only the first decision. The next is how to generate an income from it.

Should the property be leased to a long-term tenant, or offered as short-term accommodation through platforms such as Airbnb and Stayz?

There is no universal answer. The better option depends on the owner's financial goals, appetite for risk and willingness to actively manage the property.

The Attraction of Short-Term Rentals

Short-term accommodation can produce significantly higher gross income, particularly in popular tourist destinations and during peak holiday periods.

Owners also enjoy greater flexibility. They can block out dates for personal use, adjust prices to match demand and respond quickly to changing market conditions.

However, higher income rarely comes without higher costs.

Cleaning, linen, utilities, internet, booking platform commissions, insurance and regular maintenance all reduce net returns. Occupancy can also fluctuate with the seasons, meaning periods of strong income may be followed by quieter months.

Running a successful short-term rental is often closer to operating a small hospitality business than simply owning an investment property.

The Stability of Long-Term Renting

Long-term residential leases generally provide a more predictable income stream.

Rent is received each week or month, management costs are typically lower and there is less wear and tear associated with frequent guest turnover.

Banks also tend to view long-term rental income as more predictable when assessing borrowing capacity.

The trade-off is that rental increases are usually gradual and owners have less flexibility to use the property themselves.

Tax Is Only One Part of the Equation

Taxation should not be the sole reason for choosing one model over another, but it deserves careful consideration.

Rental income is generally assessable regardless of the type of tenancy, while legitimate expenses may be deductible. Capital gains tax outcomes can become more complex where part of a principal place of residence has been used to generate income, or where the property's use changes over time.

Because every owner's circumstances are different, professional tax advice is often worthwhile before making significant changes to how a property is used.

Consider Your Time Commitment

Many investors underestimate the amount of work involved in short-term accommodation.

Guest enquiries, bookings, check-ins, cleaning, maintenance and online reviews all require attention. Some owners outsource these tasks to professional managers, although this comes at an additional cost.

Long-term rentals generally require far less day-to-day involvement.

Which Strategy Suits You?

A long-term rental may suit investors who value predictable cash flow, lower management demands and a more passive investment.

Short-term accommodation may appeal to owners prepared to invest more time in exchange for the potential of higher returns, particularly in established tourism markets where demand remains strong.

Neither approach is inherently better. The most successful strategy is usually the one that matches the owner's financial objectives, available time and tolerance for risk.

The Evening Times View

The question is no longer whether Airbnb is "good" or "bad" for property investors. The better question is whether it fits your investment strategy. A property is a long-term asset, and today's rental income should be weighed against operating costs, taxation, financing and the amount of time required to manage it. The highest gross income does not always produce the highest long-term return.